An upgraded China-Singapore free trade agreement (FTA) with high standards can send a strong signal to Singapore and the rest of the world of Beijing's determination to push through tough economic reforms, said Singapore's Senior Minister of State Josephine Teo.
It will also catalyse the progress of other regional trade deals such as the Regional Comprehensive Economic Partnership (RCEP) - a proposed 16-nation free trade area that would be one of the world's biggest if sealed - and an upgraded China-Asean FTA, she said.
"Should China use high standards in the upgrade of its largest foreign investor's FTA, it will send a strong signal to Singapore and other international investors, showing China's determination in economic reforms," Mrs Teo told participants of the inaugural China-Singapore Executive Forum in Beijing yesterday.
Singapore is China's largest foreign investor, with US$7.3 billion (S$10.1 billion) worth of investments in 2013.
The one-day event was organised by influential Chinese financial magazine Caixin and SingCham - the Singapore Chamber of Commerce and Industry in China.
Mrs Teo also noted that with negotiations recently concluded on the Trans-Pacific Partnership (TPP) - a trade pact involving 12 nations that make up 40 per cent of the global economy - this gives added impetus for talks on the RCEP and upgraded China-Asean FTA.
The TPP includes Pacific Rim countries such as the US, Japan and Singapore but excludes China.
The RCEP, first conceived by Asean and which includes Australia, China, India, Japan, South Korea and New Zealand, would account for almost 30 per cent of the world's gross domestic product.
While the Chinese economy is facing some turbulence in the short term with growing concerns among observers over asset bubbles and rising labour costs, its prospects are still bright, Mrs Teo noted in her keynote address.
Singaporean firms can capitalise on their strengths in areas such as financial services, medical treatment, transport and education to take part in the transformation of China's US$10 trillion economy, she said. Developing green and smart cities are also areas where Singaporean firms have a good track record.
"As the Chinese economy shifts towards tertiary industries, urbanisation and domestic consumption will become the main thrusts of China's economic growth in the next decades," Mrs Teo said.
"The increasing number of middle-class consumers will require more and better quality products and services. Singaporean firms have an advantage in these areas."
The city state's businesses should also look for opportunities in China's western region as consumer demand grows there, she added.
With the Beijing-led "One Belt, One Road" (Obor) initiative also encouraging Chinese firms to go global, Singapore, with its strength as a financing hub, is well-positioned to serve as a platform for these firms to enter the South-east Asian market, and eventually the world, Mrs Teo pointed out.
Proposed by President Xi Jinping in 2013, the initiative is aimed at boosting trade and investment along the "Silk Road Economic Belt" linking China to Europe, and the "21st Century Maritime Silk Road" connecting China with South-east Asia, Africa and Europe.
In his address, China's vice- finance minister Zhu Guangyao acknowledged Singapore's "support, foresight and cooperative spirit" for one of the components of Obor, the Asian Infrastructure Investment Bank (AIIB), which is meant to help fund infrastructure building along the route.
He stressed that the AIIB is not meant to replace the current international financial order.
"We must protect reform and enhance the current international financial framework to better support... the economic development of developing countries ," Mr Zhu said.