The Relationship between Singapore and China

by ANKASAM Ekip
Kenan AĞAZADE

China and Singapore developed a special relationship can be traced back to the latter’s spectacular economic growth after its independence in 1965. With the exception of three years, Singapore’s economy would grow at an annual rate of over six percent for three decades (and over ten percent for half that time). As the title of former Singaporean Prime Minister Lee Kwan Yew’s memoir recounted, Singapore soared “from third world to first.” Throughout that period, Lee’s political party remained (and still remains) at the helm. To outside observers, Lee’s Singapore became the exemplar of how to create economic prosperity under one-party rule.

Felix K. Chang writes in his article for us that this  appealed to China, whose communist party in the late 1970s had started a long economic reform process to turn its brand of communism into what would become known as “socialism with Chinese characteristics.” Chinese Vice Premier (and soon-to-be paramount leader) Deng Xiaoping even travelled to meet Lee in 1978. Reciprocating, Lee would eventually visit China 33 times. The two leaders, who happened to share a common Hakka Chinese heritage, became good friends. In 1992, Deng went so far as to describe Singapore as the model China should follow for development. After Deng’s retirement, Lee became close with Jiang Zemin, too. Even today, many Chinese still recognize Lee’s contribution to shaping China’s economic success.

With such close personal relationships with China’s top leaders, it is no wonder that Singaporean leaders felt as if they could always work out problems with Beijing, often discretely. Singapore has prided itself on its “quiet, friendly but firm style of diplomacy” with China. However, as China’s economic rise accelerated and its military heft grew, the two countries began to drift apart. At the same time, Singapore drew closer to other major powers, like India, Japan, and the United States. In fact, after Thailand’s military coup in 2014 and the Philippines’ election of Rodrigo Duterte as its president in 2016, Singapore could be considered America’s closest ally in the region.

Even so, Singapore rarely feel safe. Despite the end of the Cold War, it has continued to conscript its young men into national service for two years and spend over 20 percent of its national budget on defense.

So, unsurprisingly, Singapore became concerned in 2004 when Chinese Chairman Hu Jintao first spoke of China’s “Malacca Strait dilemma” —a strategic vulnerability arising from China’s lack of control over the waterway through which 80 percent of its oil imports flowed. That strait also happens to be next to Singapore and its economic lifeline. Hu’s comments suggested that China could one day feel the need to remedy the situation. China’s island-building and increased naval activity in the South China Sea have not been reassuring. In one troubling incident, a Japanese helicopter carrier sailing to Singapore spotted a Chinese submarine lurking near the entrance to the strait in 2019, Singapore has attained a remarkable degree of physical security.

Ultimately, however, China’s real challenge to Singapore is likely to come from a different direction. Central to Singapore’s “from third world to first” ascent was its ability to leverage its location astride the Malacca Strait to become East Asia’s leading maritime trading center and serve as a major base for high-tech manufacturing. With such capabilities in place, Singaporeans initially welcomed China’s economic rise. Greater economic growth in China meant more maritime trade and profits for Singapore. Meanwhile, Singapore’s high-tech manufacturing plants churned out electronic components to serve an ever-greater number of Chinese low-cost assemblers, which cobbled them together into finished products.

But things change. Now, China has designs to remake the world’s trade flows through its Belt and Road Initiative (BRI). That could have long-term ramifications for Singapore, since the BRI envisions a new network of trade routes radiating from China, mostly over land across Central Asia and continental Southeast Asia rather than through the Malacca Strait. At the same time, some coastal Chinese cities have begun to challenge aspects of Singapore’s dominance as a maritime trading center. One such city is Zhoushan. Already the fourth busiest container port in the world and situated only 100 km from the busiest one (Shanghai), Zhoushan has already set to work building the needed infrastructure to capitalize on its location and capture a big chunk of Singapore’s marine fueling business.

Finally, another challenge to Singapore has been China’s “Made in China 2025” industrial policy. Launched in 2015, the policy has sought to coordinate the use of government subsidies, state-owned enterprises, intellectual property acquisitions abroad, and forced technology transfers from foreign companies to turn China into the world’s high-tech manufacturing leader. Specifically, China aims to be 70 percent self-sufficient in several targeted high-tech industries. To do so, it has been building the capacity to ramp up production of commonly used electronic integrated circuits. Since in 2019 those circuits represented over 16 percent of Singaporean exports (mostly to China), Singapore may be among the first to feel the heat from China’s economic tinkering.

Despite these obstacles, it is not surprising that the parties will find a new model of cooperation based on the experience of the past.

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