Effect of Slowdown in China's Economic Growth on Singapore's Economy, Job Situation and Investments

Mr Desmond Choo asked the Minister for Trade and Industry in view of China's economic growth at its lowest in 30 years (a) what is the near-term impact on Singapore's economy and jobs situation; (b) how will it alter Singapore's investment in China and Singapore's participation in the Belt and Road Initiative; and (c) what are the future measures to diversify our economic exposure.

The Chinese economy grew by 6.1% last year. Even though this is its lowest rate of growth in the past 30 years, it is still higher than the average growth rate of 1.7% among advanced economies, and 5.6% among emerging and developing economies in Asia.1 China's slowing rate of growth is not surprising as its economy matures, and shifts towards a more sustainable, consumption-led model of growth. Looking ahead, China's GDP growth is projected to moderate slightly to 6.0% in 20202, although there remain downside risks such as the potential economic impact of the novel coronavirus.

China's slower growth is not expected to have a large impact on the Singapore economy. While China is our largest trading partner and top destination for our outbound investments, it does not account for a disproportionately large share of our well diversified economy. For instance, China accounts for 13.4% of our total trade, compared to other major trading partners like Malaysia (11.1%) and the US (10.3%). We will continue to ensure that our economic relations with foreign partners are balanced and diversified, and that we are not over-exposed to any one foreign country.

We will continue to strengthen our economic relations with China, as well as our other trading partners. Bilaterally, we have been working closely with China to deepen our economic linkages. For example, the China-Singapore Free Trade Agreement (CSFTA) Upgrade Protocol that entered into force on 16 October 2019 keeps the agreement up to date by improving trading rules and investment regimes for our companies.3 We are also cooperating with China on international initiatives like the Belt and Road Initiative (BRI).

Singapore is an early supporter of the BRI. This year marks the 5th anniversary of the China-Singapore (Chongqing) Connectivity Initiative, which is a priority demonstration project under the BRI that brings Southeast Asia and China closer together. In addition, Singapore can also leverage our position as a trusted financial hub, to enhance the sustainability of BRI projects by intermediating financial needs in Asia to tap on opportunities in third country markets.

Even as we continue to deepen our engagement with China, as a small and open economy, we must remain open and connected to the rest of the world. We currently have an extensive network of 25 Free Trade Agreements (FTAs) with 64 trading partners which collectively account for more than 85% of global GDP and more than 90% of Singapore's trade. We will continue to expand and diversify our trade linkages through new FTAs with economies such as the Eurasian Economic Union, the Pacific Alliance, and the Southern Common Market in South America (Mercosur). We will also pursue new forms of partnership to facilitate digital economy activities and digital trade. We have recently concluded negotiations on our first Digital Economy Partnership Agreement (DEPA) with New Zealand and Chile, and have also embarked on bilateral DEA negotiations with Australia.

To help Singapore companies venture into overseas markets and take advantage of these FTAs, we will continue to support companies in going overseas and conquering new markets. We will enhance our support for companies and grow our network of overseas centres to provide Singapore companies assistance in business advisory services, business matching and market set-up overseas.