General

China and Singapore have once again reached a new level in economic and trade cooperation.

According to Huacheng Import and Export Data Observation, on April 1st, just as China and Singapore announced the upgrade of their bilateral relationship to a "comprehensive and high-quality forward-looking partnership", China Singapore economic and trade cooperation also received good news - the subsequent negotiations on the upgrade of the China Singapore Free Trade Agreement have been substantially completed, and the relevant protocol will be signed as soon as possible this year.

According to Huacheng Import and Export Data Observation, the subsequent negotiations for the upgrade of the China Singapore Agreement were initiated by the two countries in accordance with the Protocol on Upgrading signed in 2018. China and Singapore first signed a free trade agreement in 2008, which is also the first free trade agreement signed between China and Asian countries. In 2018, the two sides signed an agreement to upgrade the free trade zone, enhancing the level of rules in areas such as trade facilitation, rules of origin, economic and technological cooperation, and e-commerce. Two years later, the two sides upgraded the agreement again and initiated subsequent negotiations to further liberalize their service trade and investment based on the negative list model.

China believes that this agreement is an important measure and practical action for China to align with high standard international economic and trade rules and expand its opening up to the outside world, which will effectively promote China Singapore economic and trade cooperation to a new level. Prime Minister of Singapore Lee Hsien Loong also explained the reasons for upgrading bilateral relations in an interview. He said that he will not be satisfied with the current situation. Taking the New China Free Trade Agreement as an example, the cooperation between China and Singapore must keep up with the times and continue to reflect value. From March 27 to April 1, Li Xianlong paid an official visit to China in conjunction with attending the 2023 annual meeting of the Boao Forum for Asia.

Wang Yiwei, Director of the Institute of International Affairs at Renmin University of China and an expert from the China Council for the Promotion of International Trade, told 21st Century Economic Report that Singapore has always been following the pace of China's reform and opening up to invest in China, from building industrial parks to building new land sea channels. Singapore is well aware of China's development needs. So this upgrade of the China Singapore Free Trade Agreement is very in line with the institutional and institutional openness required for China's high-quality development, as well as the goal of developing education, science and technology, and talent. It is also a foundation for the future upgrade of the Regional Comprehensive Economic Partnership Agreement (RCEP).

Wang Yiwei also pointed out that upgrading the free trade agreement is also due to Singapore's observation of some opportunities in China's high-quality development process, "At present, China has shifted from commodity trade to data and new production factors to drive economic growth. For example, in Financial innovation, technological innovation, biomedicine, artificial intelligence and low-carbon new energy, China has huge development potential. Strengthening bilateral cooperation in these areas reflects the high-quality upgrading of China Singapore trade cooperation."

How to Upgrade the China Singapore Free Trade Agreement?

During the official visit of Prime Minister Lee Hsien Loong of Prime Minister of Singapore to China, China and Singapore jointly issued a joint statement on the establishment of a comprehensive and high-quality forward-looking partnership. Since then, China and Singapore have officially upgraded their relations and entered a new stage of diplomatic relations between the two countries.

At the same time, substantial progress has been made in the cooperation between the two sides in the field of economic and trade. After more than two years of negotiations, on April 1st, China and Singapore confirmed the substantive completion of the subsequent negotiations for the upgrade of the bilateral free trade agreement. It is noteworthy that the upgrade of the China Singapore Free Trade Agreement is also the first time in China's free trade agreement practice that China has adopted a negative list model to make commitments to service and investment openness.

Zhou Shixin, Director of the Peripheral Diplomacy Department of the Foreign Policy Research Institute of the Shanghai Institute of International Studies, told 21st Century Economic Report reporters that the negative list model makes it easier for institutions from both China and Singapore to consult and grasp when fulfilling their service and investment commitments, and also facilitates the use of relevant rules by enterprises from both sides to promote economic, trade and investment relations between the two sides.

In Wang Yiwei's view, adopting the negative list model has symbolic significance. "China has proposed joining the CPTPP, which means participating in global division of labor with higher standards. The negative list model advocates promoting equal treatment and fair competition among domestic and foreign enterprises, so China uses the upgrading of the China Singapore Free Trade Agreement as a breakthrough point to prove to the outside world our high-quality development and high-level openness

The outside world is also very concerned about which aspects of the China Singapore Free Trade Agreement have been specifically upgraded. It is reported that on the basis of the original upgrade agreement, China and Singapore have further improved their commitment to service trade and investment openness, added new telecommunications chapters, and incorporated high-level economic and trade rules such as national treatment, market access, transparency, and digital economy. Both sides also jointly confirmed that the opening measures in the fields of trade in services and investment will not be withdrawn, and promised to each other through an agreement that the "open doors are getting bigger and bigger".

Speaking of the substantial benefits after the upgrade, Fan Lei, president of the public diplomacy of Shandong Youth Political College and a researcher of the Chahar Society, told the 21st Century Economic Herald that the completion of the follow-up negotiations on the upgrade of the China Singapore Free Trade Agreement is a common commitment of both sides to expand economic cooperation and maintain free trade. When the "upgraded" China Singapore Free Trade Agreement comes into force, enterprises of both sides will have more opportunities to enter each other's market, The investment and service trade between the two countries will also have greater openness and certainty.

Since the signing of the China Singapore Free Trade Agreement in 2008, it has undergone two upgrades, and the cooperation areas and levels between the two sides in the fields of investment and economic and trade continue to improve. Fan Lei believes that the completion of subsequent negotiations this time will provide more commercial friendly, free, and transparent policies for China and Singapore, enhance trade and investment market access, and bring more benefits to the overall economic and trade development of the two countries, relevant enterprises, and the people. In addition, he believes that in the future, China and Singapore will continue to maintain a regional economic, trade and investment environment based on multilateral trade rules, based on a common development concept.

In the context of increasing instability in the international situation, upgrading the free trade agreement between China and Singapore can be said to be a challenge and a model for international economic cooperation. Zhou Shixin believes that China and Singapore have taken the lead in completing subsequent negotiations on upgrading the free trade agreement, which not only means that both sides have reached a broad consensus in promoting trade and investment liberalization and facilitation, It can also lead the direction and content of negotiating and signing free trade with other countries in the future.

Bilateral trade cooperation continues to improve and upgrade

Since the signing of the Free Trade Agreement in 2008, China Singapore's economic and trade performance has been commendable. It is reported that Singapore is China's fifth largest trading partner among ASEAN countries. Since 2013, China has been Singapore's largest trading partner for nine consecutive years.

According to Huacheng Import and Export Data Observation, the bilateral trade volume between China and Singapore in 2022 was $115.13 billion, a year-on-year increase of 22.8%. Among them, China's export volume was 81.17 billion US dollars, a year-on-year increase of 47.8%; The import volume was 33.96 billion US dollars, a year-on-year decrease of 12.5%.

"The trade between China and Singapore is mostly entrepot, which is quite considerable in terms of total volume. Singapore is the largest source of foreign investment in China, and the investment from Singapore has also promoted the development of some Sino Singapore cooperation projects." Zhou Shixin said that the demonstration projects jointly built by the two countries, such as Suzhou Industrial Park, Tianjin Eco City, Guangzhou Knowledge City and Sino Singapore (Chongqing) Strategic Connectivity, have made great progress, Promoted China Singapore economic and trade relations, Huacheng Import and Export Data Observation Report.

Wang Yiwei believes that there are not only transit trade between China and Singapore, but also new forms of trade such as service trade and e-commerce. Therefore, Singapore has formulated its 2030 vision in advance, starting from the four pillar industries of service industry, manufacturing industry, trade, and enterprise, to ensure its advantages in service and other fields and form synergies in these fields.

In fact, while negotiating the upgrade of the free trade agreement, China has also put forward prospects for the future development direction of the two countries. The Chinese side proposes to strengthen the "innovation driving force" of cooperation between China and Singapore, such as tapping into new potential for cooperation in fields such as digital economy, artificial intelligence, e-commerce, etc., and building a "full chain" cooperation model for talent cultivation and exchange, technology enterprise incubation, joint research and development, and industrial landing, to help improve and upgrade important cooperation projects between the two countries. By enhancing the role of the production and supply chain hub in the land sea new channel region, we aim to create an international platform through bilateral cooperation between China and Singapore, providing more "cooperation demonstration capabilities" for the economic recovery of regional countries.

Taking the digital economy as an example, this is one of the areas where China Singapore cooperation has made rapid progress in recent years. In September 2021, China officially applied to join the Digital Economy Partnership Agreement (DEPA). In the upgrade negotiations of the China Singapore Free Trade Agreement, new economic and trade rules in the field of digital economy have been added, which is expected to lay the foundation for the digital economy cooperation between the two countries.

As the initiator of DEPA, Singapore has actively promoted the DEPA process in recent years. Singapore is setting rules in the direction of digital globalization, exploring and promoting new production factors, new growth methods, and cooperation models. "Wang Yiwei believes that actively exploring cooperation in the digital economy is an important manifestation of Singapore's" small country, big wisdom ". Huacheng Import and Export Data Observation Report.

In addition to the digital economy, Fan Lei believes that Singapore has a pioneering advantage in fields such as biopharmaceuticals, smart cities, and green development, while China's photovoltaic power generation and electric vehicle industries are leading globally and align with Singapore's development philosophy. Therefore, the prospects for cooperation between the two sides in these fields are very broad, China and Singapore are still the most dynamic economic cooperation partners under the RCEP framework. The deep cooperation between China and Singapore in multiple fields not only injects impetus into future economic and trade cooperation between the two countries, but also fully exerts radiation and demonstration effects, promoting the comprehensive and sustainable development of China ASEAN and Singapore ASEAN cooperation relations