context: The PRC has been Singapore's largest trading partner for goods for 10 consecutive years. In 2022, the bilateral trade volume between China and Singapore reached US$115 bn, a y-o-y increase of 22.8 percent. Singapore has been the PRC's top source of new investment for nine consecutive years and is also the largest destination for Chinese outward investment among ASEAN countries. As geopolitical uncertainties still loom in Hong Kong, the PRC and Singapore are expected to further deepen economic cooperation.
In 2009, China and Singapore signed their first FTA (free trade agreement). In 2018, they signed a protocol to upgrade the FTA and launched negotiations, which were completed in April 2023 with the signing of an MoU (memorandum of understanding), featuring:
- the first time the PRC used a negative list approach to commit to opening up service and investment in an FTA
- further increasing the level of service trade and investment opening commitments
- adding a telecommunications chapter
- incorporating high-level trade rules such as national treatment, market access, transparency and digital economy
- the two sides will continue with follow-up work and domestic procedures to sign the agreement as soon as possible.
Singapore is an important trade partner with the PRC because it values China's market potential and is familiar with its culture and institutions, notes Xu Ningning 许宁宁 China–ASEAN Business Council executive president and RCEP Industrial Cooperation Committee chair. Singapore is a well-established international financial centre with many regional headquarters of European and American multinational companies, who can invest in the PRC through Singapore's convenient financial services, he points out.
Recognising the complementarity between PRC and Singapore in trade, Xu cites several important instruments which are crucial to fostering cooperation:
- bilateral cooperation mechanisms
- between Singapore and several cities in the PRC
- flagship cooperation projects
- China-Singapore Suzhou Industrial Park
- China–Singapore Tianjin Eco-City
- China–Singapore (Chongqing) Connectivity Initiative