SINGAPORE’S RELATIONS WITH CHINA, NORTH KOREA AND RUSSIA

SINGAPORE’S RELATIONS WITH CHINA

Singapore's founder Lee Kuan Yew visited China almost every year. After Deng's 1992 remarks to officials to "learn from the world and, especially Singapore, and do better than Singapore", thousands of Chinese officials started flooding the city-state for trips and to take part in university degree programmes in administration. his first speech as prime minister, current leader Lee Hsien Loong said he supported a “one China” policy with Taiwan.

The famous Chinese writer Xiao Qian told writer Paul Theroux, Singapore "is an economic miracle and a cultural desert. They have nothing but money. Their temples are like toys to us. They are nothing—they are not even real. Their Prime Minister Lee Kuan Yew is an Oriental posing as a Westerner. But he is not all bad. For example, he has a Confucian idea of the family in politics." He also said, "In Singapore, before anyone opens his mouth, he feels with his hands under the table to see whether there is a device that is listening."

Singapore and China established diplomatic relations in 1990. In 1989 Singapore had not yet established diplomatic relations with China, largely out of deference to Indonesia, the ASEAN state most concerned about China's intentions in the region. Indonesia's move to initiate diplomatic relations with Beijing in February 1989, however, was expected to clear the way for Singapore to follow. Regarding Indonesia's announced intentions, Singapore's First Deputy Prime Minister Goh Chok Tong stated in February 1989 that it was "logical" for Singapore "to follow suit"; however, he saw no need to move hastily because Singapore already had a cordial trading relationship with China. Singapore's trade with China in 1988 amounted to US$2.98 billion, a 27 percent increase over 1987. Reexports to China were up by 108 percent over the same period. [Source: Library of Congress, 1989 *] The other side of improving relations with China was maintaining good relations with Taiwan. Although Singapore lacked diplomatic ties with Taiwan in 1989, the two enjoyed a flourishing economic exchange. Trade with Taiwan in 1988 reached S$5.2 billion, exceeding that with China ($5.7 billion). Some analysts suspected, however, that once serious negotiations to establish diplomatic ties began with Beijing, China was likely to pressure Singapore to end its relationship with Taiwan, particularly in matters of military cooperation such as the training in Taiwan of Singaporean troops. Others speculated that the relationship would not be affected. Lee Kuan Yew said in March 1989 that he did not expect Singapore's relationship with Taiwan to change because both countries had been aware for some time of Singapore's intention to follow Indonesia in normalizing relations with China and both had taken such a development into consideration. A visit by Taiwan's President Li Teng-Hui shortly after Indonesia's diplomatic initiative, was interpreted as a sign of continuing warm relations between Taiwan and Singapore. *

See Language, Trade

Chinese Military Drills, Trade and Investment with Singapore

In June 2009, CCTV.com, reported: “China and Singapore have concluded joint military maneuvers in Guilin, in the southwest Guangxi Zhuang Autonomous Region. The goal of "Cooperation- 2009" is to improve the two countries' abilities to counter biochemical terrorism. The goal of "Cooperation- 2009" is to improve the two countries' abilities to counter biochemical terrorism. In the final drill, 61 members of each team handled suspected bombs left by terrorists at a world expo. Medical teams rescued civilian victims of the attack and cleaned up nuclear-contaminated areas around the expo venue. It's the first joint operation between the two armies since each country signed the bilateral Agreement on Defense Exchanges and Security Cooperation last year. [Source: CCTV.com, June 25, 2009]

In September 2009, Reuters reported: “Already, despite its small demographic size, Singapore was China's third largest foreign investor with total foreign direct investment of S$6.5 billion in 2008, a 40 percent rise from 2007, according to the Chinese government. Trade between the countries has risen 17-fold since 1991 to S$91.4 billion ($63.34 billion) in 2008. Around 20,000 Singaporeans are working in China and scores of joint ventures are underway. Among them is the construction of an "eco-city" in Tianjin, near Beijing, which is being designed to use renewable energy, recycled water and has an extensive public transport system. [Source: Reuters, September 16, 2009 <+>]

“Among Singapore investors in China are offshore oil rig builder Keppel Corp (KPLM.SI), bank DBS (DBSM.SI), water treatment firm Hyflux (HYFL.SI), energy services provider Rotary Engineering (ROTE.SI) and Raffles Education (RLSE.SI). Singapore developer CapitaLand (CATL.SI), which aims to build 58 malls across 40 Chinese cities, said this month it planned to nearly double the value of its assets in China to $8 billion, or 45 percent of its overall assets. Singapore is proving to be a fertile recruiting ground for Mandarin-speaking middle and senior managers to run multinationals' operations in China where a lack of qualified managers has held back expansion plans by many foreign firms. <+>

“China is expected to become Singapore's largest single market for non-oil exports this year, overtaking the United States, says economist Irvin Seah at Singapore's top bank DBS Group. "We use the term 'China-ready,' meaning we will just have to grow with them," IE Singapore CEO Chong Lit Cheong, whose state agency promotes Singapore firms' investment abroad, told Reuters. "As far as China grows 7 to 8 percent a year in a foreseeable future, we will continue to have a bigger presence there." <+>

“Singaporeans were among the first foreign investors in China after Deng Xiaoping adopted a market economy in 1978. Around three-quarters of Singapore's population are ethnic Chinese, giving many of its businessmen a cultural advantage versus the West, but the government is also trying to strengthen understanding of the Chinese culture and mindset. "Although we speak the same language, when we look at issues we are different," said IE Singapore's Chong. "The next step is how we see China in a Chinese perspective." Business China, an agency under Lee's patronage, is tasked to "groom 20,000 to 30,000 bilingual and bi-cultural Singaporeans with the ability to communicate effectively in the China market". <+>

China and Singapore Sign Free Trade Agreement

In October 2008, AFP reported: “China signed a free-trade agreement with Singapore, its seventh such pact widely seen as aimed at building political as well as commercial ties with other countries. Chinese Premier Wen Jiabao and Singaporean Prime Minister Lee Hsien Loong witnessed the signing ceremony in Beijing, with Singapore hailing the deal as a an economic boon for the tiny Southeast Asian city-state. "China is one of the largest and fastest growing markets in the world," the Singaporean government said in a statement. "The agreement will enhance Singapore companies' access to the vast Chinese market and further boost our excellent bilateral trade and investment relations."[Source: AFP, October 23, 2008 *-*]

“Under the agreement, Singapore will abolish tariffs on all products imported from China from the beginning of 2009, the Chinese commerce ministry said in a statement. In return, China will reduce the tariff to zero on 97.1 percent of goods imported from Singapore by January 1, 2012, it said. The Singaporean government said all goods from the city-state, except for about 260 products, would enjoy tariff-free access to China by 2010. These make up about 95 percent of Singapore's exports to China, with petrochemicals, processed foods and electrical products among the key items. *-*

“Song Seng Wun, a Singapore-based regional economist with CIMB-GK Research, said the FTA with China was of particular benefit to Singapore as it sought to cope with the economic downturn and climb out of recession. "Singapore is heavily dependent on external demand for goods and services," Song told AFP. "If there is a country on Mars, Singapore would have been the first to sign an FTA with the Martians." For China, it is another box ticked in its campaign over the past decade to pursue free-trade deals that go beyond its WTO commitments, especially in Asia. The deal is China's seventh free trade agreement, a Chinese commerce ministry official told AFP. *-*

WikiLeaks: Singapore’s Lee Kuan Yew on China’s Rise and Its Leaders

In November 2010, the Wall Street Journal reported: “Lee Kuan Yew, Singapore’s founding father and minister mentor, and the grand old man of Asian politics, is famously blunt with his views. All the more, it would seem, in supposedly private diplomatic conversations than in public. Among the comments he made on diplomatic cables released by Wikileaks, Lee said that North Koreans are “psychopathic types, with a ‘flabby old chap’ for a leader who prances around stadiums seeking adulation.” In the same meeting where this comment was made— with U.S. Deputy Secretary of State James Steinberg on May 30, 2009 in Singapore’s Presidential Palace, Mr. Lee also held forth on China and its leaders. This is what he had to say. [Source: Wall Street Journal, November 30, 2010 //\\]

On Xi Jinping: When asked if Xi Jinping would continue the policies on Taiwan followed by Hu Jintao. MM Lee responded affirmatively. Xi is a princeling who succeeded despite being rusticated. When the party needed his talents, Xi was brought in as Shanghai Party Secretary. Xi is seen as a Jiang Zemin protégé, but in another three and a half years Jiang’s influence will be gone. The focus now is on maintaining the system. There are no more strongmen like Deng Xiaoping. Jiang did not like Hu, but could not stop him, because Hu had the backing of the system and he did not make mistakes. //\\

On Wang Qishan: Lee met Wang Qishan at event in Singapore. He said Wang is an exceptional talent, very assured and efficient. Wang handled SARS superbly when he was in Hainan. He excelled in coordinating the Beijing Olympics. Li Keqiang may not get the Premiership and the Party is looking for a way to keep Wang on past his 65th birthday until he is 70. MM Lee said he had met first Wang back in the 1990s but had forgotten their meeting. This time when they met, Wang told Lee he had reviewed the records of all Lee’s meeting with Chinese leaders going back to the days of Deng Xiaoping to see how Lee’s thinking had developed. Wang told Lee he respects him as a consistent man. //\\

On China’s Rise: Lee said China is following an approach consistent with ideas in the Chinese television series “The Rise of Great Powers.” The mistake of Germany and Japan had been their effort to challenge the existing order. The Chinese are not stupid; they have avoided this mistake. China’s economy has surpassed other countries, with the exceptions of Japan and the United States. Even with those two countries, the gap is closing, with China growing at seven-nine percent annually, versus two-three percent in the United States and Japan. Overall GDP, not GDP per capita, is what matters in terms of power. China has four times the population of the United States. China is active in Latin America, Africa, and in the Gulf. Within hours, everything that is discussed in ASEAN meetings is known in Beijing, given China’s close ties with Laos, Cambodia, and Burma, he stated. //\\

Lee said China will not reach the American level in terms of military capabilities any time soon, but is rapidly developing asymmetrical means to deter U.S. military power. China understands that its growth depends on imports, including energy, raw materials, and food. This is why China is working with South Africa on the China-Africa Development Fund. China also needs open sea lanes. Beijing is worried about its dependence on the Strait of Malacca and is moving to ease the dependence by means like a pipeline through Burma. //\\

On Young Chinese: Lee said the best course for the United States on China is to build ties with China’s young people. China’s best and brightest want to study in the United States, with the UK as the next option, then Japan. While they are there, it is important that they be treated as equals, with the cultural support they may need as foreigners. Why not have International Military Education and Training (IMET) programs for China? Why not have Chinese cadets at West Point alongside Vietnamese cadets and Indian cadets? America’s advantage is that it can make use of the talent of the entire world, as in Silicon Valley. China still tends to try to keep the foreigners in Beijing and Shanghai. MM Lee noted that his own experience as a student in the UK had left him with an enduring fondness for the UK. When he spent two months at Harvard in 1968, an American professor had invited him home for Thanksgiving. This was not the sort of thing that happened in the UK, and Lee had realized he was dealing with a different civilization. In the future, China’s leaders will have PhDs and MBAs from American universities, he predicted.

North Korea Puts Its Funds in a Singaporean Bank

In August 2006, Reuters reported, “North Korea has turned to a Singapore bank for financial transactions after its money in Macau was frozen by U.S. sanctions, South Korea's Donga Ilbo newspaper reported, citing a source in Washington. Washington threatened Banco Delta Asia in Macau with sanctions for allegedly helping Pyongyang launder money and pass counterfeit dollars, and at least $20 million belonging to North was frozen. The state-owned Bank of China has also frozen North Korean-related assets at its Macau branch, U.S. officials have said. [Source: Reuters, August 5, 2006 \*/]

“Now a small retail bank in Singapore that is believed to be handling North Korea's funds, is under U.S. investigation, Donga said, citing a U.S. government official. It did not provide the bank's name but said it was on the U.S. government's watch list. North Korea denies involvement in money laundering and counterfeiting U.S. currency. The U.S. Department of Treasury listed this bank as being related to North Korea’s illegal funds and is currently conducting an investigation. There are also speculations that North Korean Foreign Minister Baek Nam Soon’s two visits to Singapore around the time of the ASEAN Regional Forum (ARF) that was held in Kuala Lumpur, Malaysia, had a connection to the funds. \*/

“Recently, a source in Washington D.C. said, “With the American administration raising its pressure on North Korea’s funds in Macao, North Korea attempted to change its bank to Singapore, and the new haven is known as a small bank referred to as O Bank.” On August 3, a U.S. government official also said in an interview with Dong-A Ilbo, “O Bank is a problem bank. This bank is on the list of banks related to North Korea, which the U.S. government keeps a close eye on.” With the U.S. tracing its funds, North Korea tried to disperse them, and by the official’s statement it was officially confirmed that Singapore, an international finance city, has become one of the safe havens.” \*/

“With the relation between O Bank and North Korea surfacing, Foreign Minister Baek’s two visits to Singapore around July 28, while ARF was held, are also drawing attention. Minister Baek left Pyongyang on July 25, stopped in Beijing, spent two days in Singapore and finally arrived at Kuala Lumpur in the afternoon of July 27. At the time, the South Korean government explained, “Minister Baek stopped by Singapore for kidney dialysis. It wasn’t for any particular reason.” Nevertheless, on his journey back home, Minister Back spent three days, from August 1 to 3, in Singapore, meeting with Singapore government officials. When asked by Dong-A Ilbo if Minister Baek’s stay in Singapore was related to O Bank, the U.S. government official answered, “Don’t you think that it would be logical to think so?” Paek arrived in Singapore for a four-day visit at the invitation of his Singaporean counterpart George Yeo. This is his first official visit to the city state as DPRK's Foreign Minister. He called on Singapore's Prime Minister Lee Hsien Loong, Senior Minister Goh Chok Tong and Foreign Minister Yeo.

Singapore’s Relations with the Soviet Union and Russia

In 1989 Singapore maintained both economic and diplomatic relations with the Soviet Union. From the mid-1960s until the mid1970s , Singapore's leaders promoted trade relations with Moscow in the belief that a Soviet role in Southeast Asia would ensure the permanent interest of the United States in the region. The Soviet Union was viewed as a major power and as a counterweight to China, and, therefore, as a significant factor in maintaining the regional power balance. This view changed when the Soviets established a military presence at Cam Ranh Bay in Vietnam, following the signing of the Soviet-Vietnamese Treaty of Friendship and Cooperation in November 1978, and actively supported the Vietnamese invasion of Cambodia a month later. At that time, according to Singapore, Moscow became a threat to regional stability. [Source: Library of Congress, 1989 *]

Soviet diplomacy toward the region changed, however, in the mid-1980s under the leadership of new geeneral secretary Mikhail Gorbachev. Beginning with a milestone foreign policy address in Vladivostok in July 1986, he initiated extended ties with the ASEAN states and committed the Soviet Union to playing a more constructive role in resolving the Cambodian issue. His interest in improving ties with the region and his new emphasis on Soviet economic development acted to modify regional perceptions. Singapore, as well as many of its ASEAN partners, became increasingly receptive to upgrading their bilateral relations with Moscow. *

Trade, banking, and shipping were the three critical areas of Singapore's economic ties with Moscow. Singapore's exports were mainly in the form of repairs to Soviet vessels in Singapore shipyards. Other exports included rubber, coconut oil, and fuel oil. In return, the Soviets exported fish and fish products, cast iron, light machinery, and crude oil. Beginning in the mid-1980s, the Soviets encouraged Singaporean firms to invest in joint ventures in the Soviet Union. Singapore's shipyards were reported in 1988 to be interested in reconstructing and developing the port of Nakhodka, the second largest port in the Soviet Far East after Vladivostok. *

In 2009 Bernice Han of AFP wrote: “The Russian government is keen to tap Singapore’s expertise as it tries to diversify its oil-and gas-powered economy. Last month President Dmitry Medvedev brought a high-powered business delegation on a state visit to the city-state. Medvedev said Russia could learn from Singapore’s “great example” of transformation from a colonial outpost into one of Asia’s top financial hubs. Bilateral trade doubled from $1.38 billion in 2007 to $2.75 billion in 2008, according to Singapore official data. [Source: Bernice Han, AFP, December 14, 2009 |^| ]

“Singapore can be Russia’s gateway to Asia. We have networks and experience in the economies of China, India and Southeast Asia,” Singapore President SR Nathan said. Around 200 Russian companies including Lukoil, the country’s second biggest oil producer, and TMK, its largest exporter of steel pipes, have offices in Singapore. Russian officials say 2,000 of their citizens live in Singapore, which has just 5 million people. |^|

“When you meet their entrepreneurs, they are a different breed,” Michael Tay, a former Singapore ambassador to Moscow, said. Tay, who inaugurated an annual Russia-Singapore business conference in 2006, played down any concerns about the source of the new money coming from Russia’s opaque business world and rampant money-laundering. “When the Russians come, they go through the due diligence process,” he said. “Many of them are self-made people, they have not done anything that is against the law. I don’t see that as a problem.” |^|

Image Sources:

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Singapore Tourism Board, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Foreign Policy, Wikipedia, BBC, CNN, and various books, websites and other publications.

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© 2008 Jeffrey Hays

Last updated June 2015

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