The purpose of this paper is to analyze the commodity structure and the trade pattern of the bilateral trade and other economic cooperation between mainland China and Singapore in order to realize the prospects for possible cooperation in the future.
The main findings are as follows:
1) As a whole, during the period of 1985 to 1989, the trade structure of the two countries was quite stable, and the difference between the commodity composition of their exports and imports was decreasing. Furthermore, Singapore’s imports from mainland China were concentrated in several goods as opposed to mainland China’s imports from Singapore. However, the imports from both of them show a trend toward being more diversified.
2)During the observation period, most of the goods which Singapore imported from mainland China were raw materials. And the main goods that mainland China imported from Singapore belonged to the category of light industry machinery. It also should be noted that the pace of diversification of mainland China’s imports from Singapore is slower than that of Singapore’s imports from mainland China.
3)Though the number of goods that mainland China exports to Singapore, as a result of its comparative advantage, increased over time, its highly competitive goods held their superior position in Singapore which was not the case in America, Japan, and West Germany. In other words, the combination of comparative advantage goods that mainland China exported to Singapore and their rank are rather stable. They are also mainly concentrated in the natural resources and raw materials category.
4) It is also found that the use of commodity concentration (mainland China’s exports to Singapore) as an indicator for the substitute variable, Relative Comparative Advantage (RCA) (mainland China’s exports to Singapore), is unacceptable. It is also found that the demand in the Singapore market could very well affect the commodity structure of mainland China’s exports to Singapore.
5) The trade pattern between mainland China and Singapore is a weak form of a complimentary trade pattern. And mainland China is principally an exporter of natural resources and raw materials. As for manufacturing goods, mainland China has faced weakened competition since 1989.
6) Generally, the commodity structure of mainland China’s exports to Singapore follows along according to trade theory and comparative advantage. As for the exports from Singapore to mainland China, the restrictions on data collection limit the discovery of the actual trade structure of Singapore as a result of the exclusion of re-exports in the official data.
7) Direct investment is the main type that Singapore’s capital flow into mainland China. As a matter of fact, Singapore is one of the top six foreign countries/area that invest in mainland China. But the scale of Singapore’s investment firm is small, and the ratio between actual investment amount and contractual amount is lower than the other foreign investor. Furthermore, investor from Singapore was liked to invest in travel & hotel sector in the past, but recently manufacture, high-tech knowledge, and communication sectors are becoming the mainly interesting fields. On the contrary, mainland China doesn’t establish so much firm in Singapore, and most of them are belong to the field of financial, insurance & service.
8) Singapore is not the primary loaner of mainland China. There are only 0.5% – 3% of foreign loan that mainland China borrowed from Singapore. Besides, Singapore and mainland China doesn’t have deeply and closely cooperative relationship on construction and labor cooperation field.
Finally, it is suggested that Singapore and mainland China improve their level of technology, and quality, design, and packaging of export goods, etc., in order to break through the bottlenecks they face (a weak complementary and weak competitive trade pattern). Furthermore, they should enlarge their cooperative scope and strengthen their cooperation along other lines, except in the area of commercial trade, since it is hard for them to cooperate in commercial trade.
