[Photo – Channel Newsasia: Tharman & Li]
In a sign of improving relations between the two countries, Chinese premier Li Keqiang has accepted an invitation from Singapore to visit the island-state. The invitation from Prime Minister Lee Hsien Loong was conveyed to Mr Li by Singapore’s Deputy Prime Minister, Tharman Shanmugaratnam, who was in Dalian for the World Economic Forum.
No date has been set for the visit, which will be Mr Li’s first to Singapore.
The upcoming visit is seen by analysts as a sign that the strained relations between the two sides are thawing. China had been reported to have been unhappy with Singapore’s position on the situation in the South China Sea, and its close ties with the United States. Last November, things came to a head when China seized 9 military vehicles belonging to Singapore which were on their way back from training in Taiwan. It took 3 months of negotiations before China returned the vehicles to Singapore.
In May, China declined to issue an official invitation to Singapore’s Prime Minister Lee Hsien Loong to attend the Belt and Road Forum in Beijing. The Singapore side had requested the formal invitation. China’s rejection of the request was seen as a slap on the face of the Singapore leader.
All that, however, seem to be in the past as the two sides on Tuesday pledged to work together on various initiatives, including those involving the B&R project.
“Cooperation between Singapore and China on the Belt and Road (B&R) Initiative is substantial and has much potential for further deepening,” DPM Tharman said in an interview with the 21st Century Business Herald, a leading business newspaper in China, during his visit.
Explaining just how substantial the cooperation is, Mr Tharman said, “According to the PRC Ministry of Commerce statistics, Singapore’s investments in China accounted for 85% of total inbound investments from B&R countries, and Chinese investments in Singapore accounted for close to a third of China’s total investments to B&R countries.”
Mr Tharman, who is also Singapore’s Coordinating Minister for Economic and Social Policies, highlighted the third Government-to-Government project: the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity (CCI), with Chongqing as the operating centre.
It was designated as a priority demonstration project for the B&R initiative in November 2015, and is considered a model not only for the B&R initiative but also for China’s Western development strategy and the Yangtze River Economic Zone strategy.
“We are currently working on the development of the ‘Southern Transport Corridor’ linking Western China to Southeast Asia through Chongqing and Singapore which will link the Silk Road Economic Belt and the 21st Century Maritime Silk Road,” Mr Tharman said.
On the CCI itself, Mr Tharman said it provides a platform for Singapore and China to learn from one another.
He said, “It presents opportunities for Singapore companies to share their expertise and expand their presence into Western China through Chongqing just as how Chinese companies can tap on Singapore as a gateway into Southeast Asia. This creates the “mutual hub effect” for the benefit of businesses on both sides.”
Singapore’s Foreign Affairs Minister, Vivian Balakrishnan, and Chinese Minister Wang Yi agreed 2 weeks ago that Singapore and China would build three platforms together under the B&R initiative, namely: connectivity cooperation; financial cooperation; and third-party collaboration.
Mr Tharman said: “In the area of financial cooperation, our governments can work together with the private sector to foster deeper cooperation by (a) unlocking greater private sector financing for infrastructure projects; (b) expanding the role of Asia’s bond markets and facilitating the participation of institutional investors to complement traditional bank financing sources; and (c) developing appropriate risk management solutions for B&R projects, such as insurance pooling to allow expertise sharing and capacity pooling to offer customised risk protection for large and complex infrastructure projects.”
“In short, the potential outcomes from Singapore and China’s B&R cooperation will be to multiply investments and growth opportunities across the region.”
The DPM said Singapore also welcomed China’s involvement in projects in Singapore, such as the 350km-long KL-Singapore High Speed Rail project.
“Given China’s extensive HSR experience, we welcome the participation of Chinese companies in the tenders, and I am sure that they will put in high quality, competitive bids,” he said.
Asked by the newspaper how he sees Singapore’s investments in China, going forward, Mr Tharman said there are many areas which Singapore businesses could contribute.
“Singapore’s investments in China reached USD 6.2 billion in 2016, making Singapore the largest foreign investor in China for the fourth consecutive year,” he said. “Most of these investments are in China’s manufacturing, real estate, wholesale and retail sectors. While Singapore companies have traditionally invested in China’s coastal cities, they have also started to venture into the Central and Western regions in recent years.
“With China’s huge remaining potential for urbanisation, and the growth of its middle class, there will be more opportunities for Singapore companies to contribute, e.g. by providing quality urban solutions, transport & logistics, lifestyle, education and healthcare.”
As for US-China ties and how Singapore positions itself in relation to this, Mr Tharman said Singapore seeks to be friends with both sides.
“We want to deepen our ties with both countries and keep both constructively engaged in the region,” he said.
He described US-China relations as the “most important relationship in the region and globally.”
“It defines the peace, security and prosperity of the region and the world,” Mr Tharman said. “By virtue of their economic ties and geopolitical weight, both countries have made important contributions to the stability and development of the region.
“We therefore hope that the China-US relationship continues to be strong, stable and mutually beneficial.”
He said Singapore welcomes the recent positive developments in the China-US relationship under the leadership of President Xi and President Trump.
“If both countries continue their constructive engagement and win-win cooperation, this will only benefit the region and the world,” he said.
As for Singapore-China ties, Mr Tharman said the meetings he had with the Chinese leaders underscored the understanding on both sides that “this relationship has been built up over many years, and both sides should cherish it and move ahead with full effort on our forward-looking agenda.”
Mr Tharman’s five-day visit to China also saw him meet top national and provincial leaders such as Vice-Premier Zhang Gaoli, Tianjin Party Secretary Li Hongzhong and Liaoning Governor Chen Qiufa.
Read 21st Century Business Herald’s full interview with Mr Tharman here.