BEIJING - Singapore and China are working to step up collaboration in five key areas in the financial sector, Deputy Prime Minister Tharman Shanmugaratnam said on Thursday (June 29) at the end of his five-day visit to China.
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 renminbi 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 B&R related infrastructural projects through Singapore, Mr Tharman 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 Southeast 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 the Chairman of the China Banking Regulatory Commission (CBRC) Guo Shuqing and the Governor of the People’s Bank of China Zhou Xiaochuan on Thursday.
“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,” he said.
“I got quite a forthright sense of that (from the meetings).”
Both countries 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 renminbi clearance.
Singapore overtook Britain in February 2014 to become the second largest offshore RMB clearing centre after Hong Kong, but fell back to third place early last year.
Latest data shows that in March, Singapore handled 4.19 per cent of the offshore RMB payments market compared to Britain’s 5.66 per cent.
Fourth 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 initiative.
“We’d 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,” said Mr Tharman.
Finally, Singapore and China are looking at working together to training officials from B&R countries in the area of finance, such as project preparation and project finance.
These five areas aside, 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.
Mr Tharman’s five-day visit to China also saw him meet top national and provincial leaders such as Premier Li Keqiang, Vice-Premier Zhang Gaoli, Tianjin Party Secretary Li Hongzhong and Liaoning Governor Chen Qiufa.
What came through from the meetings was the durability of ties that have been built over a long time, 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,” he said.