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Free trade deals strengthen China-Singapore ties

Copyfrom:China DailyPost Time:2023-04-07 16:31:29

Amid economic headwinds, nations secure means to keep commerce flowing

With China and Singapore creating favorable conditions to boost two-way investment and foreign trade volume, companies have been rushing to deploy more resources in each other's markets to seek new growth points and continue robust development, said trade experts and business executives.

They said many opportunities come from the two countries' efforts to actively promote free trade deals and remove trade and investment barriers, as well as encourage their companies to invest in each other's markets, especially in those fast-growing sectors.

China and Singapore announced on April 1 that they had completed substantive negotiations on the upgrade of their bilateral free trade agreement. The objective of the upgrade is to improve market access for their companies, while also establishing more transparent and advanced economic practices, said China's Ministry of Commerce.

The upgraded deal, once sealed, will show the world that business ties between China and Singapore are on course to being upgraded to new heights amid both countries' push for the regional integration of the Association of Southeast Asian Nations, said Gao Lingyun, a researcher at the Institute of World Economics and Politics, which is part of the Chinese Academy of Social Sciences in Beijing.

In addition to advancing preparations for enhancement of the ASEAN-China Free Trade Area — or the ACFTA 3.0 — this move will further upgrade the Regional Comprehensive Economic Partnership pact, said Guo Da, assistant president at the Haikou, Hainan province-based China Institute for Reform and Development.

After taking effect in January 2022, the RCEP agreement's signatory countries account for roughly 30 percent of the world's gross domestic product and population. Over 90 percent of trade in goods among approved member economies will gradually be tariff-free, according to information from the Jakarta-based ASEAN Secretariat.

It will also create favorable conditions for China to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economy Partnership Agreement. Singapore is a member of both, Guo said.

China and Singapore signed their FTA in 2008 and upgraded it in 2018. They upgraded the agreement again and launched subsequent negotiations to liberalize services and investment based on a negative list model in December 2020.

The negative list sets out in a centralized manner special administrative measures with respect to the access of foreign investment. It has been a practical policy measure to show China's firm determination to expand market access and build an efficient, fair and unified domestic market, according to the Ministry of Commerce.

Ong Tze Guan, chairman of the Singapore Chamber of Commerce and Industry in China, believes that China and Singapore will benefit from the multiplier effects of synergies brought about by the improvement of overall economic, trade and investment relations in the Asia-Pacific region.

With Singapore being the first signatory country to ratify the RCEP agreement, he stressed that trade is a key component of the Singaporean economy, and the pact will serve as an important mechanism to boost trade between his country and other RCEP members.

According to information released by China's Ministry of Commerce, the RCEP is expected to eventually eliminate tariffs on as much as 90 percent of goods traded among its signatories, expand market access for investment, harmonize rules and regulations and strengthen supply chains within the free trade zone.

Boosted by growing trade and investment volume, China and Singapore have already scaled up trade and investment in fields such as the digital economy, new infrastructure, new energy and shipping in recent years, said Zhang Jianping, head of the center for regional economic cooperation at the Chinese Academy of International Trade and Economic Cooperation.

Unlike traditional infrastructure such as railways, roads and water conservancy, the concept of new infrastructure refers to critical facilities based on information technologies like 5G, artificial intelligence, the industrial internet and the internet of things. IoT describes networks of devices that can connect and exchange data.

For instance, the China-Singapore Suzhou Industrial Park — an important inter-governmental cooperation project between China and Singapore — has continuously boosted in-depth cooperation between their companies, especially in the areas of high-end manufacturing, new materials and green development.

The park, established in 1994 in Suzhou, East China's Jiangsu province, had received a total investment of $4.35 billion from Singaporean companies by the end of 2021. The capital had been utilized for the development of 404 projects.

Gu Qingyang, an associate professor at the Lee Kuan Yew School of Public Policy of the National University of Singapore, said China's optimization of its pandemic control policies will stimulate consumption and boost confidence in global economic development in the long run.

The country's outbound tourists will not only fuel the global tourism industry, but also help to ensure the operations of industrial and supply chains in both the Asia-Pacific region and the world, said Gu.

"The New International Land-Sea Trade Corridor and China-Europe freight train service have also promoted the connectivity of infrastructure in many countries," Gu said. "Such projects effectively hedged the risk of logistics disruption amid the pandemic and laid a foundation for economic recovery."

China Energy Engineering Group, or Energy China, a Beijing-based State-owned enterprise, plans to invest more resources to expand its market share in green energy and new types of infrastructure in Singapore as well as other ASEAN member economies this year.

The Chinese company launched an energy storage project on Jurong Island in Singapore in December. The project has a designed capacity of 200 megawatt-hours, the largest of its kind in Southeast Asia, Energy China said.

The project is expected to support the development of a new operation model of large-scale energy storage systems and to build a strategic emerging industry cluster on Jurong Island, said Chen Xiaohua, Energy China's vice-president.

The project will help promote the transformation of Jurong Island into a sustainable chemical energy park in Singapore and help the city state achieve its carbon reduction targets as outlined in the Singapore Green Plan 2030.

Chengdu Engineering, a Sichuan province-based subsidiary of Power Construction Corporation of China, announced in February that it has participated in the design and construction of the Cross-island Line project in Singapore.

With a total length of approximately 50 kilometers, the Cross-island Line project is the longest underground transport line in the Southeast Asian country.

Once operational, it will have the highest number of interchange stations, with almost half the stations on the line to be linked to current rail stations. This means more alternative travel routes to help passengers reach their destinations, according to Singapore's Land Transport Authority.

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