Photo:Xinhua

China's recent efforts to strengthen cooperation with Singapore in the financial sector show that Beijing aims for comprehensive opening-up, and a Chinese market offering greater access would provide the Southeast Asian country more growth opportunities, experts said on Thursday.

The China Banking and Insurance Regulatory Commission and the Monetary Authority of Singapore (MAS) have jointly signed a memorandum of understanding to enhance supervisory cooperation and facilitate exchange of information in sectors including banking, insurance supervision and crisis management, the MAS confirmed with the Global Times on Thursday.

On October 15, the MAS announced that new initiatives are in progress to strengthen capital market activities between Singapore and China. These measures will facilitate the growing interest of financial institutions based in Singapore and China to expand in each other's markets, according to the MAS.

The recent moves to increase cooperation in the financial sector between China and Singapore are being boosted by the upgraded bilateral Free Trade Agreement (FTA), which aims to expand services trade, said Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations.

Economic and trade relations between China and Singapore were largely enhanced in sectors like services, investment and e-commerce after the upgraded China-Singapore FTA took effect on October 16, said China's Ministry of Commerce.

Calling the new agreement "a milestone" in history of China-Singapore economic and trade ties, the ministry said the upgraded version is projected to continuously enhance the well-being of businesses and people in both countries and proceed with the building of an open world economy.

Chen told the Global Times on Thursday that Singapore, also located in Asia as China, is one of the safest countries in the world, and it has a market featuring comprehensive opening-up and a sound business environment. 

"Cooperation between the two countries will offer experience for China, which endeavors to pursue comprehensive opening-up," she said.

According to the World Bank Group's Doing Business 2020 study released on Thursday, Singapore ranked second, followed by China's Hong Kong Special Administrative Region (SAR), which improved from the fourth place in 2019. 

Online discussions persist, however, that Singapore is gaining from Hong Kong's current social unrest. Goldman Sachs in early October estimated an outflow of between $3-4 billion of Hong Kong dollar deposits to Singapore as of August.

These capital outflows only accounted for a small part of daily transactions in the Hong Kong market, but it seemed to send a signal that if the social unrest in Hong Kong affects its financial market, then Singapore, which can also function as an offshore yuan-clearing center, is likely to grasp the opportunity to widen cooperation with the Chinese mainland in the financial industry, said Liang Haiming of the Belt and Road Institute at Hainan University.

China extended a currency swap arrangement with Singapore in May, under which up to 300 billion yuan ($44 billion) in Chinese currency liquidity will be available to eligible financial institutions operating in Singapore. The two countries first agreed on a currency swap deal of 150 billion yuan in July 2010.

"But Singapore is unlikely to replace Hong Kong's financial position," Liang told the Global Times on Thursday, noting that the country's strict laws would deter foreign companies from holding IPOs there. Meanwhile, Hong Kong has more advantages - support from the central government and the huge Chinese market.

The IMF recently released its forecasts of GDP growth of countries in Asian-Pacific Region. The organization unveiled Singapore growth forecasts of 0.5 percent in 2019 and 1 percent in 2020. The IMF forecast that Hong Kong's GDP growth would expand 0.3 percent in 2019 and 1.5 percent in 2020.

Given that Singapore's growth in trade and the manufacturing industry slowed down in recent years, its tie-up with China to advance the finance sector would be conducive to the country's economic development, and Singapore expects to lure more Chinese companies to do business there, Liang said.