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China eyes closer financial ties with Singapore
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FINANCIAL cooperation between China and Singapore is expected to go from strength to strength as wide-ranging agreements were reached during President Xi Jinping’s visit to the city-state over the weekend.
The two countries agreed to promote the use of yuan in bilateral trade and investment, improve the use of the yuan clearing bank in Singapore, and steadily advance cross-border yuan business, according to a joint statement issued at the end of Xi’s visit.
The two sides will work toward the early opening of the Asian Infrastructure Investment Bank.
They will also work together to make Singapore a financial service center for regional cooperation on industrial capacity as China pursues its Belt and Road initiative.
An upgrade of the seven-year-old free trade agreement is planned, along with a third government-to-government project, in Chongqing.
Analysts believe closer financial cooperation is both necessary and achievable through “a partnership of all-round cooperation keeping with the times.”
Improved financial cooperation with Singapore will increase the global use of the yuan and improve its chances of being included into the International Monetary Fund’s Special Drawing Rights basket, said Sang Baichuan, dean of the International Economic Research Institute, University of International Business and Economics.
Singapore can cement its position as a financial center by engaging with China in yuan businesses. Singapore’s yuan ambitions match perfectly with China’s objectives, he said.
Singapore faces new development opportunities through the new government-to-government project in Chongqing, following successful projects in Suzhou and Tianjin. The new project in Chongqing will serve the needs of the Belt and Road initiative and a proposed economic belt along the Yangtze River.
With its mature capital market and expertise in infrastructure financing, Singapore can play an important role in infrastructure development in Asia, said Bai Ming, a researcher at an institute under the Ministry of Commerce.
The Singapore branch of the Industrial and Commercial Bank of China became the yuan clearing bank there in 2013, and last year, Singapore overtook London to become the biggest offshore yuan center outside Hong Kong, with yuan settlement of 37.5 trillion yuan (US$5.9 trillion).
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