Strengthening Financial Ties Between Singapore and China

During his inaugural official visit to China since October 2019, Singapore’s Deputy Prime Minister Heng Swee Keat has put a spotlight on the burgeoning financial and economic cooperation between Singapore and China. In a high-profile meeting with China’s Vice-Premier He Lifeng in Beijing, DPM Heng underscored the immense potential for both nations to work hand in hand on pivotal issues such as ensuring financial stability, managing risks effectively, and leveraging finance to drive development. This visit not only marks DPM Heng’s first interaction with Mr. He, who plays a crucial role in shaping China’s economic and financial policies but also sets the stage for deepening trade and investment cooperation rooted in the success of bilateral projects like the Suzhou Industrial Park and the Guangzhou Knowledge City.

The discussions between DPM Heng and Vice-Premier He Lifeng were comprehensive, covering the enhancement of bilateral economic ties, boosting financial connectivity, and fostering increased cross-border financial flows. Both parties also delved into regional and international economic developments, highlighting a mutual commitment to deepening economic cooperation. This commitment is further evidenced by DPM Heng’s optimism about the distinctive nature of the Singapore-China relationship, underpinned by specific projects such as the Sino-Singapore Tianjin Eco-City Investment and Development Co., which have significantly contributed to economic ties, trade, and people-to-people interactions.

Amidst strengthening ties with China, Singapore faces shifting regional dynamics as Japanese multinational corporations (MNCs) increasingly favor Malaysia and Thailand over Singapore for establishing their regional headquarters. This trend, driven by cost-cutting measures and attractive tax incentives offered by Malaysia’s Budget 2024 and Thailand’s concentration of production sites, poses a challenge to Singapore’s status as a regional hub. However, this shift primarily affects specific functions like sales or corporate planning rather than signaling full relocations. Despite these changes, Singapore continues to play a crucial role in the financial services sector, benefiting from its strategic location, language proficiency, and established infrastructure.

The movement of some companies to neighboring countries underscores the importance of Singapore’s ongoing efforts to enhance its value proposition as a key location for business and finance. The deepening of financial cooperation between Singapore and China serves as a testament to Singapore’s strategic importance in the region. By focusing on financial stability and development-driven finance, Singapore not only strengthens its partnership with China but also reinforces its position in the global financial landscape amidst evolving regional dynamics.