Geopolitical Economic Tensions
Regarding the concept of geopolitical context, Singapore seems to have mattered in this move. This is such that Singapore is located at a crucial point in geostrategic terms. This is such that it is sandwiched between the Pacific Ocean and the Indian ocean. As such, being; located in the indo-pacific region presents challenges for Singapore because the region is vital for both China and the United States (Atalayar, 2021). As such, Singapore has found itself in the middle of the US-China trade aw as each nation is constantly trying to appeal to other nations. This has hurt the Singaporean economy (Atalayar, 2021). However, contrary to other nations that have started choosing between doing trade with Us or China, Singapore has taken a different approach by remaining neutral. As such, in the statement by Singapore’s foreign minister Vivian Balakrishnan categorically stated that Singapore would continue to be relevant and valuable; however, the minister further claimed that any nation in the ongoing rivalry between USA and China would not use Singapore.
Although Singapore is not a formal ally of the U.S., the two have been enjoying a broad partnership for various decades. as such, Singapore has always viewed the united states as an essential ally whose presence in the region is important as it contributes to peace, prosperity, and stability which eventually translates into a strong economy in the region (Atalayar, 2021). Singapore’s decision to remain neutral and view the U.S. as an ally started during the cold war when it implemented its non-alignment policy in 1965. This is such that the policy enabled Singapore to maintain a strong relationship with U.S., Russia, and the Soviet Union. Ever since, the U.S. has viewed Singapore as a strategic partner that will help it end communism in the Asian region (Atalayar, 2021). On the other hand, Singapore has always viewed the U.S. as a partner that w has helped it to attain its immediate objectives. The relationship has been great, making Singapore the 17th largest trading partner of America.
On the other hand, Chin has also had a positive relationship with China as the two’s interests tend to align dues to their economic interdependence and cultural affinity. As such, the two have a rich history in that Singapore was used as a model for China’s development after it abandoned Maoist autarky, and Singapore offered training to at least 55 000 Chinese officials (Atalayar, 2021). Ever since, they have continued to have a good relationship in that in 2019, Singapore’s largest trading partner was China, as most of Singapore’s Foreign Direct investment came from China. However, it was much smaller than America’s cumulative investments in Singapore. Also, Singapore has continued to be the main foreign investor in China since 2013 (Atalayar, 2021). The partnership has been good to the extent that both Singapore and Chain a introduces work program which negotiated for a free trade agreement between the two nations. Hence contrary to common beliefs, Singapore has been neutral when conducting trade with China and the U.S. as it has formed a diplomatic and equilibrated partnership with U.S. and China and, in the process, avoided a hybrid war that would adversely affect its economy.
Analysis of Bilateral Trade Data
US and Singapore have a Free Trade Agreement (FTA), which was implemented in 2004 and has made Singapore the U.S. largest trading partner in southeast Asia (U.S. Department of State, 2021). As such, the FTA between the two nations has made Singapore support about 215,000 jobs from the USA, with the bilateral goods and services between America and Singapore exceeding $ 93B in 2020 region (U.S. Department of State, 2021). This is such that in 2020 alone, the U.S. exports to Singapore were valued at $25.9 billion, with Us mainly supplying gas turbines ($2.59B), crude petroleum ($1.29), and integrated circuits (I.C.) ($1.41B) (Oec. world, 2021). on the other hand, Singapore’s exports to the U.S. were estimated to be $27.6b as of 2020. In doing so, the main product that was exported to the U.S. were package medicaments ($2.11b), Gold ($3.22B), and Edible preparations ($3.13B) (Oec. world, 2021). Singapore also exports various services to the U.S. in that as of 2015, about $132B were exported to the U.S., with transportation valued at $ 6.93B, insurance services valued at $156M, and other business services estimated to be $5.87 B. Furthermore, based on further analysis, Singapore’s exports have been increasing at an annual rate of 1.29%, with the total export from Singapore To the USA increasing from $20.1B to $27.6B in 1995 and 2020 respectively (Oec. world, 2021). On the other side, exports from the U.S. to Singapore have increased at an annual rate of 1.94% within the past 25 years. This is such that Us exports to Singapore in 1995 were valued at 16 B and increased to 25.9B as of 2020.
Similar to the U.S., Singapore also has an FTA with China. This is such that FTA signed between Singapore and China has enhanced bilateral trade between the two nations, allowing Singapore to access a huge Chinese market (Enterprise Singapore, 2023). This is such that as of 2020, the amount of export from China to Singapore was approximately valued at $54 B, with the main products being refined petrouluemn9 ($ 4.88B), Integrated Circuits ($ 5.55B) and broadcasting equipment ($3.97B) (Oec. world, 2021). On the other hand, as of 2020, Singapore exports to Chain were valued at $42.9B, with major products being ethylene polymers ($2.25B), I.C. ($10.6B) and Machinery having individual functions ($ 1.86B) (Oec. world, 2021). As for the service Singapore exports in terms of services to China as of 2015 was valued at $ 7.08B, whereby the key services were royalties and license fees ($ 392M0, other business services ($1.83B) and transportation ($4.57B) (Oec. world, 2021). As such, n a period of 25 years, Singapore’s exports have constantly been increasing at an annual rate of 11.1%. In 1995 the exports were valued at $3.11b, and as of 2020, they were valued at 42.9B (Oec. world, 2021).. on the other hand, Chinese exports for the same period have increased same annual rate increasing from $ 3.89B to 54B.
Analysis of Bilateral Investments Data
Investments in a country are important, and Singapore has been voted among the best countries to invest in, as it had a Global FDI of USD 1.58 trillion in 2021 (Trade Club, 2023). The USA and China have a substantial share of investment in Singapore due to its free market economy and open investment policies (Trade.gov, 2022). This is such that as of 2020, the USA, through FDI, had invested stock worth $ 270.8 billion in Singapore (Ustr.gov, 2021). This was a significant improvement as its FDI in Singapore rose by 3.9% compared to 2019: manufacturing companies, nonbank holding companies and wholesale trade spearhead most U.S. investments in Singapore. More so, as of 2018, sales of services in Singapore from American companies were valued at $ 88.1B 2018 (Ustr.gov, 2021). On the other hand, Singapore’s FDI as of 2020 in the USA was valued at $ 27.3B, an increase of 3.8% from 2019 (Ustr.gov, 2021). As such, Singapore’s investments in the USA are spearheaded by wholesale trade, manufacturing companies and scientific, professional and technical services. The services sales from Singapore companies in the USA were valued at $ 6.8B (Ustr.gov, 2021). China also heavily invested in Singapore in that in 2020, the FDI from China to Singapore was valued at USD 5.92 B and increased to USD 8.41 B in 2021 (Textor, 2022). On the other hand, Singapore has also been investing heavily in China. As of 2020, FDI from Singapore to China was valued at 145 billion Singapore dollars (Currently equivalent to USD 109.21 B) (Statista, 2022). This was the biggest value in the whole period making Singapore the largest foreign direct in China.
Evaluation of Findings
Based on the above analysis of Singapore, it can be seen that Singapore, being sandwiched between the Indian and Pacific Oceans, has made it a key geostrategic area. As such, Singapore has found itself in the ongoing feud between USA and Chin regarding trading and investment partnership. Nonetheless, Singapore has maintained a neutral place whenever it engages the USA and China (Atalayar, 2021). Furthermore, from the evaluation of bilateral trade, Singapore has maintained a neutral perspective in that it has an FTA with both China and the USA, which allows the movement of goods in and out of Singapore from China and the USA. Also, when the two nations are evaluated in terms of investment. Singapore also invests a significant amount of its resources in the USA in the same manner the U.S. invests in Singapore. However, the amount of investment between Singapore and China is huge compared to Singapore’s investments in the united states. Although the volume of bilateral trade and investments between Singapore, and U.S. and China are different and are somehow neutral. The large volume of goods exchanges between China and Singapore is large, which can be explained by the fact that both China and Singapore are in close proximity and have close economic interdependence and similar culture.
Conclusion and Recommendation
The above report has evaluated Singapore’s trade and investment agreement policy with regard to geopolitical tension, bilateral trade data and bilateral trade investment. The report has established that Singapore has not taken any side in the ongoing US-China feud. Instead, it has maintained a neutral point and reasonably engages in trade and investments between the two without leaning toward any nations. Although the bilateral trade and investments between Singapore and China are huge. It happens due to the close economic interdependence and cultural affinity between the two nations rather than because of trade and investment bifurcation, as Singapore has a non-alignment policy. Therefore, it is vital that other nations emulate Singapore and establish diplomatically and equilibrate associations with great nations such as China and USA to avoid hybrid wars.
References
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Enterprise Singapore. (2023). China: Singapore’s bilateral agreements with China: Enterprise Singapore. Retrieved March 28, 2023, from https://www.enterprisesg.gov.sg/overseas-markets/asia-pacific/china/doing-business-in-china/singapores-bilateral-agreements-with-china
Oec.world. (2021). Singapore (SGP) and China (CHN) trade. Retrieved March 28, 2023, from https://oec.world/en/profile/bilateral-country/sgp/partner/chn
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Statista. (2022, June 24). Singapore: Direct equity investment in China. Retrieved March 28, 2023, from https://www.statista.com/statistics/1018060/singapore-direct-equity-investment-in-china/
Textor, C. (2022, November 28). China: Outward FDI flows to Singapore 2021. Retrieved March 28, 2023, from https://www.statista.com/statistics/720397/china-outward-fdi-flows-to-singapore/#:~:text=In%202021%2C%20the%20outflow%20of,around%208.41%20billion%20U.S.%20dollars.
Trade Club. (2023). Foreign Direct Investment (FDI) in Singapore. Retrieved March 28, 2023, from https://www.tradeclub.standardbank.com/portal/en/market-potential/singapore/investment
Trade.gov. (2022). Singapore – Investment Climate Statement. Retrieved March 28, 2023, from https://www.trade.gov/country-commercial-guides/singapore-investment-climate-statement
U.S. Department of State. (2021, October 06). U.S. relations with Singapore – United States Department of State. Retrieved March 28, 2023, from https://www.state.gov/u-s-relations-with-singapore/#:~:text=Bilateral%20Economic%20Relations,18th%20largest%20trading%20partner%20overall.
Ustr.gov. (2021). Singapore. Retrieved March 28, 2023, from https://ustr.gov/countries-regions/southeast-asia-pacific/singapore
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