Written reply to PQ on China's weak GDP growth

Question

Ms Foo Mee Har: To ask the Minister for Trade and Industry what is the Ministry's assessment of the vulnerability of Singapore companies with significant investments in China as China witnesses its weakest GDP growth in 28 years.

Written reply

1. Over the years, many Singapore companies have invested in China to ride on its growth. Singapore companies have invested across a diverse range of sectors, from manufacturing to real estate, wholesale and retail trade, to financial and insurance services.  The easing of China’s economic growth has been a gradual one, and companies would have carefully made their business calculations and projections accordingly. 

2. In our conversations with companies, there is recognition that China’s economy is maturing.  This includes shifting from an export-led and investment-oriented growth model towards one that is driven by domestic consumption.  From rapid growth of 10.6% in 2010, growth has eased in the intervening years to 6.6% in 2018, and the IMF has projected China’s 2019 GDP growth to be 6.2% as investment growth moderates and some domestic deleveraging continues.  There are also uncertainties in the outlook arising from unresolved United States-China trade tensions, but the Chinese government has made clear its preparedness to bolster domestic demand. 

3. Amidst the headwinds facing the Chinese economy, there remain opportunities as China continues to liberalise and pursue its provincial-regional strategies such as the integrated development of mega-regions like the Guangdong-Hong Kong-Macao Greater Bay Area and Yangtze River Delta. Provinces and municipalities like Guangdong, Jiangsu and Shanghai have maintained growth rates on par with or above China’s national average last year.

4. To support Singapore companies’ investments in China, Singapore has established a network of provincial business councils in Guangdong, Jiangsu, Liaoning, Tianjin, Shandong, Sichuan and Zhejiang over the years. With the China-Singapore Free Trade Agreement (CSFTA) upgrade to be ratified later this year, Singapore companies can also look forward to improved market access in goods and services. 

5. More Chinese companies are also venturing out of China and has chosen Singapore as a launchpad to internationalise their businesses. As of end-2017, China’s stock of direct investments in Singapore reached SGD 36.3 billion. This is an increase of around 10% per year on average since 2010. There is thus scope for Singapore and Chinese companies to forge closer partnerships and leverage on each other’s networks to tap on opportunities in the region.