China's weakening economy is "not good news" for Singapore but the city-state should stay nimble and take advantage of other faster-growing markets such as Asean and possibly Africa to counter the impact of the slowdown, said Senior Minister of State for Trade and Industry Lee Yi Shyan.
"If an abrupt slowdown happens in China, we'll be concerned, but this is not something we can control so we have to do what we can to build resilience in our economy," he added. He was speaking yesterday on the sidelines of the opening day of the 12th China-Asean Expo, an annual trade event held in Nanning, the capital of the southern Guangxi region.
"A stable, growing and prosperous Asean is very important for our economy. In the end, we must have the ability to adjust and take advantage of markets that are growing faster," Mr Lee said.
BUILDING A RESILIENT ECONOMY
If an abrupt slowdown happens in China, we'll be concerned, but this is not something we can control so we have to do what we can to build resilience in our economy. A stable, growing and prosperous Asean is very important for our economy. In the end, we must have the ability to adjust and take advantage of markets that are growing faster.
SENIOR MINISTER OF STATE FOR TRADE AND INDUSTRY LEE YI SHYAN, on how China's economy might affect Singapore
This can be done, for instance, by building on the Asean Economic Community - expected to be declared at the end of this year - that will reduce trade barriers and streamline Customs procedures, all of which reduce trade friction, he added.
China is the largest market for Singapore's non-oil domestic exports, accounting for about 15 per cent of such exports last year, but Chinese data continues to point to weakness across large swathes of the world's No. 2 economy.
This has led to doubts about Beijing's ability to meet its growth target of 7 per cent this year.
Already, some Singaporean firms, especially those in the export sector, have felt the impact of the Chinese slowdown, Mr Lee said, adding that sectors such as transport, including airlines and shipping companies, might also find themselves susceptible.
But China's Executive Vice-Premier Zhang Gaoli played down growth concerns during his speech at the expo's opening ceremony, emphasising the resilience and huge potential of the US$10 trillion (S$14 trillion) Chinese economy even while he acknowledged downward pressures. "Not only does China still have large room for manoeuvring, but it also has abundant foreign exchange reserves," he pointed out.
"I can responsibly say that China's growth remains in the reasonable range and that long-term fundamentals of stable and positive growth have not changed. We have the confidence and ability to maintain the healthy development of the economy," he stressed.
Mr Zhang also touched on the need to deepen China-Asean trade ties, with the goal of completing negotiations for an upgraded free trade agreement by this year, and pushed for greater maritime cooperation amid tensions over territorial disputes in the South China Sea between China and some members of the 10-nation grouping.
He urged greater political trust and the convergence of strategies so that the China-led "One Belt, One Road" initiative can enter a new phase of cooperation.
First proposed by President Xi Jinping in 2013, the initiative is meant to spur economic development along the overland Silk Road economic belt and a maritime Silk Road that connects China with South-east Asia, Africa and Europe.
On the role that Singapore can play in this strategy, Mr Lee said the Republic can combine its expertise, such as in port building, and its resources as a financial hub to turn infrastructure needs into investment projects.