Foreign Policy Research Institute A Nation Must Think Before it Acts The Odd Couple: Singapore’s Relations with China
The Odd Couple: Singapore’s Relations with China

The Odd Couple: Singapore’s Relations with China

In November 2016, China seized nine armored vehicles that Singapore had shipped through Hong Kong on their return from a training exercise on Taiwan. A day after the seizure, China’s foreign ministry announced that “the Chinese government has always firmly opposed countries that have diplomatic ties with the Chinese mainland to conduct official exchanges of any kind with Taiwan, including military exchanges and cooperation.” It was the first time China had ever publicly rebuked the Southeast Asian city-state. It also marked a low point in Singapore’s relationship with China, which has long been a special one despite the dramatic size imbalance between the two countries.

Oh So Special

As to why China and Singapore developed a special relationship can be traced back to the latter’s spectacular economic growth after its independence in 1965. With the exception of three years, Singapore’s economy would grow at an annual rate of over six percent for three decades (and over ten percent for half that time). As the title of former Singaporean Prime Minister Lee Kwan Yew’s memoir recounted, Singapore soared “from third world to first.” Throughout that period, Lee’s political party remained (and still remains) at the helm. To outside observers, Lee’s Singapore became the exemplar of how to create economic prosperity under one-party rule.

That appealed to China, whose communist party in the late 1970s had started a long economic reform process to turn its brand of communism into what would become known as “socialism with Chinese characteristics.” Chinese Vice Premier (and soon-to-be paramount leader) Deng Xiaoping even travelled to meet Lee in 1978. Reciprocating, Lee would eventually visit China 33 times. The two leaders, who happened to share a common Hakka Chinese heritage, became good friends. In 1992, Deng went so far as to describe Singapore as the model China should follow for development. After Deng’s retirement, Lee became close with Jiang Zemin, too. Even today, many Chinese still recognize Lee’s contribution to shaping China’s economic success.

With such close personal relationships with China’s top leaders, it is no wonder that Singaporean leaders felt as if they could always work out problems with Beijing, often discretely. Singapore has prided itself on its “quiet, friendly but firm style of diplomacy” with China. However, as China’s economic rise accelerated and its military heft grew, the two countries began to drift apart. At the same time, Singapore drew closer to other major powers, like India, Japan, and the United States. In fact, after Thailand’s military coup in 2014 and the Philippines’ election of Rodrigo Duterte as its president in 2016, Singapore could be considered America’s closest ally in the region.

Friend or Foe

Even so, small countries like Singapore rarely feel safe. Generally, the smaller the country, the more concerned it is about its larger neighbors. As a result, Singapore has remained ever vigilant. Despite the end of the Cold War, it has continued to conscript its young men into national service for two years and spend over 20 percent of its national budget on defense.

So, unsurprisingly, Singapore became concerned in 2004 when Chinese Chairman Hu Jintao first spoke of China’s “Malacca Strait dilemma”—a strategic vulnerability arising from China’s lack of control over the waterway through which 80 percent of its oil imports flowed.[1] That strait also happens to be next to Singapore and its economic lifeline. Hu’s comments suggested that China could one day feel the need to remedy the situation. China’s island-building and increased naval activity in the South China Sea have not been reassuring. In one troubling incident, a Japanese helicopter carrier sailing to Singapore spotted a Chinese submarine lurking near the entrance to the strait in 2018.

Hence, Singapore has kept up its guard. Owing to its wealth, it is the only Southeast Asian country that has been able to keep pace with China’s burgeoning military power. Singapore fields respectable numbers of the latest military equipment, which will include a dozen American-built F-35 fighters and four German-built Invincible-class (Type 219SG) attack submarines in the coming years. Together with 100 other F-15 and F-16 fighters and two Archer-class attack submarines (both modernized with air-independent propulsion systems), Singapore’s armed forces are well postured not only to defend Singaporean territory, but also to do so in depth with power projection capabilities that include airborne early warning aircraft, aerial refueling tankers, and amphibious lift.

Not stopping there, Singapore has permitted the United States to station on a rotational basis one of its littoral combat ships at Changi Naval Base since 2013 and to fly P-8 anti-submarine warfare aircraft from Paya Lebar Air Base since 2015. Singapore even built one of the few piers in Southeast Asia with a draft deep enough to accommodate an American aircraft carrier. No doubt having a U.S. carrier battle group periodically in port serves as a useful deterrent. All in all, Singapore has attained a remarkable degree of physical security.

Of course, gaps in Singapore’s defenses still exist, most notably against cyberattacks. In 2018, foreign hackers compromised the health records of a quarter of all Singaporeans. Interestingly, though, the hackers specifically and repeatedly targeted the records of Singapore’s prime minister. A year later, Symantec, a global computer-security firm, traced the cyberattack to a state-sponsored espionage group. While the firm did not disclose where the group was based, most suspect it was China.

Customer or Competitor

Ultimately, however, China’s real challenge to Singapore is likely to come from a different direction. Central to Singapore’s “from third world to first” ascent was its ability to leverage its location astride the Malacca Strait to become East Asia’s leading maritime trading center and serve as a major base for high-tech manufacturing. With such capabilities in place, Singaporeans initially welcomed China’s economic rise. Greater economic growth in China meant more maritime trade and profits for Singapore. Meanwhile, Singapore’s high-tech manufacturing plants churned out electronic components to serve an ever-greater number of Chinese low-cost assemblers, which cobbled them together into finished products.

But things change. Now, China has designs to remake the world’s trade flows through its Belt and Road Initiative (BRI). That could have long-term ramifications for Singapore, since the BRI envisions a new network of trade routes radiating from China, mostly over land across Central Asia and continental Southeast Asia rather than through the Malacca Strait. At the same time, some coastal Chinese cities have begun to challenge aspects of Singapore’s dominance as a maritime trading center. One such city is Zhoushan. Already the fourth busiest container port in the world and situated only 100 km from the busiest one (Shanghai), Zhoushan has already set to work building the needed infrastructure to capitalize on its location and capture a big chunk of Singapore’s marine fueling business.

Yet another challenge to Singapore has been China’s “Made in China 2025” industrial policy. Launched in 2015, the policy has sought to coordinate the use of government subsidies, state-owned enterprises, intellectual property acquisitions abroad, and forced technology transfers from foreign companies to turn China into the world’s high-tech manufacturing leader. Specifically, China aims to be 70 percent self-sufficient in several targeted high-tech industries. To do so, it has been building the capacity to ramp up production of commonly used electronic integrated circuits. Since in 2017 those circuits represented over 16 percent of Singaporean exports (mostly to China), Singapore may be among the first to feel the heat from China’s economic tinkering.

Consequently, if the BRI and “Made in China 2025” come to full fruition, future Chinese growth may come at Singapore’s expense. That is a possibility not lost on some Singaporeans. Analysts have already begun to wonder how much longer Singapore can stay competitive. But for Singapore, there is little doubt that keeping trade briskly flowing through the Malacca Strait and staying near the top of the high-tech manufacturing value chain are vital to its national interests.

Not So Special Anymore

Almost a decade has elapsed since Lee passed away. Since then, China’s gross domestic product has nearly doubled, and political power within China has become far more centralized. In contrast to his recent predecessors, China’s current leader, Xi Jinping, cuts a stronger and more decisive figure. He has pursued his various agendas with resolve. That is also the way he has dealt with Southeast Asian countries over the last half decade. And it has been over that time that China seems to have come to regard Singapore as more like any other Southeast Asian country, rather than something special.

That much was evident from China’s seizure of Singapore’s armored vehicles. At the time, some speculated that the seizure was China’s way of expressing its displeasure over Singapore’s hosting of U.S. military forces or its close relationship with Taiwan. Indeed, Singapore is the only Southeast Asian country with an economic partnership agreement with Taiwan. But China could have expressed its displeasure at any time; it need not have waited for the seizure. In any case, China’s reaction to the event was not out of line with how it could have been expected to react had any other Southeast Asian country been involved. While Singaporean leaders might have hoped for some discretion due to their special relationship, they received little. Singapore ended up enduring two months of negotiations before China released its vehicles.

Singapore’s relationship with China has evolved. It is not as cozy with China as it once was—not because China seeks to dominate Singapore, but rather because China no longer sees Singapore as particularly special. China may always give a bit more leeway to Singapore, a country with an ethnic Chinese majority, but that leeway has limits, as the ethnic Chinese residents of Hong Kong have learned.

[1] Ji You, “Dealing with the Malacca Strait Dilemma: China’s Efforts to Enhance Energy Transportation Security,” National University of Singapore East Asia Institute Background Brief, No. 329, Apr. 12, 2007.

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