The upgraded China-Singapore free trade deal will bring opportunities to firms here as the mainland moves from a manufacturing- based economy to a services one.
Analysts note that services are becoming an increasingly important part of the mainland's economic make-up, a shift that should benefit Singapore, given the strength of the sector here.
The catalyst could come from moves to broaden the existing free trade agreement (FTA) struck between China and Singapore in 2008, an initiative set in motion last Saturday during Chinese President Xi Jinping's visit here.
An expanded pact will give Singapore companies greater protection for their investments in China, fewer barriers to investing in the country and more access to its services sector.
An expanded pact will give Singapore firms greater protection for their China investments, fewer barriers to investing in the country and more access to its services sector.
Services contributed to slightly more than half of China's economy in the first nine months of this year, official data shows, and are set to assume an increasing share of its GDP as the country moves away from a reliance on manufacturing.
"With Singapore's comparative advantage in service industries, it will be beneficial to be able to access this increasing market," said Assistant Professor Chen Xiaoping of Nanyang Technological University's economics division.
DBS economist Irvin Seah pointed out that the trade deal now is only "marginally" more than China's commitment to the World Trade Organisation agreement. "There is significant room for liberalisation in the services chapter," he said.
The trade agreement uses a positive-list approach where sectors committed for more liberalisation are detailed.
Mr Seah felt the upgraded deal could adopt a negative-list approach, where all sectors are included unless otherwise mentioned. Freeing up the services sector for Singapore firms will bring benefits to China as well, he said.
"Allowing smaller and more progressive foreign service providers into the market can inject competition to help upgrade Chinese companies in that sector," he said, and this could trigger further reforms.
The investment chapter in the current trade deal refers to China's commitments under its free trade agreement with Asean, which means there is again "room for deeper commitments from both sides", said Mr Seah.
Dr Chen said China has been restrictive "for a long time" when it comes to foreign investment.
"Capital market reform is the most important part of China's economic reform. Among many things, foreign investment regulation is one, if not the most, important aspect," he said.
He felt that the trade agreement is the best platform to experiment with new investment regulations.
SP Chemicals chief executive Chan Hian Siang told The Straits Times he is looking to expand his business in China beyond his chemical manufacturing factory.
"We welcome the upgraded (trade agreement) which could include new areas of investment. This may give us opportunities to invest in the industries that are currently restricted," he said.
Mr Chan hoped the new agreement will further relax capital flows between Singapore and China so he could borrow cheaper offshore yuan from Singapore banks to expand his factory.
While China has opened up its cross-border yuan channels with Singapore in recent weeks, only companies based in Suzhou, Tianjin and now, Chongqing, are able to access yuan funding from Singapore banks. This excludes Mr Chan's factory, which is in Jiangsu.
However, Mr Seah said that while the issue of currency flow could be included in the talks, it could also be dealt with directly by the central banks of both countries. "This way, they can be more responsive to global developments."