Singapore-China ties to deepen in 5 key areas of finance

Deputy Prime Minister Tharman Shanmugaratnam meeting Chinese Vice-Premier Zhang Gaoli yesterday. During Mr Tharman's five-day trip to China, he met national and local leaders, including Premier Li Keqiang.
Deputy Prime Minister Tharman Shanmugaratnam meeting Chinese Vice-Premier Zhang Gaoli yesterday. During Mr Tharman's five-day trip to China, he met national and local leaders, including Premier Li Keqiang.PHOTO: XINHUA

Singapore and China are working to step up collaboration in five key areas of the financial sector, Deputy Prime Minister Tharman Shanmugaratnam said yesterday.

Signalling that cooperation between the two countries takes many forms, Mr Tharman said regulators and financial markets on both sides are looking to deepen links with the long-term objective of internationalising the yuan capital markets and providing sound financial underpinning to China's Belt and Road initiative (BRI) without causing short-term market instabilities.

The BRI is China's ambitious plan to build infrastructure such as railways and ports across a network of countries to recreate the Silk Road of yore.

The first area is in finding ways to expand project financing for BRI-related infrastructural projects through Singapore, Mr Tharman, who is also the chairman of the Monetary Authority of Singapore (MAS), told reporters at the end of his five- day visit to China.

Singapore is already a major location for this, with about two-thirds of project financing in South-east Asia arranged out of Singapore.

Regulators are also looking at ways for banks from both countries to grow their presence in each other's markets, said Mr Tharman, who met chairman of the China Banking Regulatory Commission (CBRC) Guo Shuqing and governor of the People's Bank of China (PBOC) Zhou Xiaochuan yesterday. The PBOC is China's central bank.

  • High level of bilateral interaction

  • BEIJING • Thirteen visits: That is how many trips Singapore's political office holders, from ministers of state to full ministers, have made to China in the first six months of this year.

    Deputy Prime Minister Tharman Shanmugaratnam used this number yesterday to illustrate the high level of interaction at the senior official level between Singapore and China, and the strength of bilateral ties.

    "It is a level of interaction that is not incidental, because the constant communication really helps keep up the relationship, and to keep finding ways to evolve it," he told reporters at a media wrap-up of his five-day trip.

    Visits also go both ways, he added, noting, for instance, that the Chinese Communist Party's Politburo member Zhao Leji was in Singapore last month. He co-chaired the 6th Singapore-China Forum on Leadership and also met Prime Minister Lee Hsien Loong.

    Ties between Singapore and China are also wide-ranging, including at the provincial and city level, said Mr Tharman, whose trip saw him meet national and local leaders such as Premier Li Keqiang, Vice-Premier Zhang Gaoli, Tianjin party secretary Li Hongzhong and Liaoning Governor Chen Qiufa.

    "Not everything in our bilateral cooperation is done through Beijing," said Mr Tharman, referring to the three provincial-level government- to-government projects the two countries have, including the Tianjin Eco-City, which he visited on this trip.

    What came through from his meetings was also the durability of bilateral ties that have been built over the years, said Mr Tharman.

    "The spirit of the meetings was that this relationship has been built up over many years, and both sides should cherish it and move ahead with full effort on our forward-looking agenda."

    Lim Yan Liang

"We are keen to see the Chinese banks grow their presence and activities in Singapore, for the region, as part of Belt-and-Road, and the CBRC too is keen to see the Singapore banks grow their operations in China. I got quite a forthright sense of that."

Both sides are also keen on strengthening capital market linkages between Singapore and China, as Chinese regulators recognise Singapore's distinct strengths here, such as in the bond markets, he added.

This is good news for Singapore, which has been in a neck-and-neck race with Britain in offshore yuan clearance. Singapore overtook Britain in February 2014 to become the second largest offshore yuan clearing centre after Hong Kong, but fell back to third place early last year. The latest data showed that in March, Singapore handled 4.19 per cent of the offshore yuan payments market compared with Britain's 5.66 per cent.

The fourth area is closer collaboration in the money markets, which will help investors to manage financial risks related to long-term investments that characterise many of the projects under the BRI.

"We would like to develop the long-term renminbi market instruments that can help investors manage the financial risks that are part and parcel of long-term borrowings and investments in infrastructure," Mr Tharman said, referring to the other name for the Chinese currency.

Finally, Singapore and China are looking at working together to train officials from BRI countries in the area of finance, such as in project preparation and project finance.

Mr Tharman said these initiatives did not come out of the blue, but are the result of an alignment in thinking between MAS and Chinese regulators, as well as trust and momentum built over time and successive visits from both sides.

Singapore and China are also working to conclude the upgrade to the China-Singapore Free Trade Agreement, with enhancements to areas such as investing, trade and market access. He expressed hope the new agreement will be signed by next year, the 10th anniversary of the signing of the original agreement.

"There was a good third round (of negotiations) two weeks ago, and both sides were willing to put some new things on the table (and) there was a willingness for this to be a substantive upgrade and not just a routine renewal," he said.

A version of this article appeared in the print edition of The Straits Times on June 30, 2017, with the headline 'S'pore-China ties to deepen in five key areas of finance'. Print Edition | Subscribe