20 Years of China-Singapore Diplomatic Relations: An Assessment

2013/05/23

abstract

Overview
Singapore’s relations with China today are strong and substantive. The two countries interact and cooperate in many fields ranging from politics, economics, business, the arts, culture and education to the environment. Their relationship is also manifested at many levels ranging from government-to-government ties involving the top leaders to people-to-people exchanges of tourists and students. Over the years, bilateral relations has not only deepened but also broadened into new areas.
The state of bilateral relations today is highly commendable when compared to the not too distant past. Singapore’s relations with China before the open door and reform policy in 1978 were dogged by ideological differences and threats to national security. Then, both countries were at different ends of the ideological spectrum with governments in Southeast Asia, Singapore included, having to grapple with communist elements that threaten to topple the governments of the day. Yet, despite their differences then, both countries displayed a high degree of pragmatism that allowed their economic relationship to proceed, quite separate from what was happening on the political front.
This high pragmatism became more pronounced with the start of economic reform and open door policy under Deng Xiaoping’s leadership. This further spurred relations between the two countries. In particular, Singapore seized the opportunity to expand its economic ties with China, especially after Deng’s tour of south China in early 1992. As at end 2010, Singapore was China’s eighth largest trading partner and the seventh largest investor in China. The Singapore-China Free Trade Agreement which came into force in January 2009 has further spurred growth in bilateral trade and investments.
Most notably, the Suzhou Industrial Park (SIP) which the two countries had embarked on in 1994 celebrated its 15th Anniversary in May 2009. Building on the foundation of the SIP, the two countries have since opened up another new front of cooperation in the form of the Sino-Singapore Tianjin Eco-city that seeks to balance the objectives of environmental protection, economic growth and social harmony. There are many other commercial projects, undertaken by the private sectors of the two countries.
At the political level, China and Singapore relations are warm and productive, buttressed by regular high level exchanges of visits. Augmenting the warm personal ties between the leaders of the two countries is an overarching institutional mechanism in the form of the Joint Council of Bilateral Cooperation and other bilateral cooperation bodies under this council that oversee the various areas of cooperation between the two countries. These bodies provide useful platforms for both sides to not only engage but also to continually explore mutually beneficial areas of cooperation. This will in turn strengthen the foundation of the bilateral relationship.
The Two-Way Relationship in Perspective
Singapore has geographically and historically been an integral part of Southeast Asia. Its interactions with China, in the past and presently, can be viewed not only within a bilateral context but also as part of a wider region. Today, Singapore enjoys a strong and substantive relationship with China. Its ties with China, like with many other countries, are guided by a high sense of pragmatism, not ideological correctness. A large part of Singapore’s “core interests” are trade, investments and economic growth. Singapore welcomes China’s growing engagement in the region as this provides ample opportunities for it to participate in China’s development, both to help China as well as to ride on China’s growth.
Singapore-China relations go back a long way, well before the establishment of diplomatic relations on 3 October 1990. Even before the founding of the People’s Republic of China (PRC) in 1949, China’s relations with Southeast Asia, traditionally called Nanyang or South Sea by the Chinese (and of which Singapore is a part of), are extensive and deep-rooted on account of history, geography and migration.
Geographically, Singapore was part of the “Pan-Malayan lands”. Historically, trade between China and Pan-Malaya dated back to the early centuries. A fair amount of trade was recorded as early as the Tang Dynasty (618-907). The early trade activities were often mixed with tribute-bearing missions, a peculiar Chinese way of conducting diplomacy with smaller states in Nanyang. But regular and steady growth in trade started only after the second part of the 19th century, with the increased influx of Chinese immigrant labor into British Malaya.
In fact, the Chinese had frequented the Malay lands long before the Portuguese conquered Malacca in 1511. In 1349, a Chinese trader gave a vivid account of life in Temasek, the name of old Singapore. In 1409, Admiral Zheng He led an expedition to Malacca and made it one of China’s tributary states. However, it was not until 1819 when the British East India Company established a settlement in Singapore that sizable Chinese communities began to grow.
By 1860, ethnic Chinese constituted 60% of Singapore’s total population of 82,000, 15% of Malacca’s 67,000, and nearly 30% of Penang’s 67,000. Most Chinese, mainly from Fujian and Guangdong, migrated into Malaya under the contract-labor system. But they soon became traders and craftsman, and they eventually dominated the economic life of the Straits Settlements.
After the founding of the PRC in 1949, however, China’s relations with Southeast Asia assumed new dimensions, with complex ideological and geo-political forces coming into play. This gave rise to more than two decades of Cold War relations. It was not until the early 1970s, with the advent of international détente, that individual Southeast Asian countries started to normalize relations with China. Notably, Singapore was the last country in ASEAN to formalize relations with China, out of respect for neighboring sensitivities. Thus, Singapore only set up a Trade Office in Beijing in 1981, and it waited until October 1990 to formalize diplomatic ties with China, shortly after Indonesia did so. This move was intended to send an unequivocal message to its neighbors that Singapore was an independent and sovereign actor on the international stage, and was not an agent of another state. On hindsight, this move laid a good basis for Singapore’s ties with China to develop.
Looking back, Singapore’s relations with China has been guided by a high sense of pragmatism. In separating trade from politics, pragmatism had enabled Sino-Singapore relations to withstand the vagaries of the Cold War period. When China’s trade with Indonesia, the Philippines and Thailand was either seriously disrupted or banned altogether in the 1950s or 1960s, China’s trade with Singapore continued unabated. In fact, for three decades from 1950 to 1990, Sino-Singapore trade persisted in the absence of a formal diplomatic framework.
After 1979, when Deng Xiaoping started economic reform and open door policy, China’s approach to foreign relations was also characterized by pragmatism. This spurred the growth of two-way relations between China and Southeast Asia (or ASEAN) in general and between China and Singapore in particular. China-Singapore ties received a further boost when Deng mentioned Singapore during his Nanxun or Southern Tour in 1992. Thereafter, numerous official “observation groups” came to Singapore to study Singapore’s development experiences.[①] This culminated in the joint development of the two countries’ first flagship project in Suzhou in 1994, which eventually took off after overcoming initial hurdles.
A Broad-Based and Substantive Relationship
Today, China and Singapore enjoy a multi-faceted relationship with cooperation and interactions on many fronts. One of the important anchors is their ever expanding and deepening trade and investment ties. In 2010, China was Singapore’s third largest trading partner with total trade amounting to S$95.3 billion, a jump of 26 percent from the previous year figure of S$75.7.[②] Since 2001, after China’s entry into the World Trade Organization (WTO), the bilateral trade volume expanded more than threefold from S$22.4 billion in 2001 to S$95.3 billion in 2010, averaging an annual growth rate of more than 15 percent (see Chart 1 in Annex). In 2010, Singapore was China’s eight largest trading partner.
The China-Singapore Free Trade Agreement (CSFTA) that came into force on 1 January 2009 has brought notable benefits to both countries as indicated by the above figures. This was also the view shared by Singapore and Chinese officials when they met for their first review of the CSFTA in April 2010. To ensure its continued relevance, the CSFTA will need to continually evolve to meet the needs of the Singapore and China’s business communities.    
Since 1997, China overtook Malaysia as the most important destination for Singapore’s foreign direct investment in cumulative terms. In 2010, Singapore’s cumulative direct investment in China reached S$58.1 billion, an increase of more than 12 percent from S$51.6 billion in 2009 (see Chart 2 in Annex). Singapore’s investments in China are predominantly in manufacturing and real estate, rental and leasing. In 2010, Singapore was China’s seventh largest investor.
Many Chinese companies have also chosen Singapore as a springboard into the region and the Singapore Exchange as a fund-raising platform. Apart from accessing global capital, a listing on the Singapore Exchange helps these companies generate overseas brand awareness and broaden shareholder base. In the past five years, China listings have grown from 85 in 2005 to some 154 in 2010. Till the end of April 2011, China companies make up around 7 percent of market capitalization of listings on the Singapore Exchange Mainboard.[③]
However, there appears to be an increasing trend of China firms on the Singapore Exchange seeking dual listings elsewhere in China’s Taiwan, Hong Kong and even Seoul. These Chinese firms are now looking beyond the Singapore Exchange in search of higher valuations and bigger trading volumes which translates into higher liquidity and higher profiles for these companies. This is to be expected as Chinese firms evaluate the benefits they can get in line with the developments on the international economic front.
On its part, the dynamism and resilience of the Chinese economy is making a significant positive impact in the region and the rest of the world. This is especially evident after the 2008 financial contagion that engulfed the major economies of the world. Bucking the trend, China achieved a stellar GDP growth of 9.1 and 10.3 in 2009 and 2010 respectively, becoming an ever more important economic driver. In Asia, China-ASEAN trade volume reached US$235.4 billion in the first ten months of 2010, up 42 percent year-on-year, retaining ASEAN’s position as China’s fourth biggest trading partner.[④] Indeed, China’s economic relations with ASEAN have been much boosted by the China-ASEAN Free Trade Area (CAFTA) which went into effect on 1 January 2010.
In fact, China has continued to run substantial trade deficits with its neighbors from Japan, Korea, Taiwan region, Australia and the ASEAN countries of Malaysia, Thailand and the Philippines. By opening up its vast market for their exports, China has become a critical engine for their economic growth. More significantly, by importing raw materials, intermediate products, machinery and equipment, and services from different Asian economies, Singapore included, and then re-exporting the finished products to different markets in the region and beyond, China operates as an important integrator of regional and global manufacturing activities (see Chart 3 in Annex).
At the financial level, the two countries have sought ways to strengthen their economic resilience and financial stability. In July 2010, the People’s Bank of China and the Monetary Authority of Singapore announced the setting up of a bilateral currency swap arrangement that will provide Chinese Yuan liquidity of up to RMB150 billion and Singapore dollar liquidity of up to S$30 billion. The two countries are reportedly also in talks to explore the possibility of Singapore as a second offshore yuan trading hub after Hong Kong.
On tourism, or people-to-people relations, China is Singapore’s second largest visitor-generating market with 1,171 million Chinese tourist arrivals after Indonesia at 2,305 million in 2010 (see Chart 4 in Annex). Over the years, the size of Chinese tourists gradually crept upwards to 7th position in 1998, 3rd position in 2002 (overtaking Malaysia and Australia) and 2nd position in 2003 (overtaking Japan). In 2008, China overtook India to become the 2nd top Total Expenditure of Visitors (TEV) generator.
In the field of education, Singapore is an important destination for Chinese overseas students. In 2008, there were an estimated 97,000 foreign students in Singapore, a 13% increase from the 86,000 figure in 2007. The students coming to Singapore are mainly from China, India, Indonesia, Malaysia, Myanmar, South Korea and Vietnam.[⑤] Furthermore, there is also extensive education collaboration between the two countries. Most recently, in November 2010, Singapore’s renowned National University of Singapore and Nanyang Technological University signed separate agreements with the local municipal authorities in China to set up institutes in the Sino-Singapore Tianjin Eco-city and the Suzhou Industrial Park respectively.[⑥] In June 2010, Hwa Chong Institution (also a famous high school in Singapore) signed an MOU to have exchanges and mutual learning programs with a top local school in the Sino-Singapore Knowledge City in Guangzhou.[⑦]
Cultural exchanges between the two countries also cover various aspects. For instance, the Little Nonya (小娘惹), a television series produced in Singapore, was aired in China and was quite well received. During a trip by Singapore’s Media Development Authority to China in July 2010, a total of nine agreements were signed that will pave the way for television audiences in China and Singapore to view more programs co-produced by the two countries.[⑧] Separately, but in the same month, the China-Singapore Film Co-production Agreement was signed that covers cooperation in the areas of theatrical films, telemovies, across live-action, animation and documentaries. This agreement will facilitate greater cinematic cross-pollination between the two countries in technical and creative know-how.
At the political level, the two countries have kept up the momentum of high-level exchanges. In 2010, Singapore leaders like Prime Minister Lee Hsien Loong, President S. R. Nathan, Deputy Prime Minister Wong Kan Seng, Deputy Prime Minister and Minister for Defense Teo Chee Hean, Minister Mentor Lee Kuan Yew, Senior Minister Goh Chok Tong and Foreign Minister George Yeo have visited China. In November of the same year, Vice President Xi Jinping visited Singapore to commemorate the 20th anniversary of the establishment of diplomatic relations between the two countries. During Xi’s visit, a bronze bust of Deng Xiaoping was unveiled, indicating the recognition by Singapore and China of Deng’s contribution to the nurturing and building of the bilateral relationship. Xi also officiated at the ground-breaking ceremony of the China Cultural Centre in Singapore.
Effective High-Level Collaborative Mechanism
The development of China-Singapore ties is overseen by a high-level institutional mechanism known as the Joint Council for Bilateral Cooperation (JCBC) that meets on a regular basis. The JCBC was launched by then Prime Minister Goh Chok Tong and Premier Wen Jiabao in November 2003. This mechanism has enabled both sides to periodically review the state of bilateral ties and proactively suggests ways to improve existing cooperation or identify new areas to work on. The JCBC also provides a useful platform for political leaders and officials as well as businessmen from both sides to get to know each other better by collaborating on joint projects. This network of interactions has helped to lay the groundwork for stronger political and economic ties.
Maintaining the momentum of the bilateral relationship, the JCBC held its 8th meeting in Singapore chaired by Vice Premier Wang Qishan and Deputy Prime Minister Teo Chee Hean in July 2011. Under the JCBC are two Joint Steering Councils (JSCs), also headed by Vice Premier Wang and DPM Teo, that oversee policy-related issues on the Suzhou Industrial Park and the Sino-Singapore Tianjin Eco-city. The collaboration on the industrial park and now the eco-city provides vivid examples of how the two countries are constantly finding ways to stay relevant and benefit from each other’s growth. The success of these two flagship projects have strengthened and will add substance to bilateral ties.  
Below the JCBC framework are seven other key bilateral cooperation councils that Singapore has with Shandong (1993), Sichuan (1996), Liaoning (2003), Zhejiang (2003), Tianjin (2007), Jiangsu (2007) and Guangdong (2009) (see Chart 5 in Annex for a list of these councils). They provide additional avenues for Singapore to explore meaningful collaboration with the respective Chinese provinces based on their comparative strengths. Some of these projects include the Sino-Singapore Guangzhou Knowledge City (that held its groundbreaking ceremony in June 2010) and the Sino-Singapore Nanjing Eco High-Tech Island (officially launched in May 2009). Singapore companies are also taking the lead in the Jilin Food Zone that fits into Singapore’s food diversification strategy.
Looking Forward
China and Singapore have a substantive relationship that extends into many areas. This has been made possible by the committed and visionary leadership on both sides, and at various levels, to constantly add value to the relationship. Such strong and committed leadership will remain key in sustaining the momentum of bilateral ties.
Buttressing the strong personal ties between the leaders of the two countries is the high-level institutional mechanism in the form of the JCBC that oversees all form of bilateral cooperation between the two countries. Singapore's older generation leaders like Lee Kuan Yew and Goh Chok Tong had established good personal relations (guanxi) with the older generation of Chinese leaders from Deng Xiaoping to Jiang Zemin and Hu Jintao. The new generation of leaders on both sides has yet to develop such close rapport with each other. In this regard, it is very likely that the high level JCBC and the attendant platforms will come to assume greater importance in the post Lee Kuan Yew era in helping to broaden and deepen the personal ties of the leaders on both sides.
To further sustain the momentum of bilateral ties, the two countries will need to constantly explore ways and means to be relevant to each other. In this way, they can expand common grounds and benefit from each other’s growth. Already, the China Cultural Centre is scheduled to be completed in Singapore in 2011, providing yet another avenue for furthering cultural relations between the two countries. In April 2012, the tripartite partnership among the newly-opened Singapore University of Technology and Design (SUTD, Singapore’s fourth university), Zhejiang University and the Massachusetts Institute of Technology will kick in when SUTD admits its inaugural cohort of undergraduate students.
On a lighter but no less significant note, is the feverish preparation being made by the Singapore Zoo to receive two pandas from China in 2012. Already, in March 2011, a judging panel has selected the names of “Kai Kai” (凯凯 which means “successful”) and “Jia Jia” (嘉嘉 which means “beautiful and fine”) for these two pandas in a nation-wide competition held in Singapore.
While working on new areas, the two sides ought to work even more closely together to ensure the success of existing collaborative projects such as the Suzhou Industrial Park and Sino-Singapore Tianjin Eco-city so that they can generate greater synergies, and further enhance bilateral ties.
From time to time, differences may arise that affect relations between the two countries. This is unavoidable as China and Singapore are two different countries. What is more important is for both sides to respect each others’ interests and properly manage these differences as they surface so as not to lose sight of the bigger strategic benefits of working together.
As a small and export-oriented country, Singapore would like to continue to see a stable, prosperous and responsible China. This will provide Singapore with the necessary economic and political space to grow, and to ride on China’s growth.
For China, a giant in many ways, the building of a more comprehensive relationship with Singapore on the continued basis of mutual respect and mutual benefit will underscore China’s pledge to peaceful development. With its rising international clout, it is even more important for China to be sensitive to this.
With realistic expectations and building on the basis of what has been achieved so far, there are good prospects for China-Singapore relations to grow from strength to strength. [①] “Singapore, China Witness Strong Bilateral Trade Growth,” China Daily, 5 February 2011.
[②] Ibid.
[③] Singapore Exchange Statistical Report April 2011.
[④] “China ASEAN Trade Soars on China's Deficit,” China Daily, 9 December 2010.
[⑤] Speech by Mr Lee Yi Shyan, Minister of State for Trade and Industry at the “Singapore
Education Awards 2009,” 19 March 2009 at http://app.mti.gov.sg/default.asp?id=148&articleID=17921. According to an unofficial figure, the number of Chinese students in Singapore comprises around 42 percent of the total number of foreign students.
[⑥] “NUS, NTU to Open Research Institutes in China,” Straits Times, 16 November 2010.
[⑦] In 2007, Hwa Chong Institution became the first Singapore school to set up the Hwa Chong-Beijing Satellite Campus. It scored another first with the latest MOU to establish a Singapore presence in Guangzhou.
[⑧] This will cover telemovies, documentaries and concerts produced by each country.

author： John Wong and Lye Liang Fook*