Singapore to Deepen Bilateral Relationship with China
By Dezan Shira & Associates
Posted: 4th September 2013 08:56Singaporean Prime Minister Lee Hsien Long embarked on a week-long official visit to China earlier this week upon the invitation of Chinese Premier Li Keqiang.
During the visit, China stated its eagerness to review and continue improving its free trade agreement (FTA) with the Association of Southeast Asian Nations (ASEAN). In turn, Singapore has pledged its support to further help the development of the FTA.
Both sides also pledged to ensure that the Suzhou Industrial Park, Tianjin Eco-city and Jilin Food Zone projects in China are completed successfully in the near future.
Further, Prime Minister Lee reiterated the importance of the China-Singapore Joint Council for Bilateral Cooperation in deepening trust and cooperation between the two countries, in addition to Singapore’s desire to upgrade the China-Singapore free trade zone over the next few years.
Over the years Singapore has helped build China’s economic and administrative management expertise. Meanwhile China’s rapid growth has in turn offered Singapore a myriad of investment opportunities. Singapore is currently the only ASEAN country to have signed a FTA with China, and the country is also China’s third largest trading partner within the trading bloc.
Bilateral trade between China and Singapore grew by 8.7 percent year-on-year in 2012 to US$69.3 billion.
Additionally, the size of the bilateral currency swap between the two countries is the largest in ASEAN, with China and Singapore’s central banks recently doubling their currency swap facilities to RMB 300 billion (US$48 billion). Under this agreement, China will make available RMB 300 billion to eligible financial institutions that are currently operating in Singapore, while Singapore will make available the same monetary amount to eligible financial institutions currently operating in China.
The continuation of this agreement will allow both countries to provide foreign currency liquidity to stabilize their respective financial markets.
Prime Minister Lee also stressed the continuation of financial cooperation between the two countries as an important issue since RMB clearing services have recently gained momentum in Singapore. Last May, the Industrial and Commercial Bank of China started up RMB-clearing services in Singapore, making Singapore a significant de-facto offshore RMB hub.
Also discussed during the talks was a peaceful resolution to the South China Sea issue. However, Beijing has sent a clear message that the crux of the China-ASEAN relationship will only focus on economic cooperation, not territorial issues within the South China Sea.
This article was first published on ASEAN Briefing.
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