Significant upgrade of trade between two nations is the glittering prize
China and Singapore are set for a new and exciting phase of enhanced trading, following extensive talks, according to leading officials.
They said both sides were speeding up negotiations for a planned upgrade of the China-Singapore Free Trade Agreement.
This would create strong momentum for the development of trade in the service and financial sectors between the two countries, as well as significantly improved regional connectivity, they said.
Chinese President Xi Jinping witnessed the launch of the negotiations to upgrade the FTA back in 2015, while on a state visit to the Southeast Asian nation.
The two sides completed the fourth round of bilateral FTA upgrade talks in Singapore in October last year.
They discussed topics including trade in services, investment, customs procedures and trade facilitation and remedies, according to China's Ministry of Commerce.
When China and Singapore signed the FTA in 2008, the agreement focused heavily on accelerating the liberalization of the trade in goods, on the basis of the Agreement on Trade in Goods of the China-ASEAN FTA signed in 2004.
At the time, extensive agreements were not covered on services and investment within the FTA framework, officials said.
Eager to further deepen economic ties, the China-Singapore FTA Upgrading Negotiations were officially launched in November 2015.
Vice-Chairman of the China Council for the Promotion of International Trade, Wang Jinzhen, said new ground needed to be covered.
Wang said that in comparison with the China-South Korea and China-Australia FTAs signed in 2015 - which had specific articles describing trade in services and investment conditions - the present China-Singapore FTA was not as advanced as free trade deals sealed in recent years.
Although limited by its land size and natural resources, Singapore is proficient in trading in services and related industries including logistics, tourism, shipping, healthcare, education, finance and smart city developments.
"Singaporean companies want to see the China-Singapore FTA enriched and extended by a more service and investment-driven economic development model as soon as possible," Wang said.
China remains Singapore's top trading partner. Bilateral trade in 2017 totaled $79.24 billion, up 12.4 percent on a year-on-year basis.
The volume of trade also jumped in the first two months of this year, up 14 percent year-on-year to $12.9 billion, data from the General Administration of Customs showed.
China's exports to Singapore mainly comprise construction materials and machinery, agricultural products, computers, raw materials, electronics, furniture, toys, textiles, garments and household appliances.
Supported by its strong transit trade development model, Singapore mainly ships electromechanical equipment, chemicals and mineral products to China.
Dong Liwan, a shipping industry professor at Shanghai Maritime University, said Singapore has always served as a gateway for business between China and its fellow Association of Southeast Asian Nations members, because it has developed itself into a major logistics and shipping center for Asia.
Even though China has seven of the world's top 10 largest container ports by handling capacity - such as the Port of Shanghai or the Port of Ningbo-Zhoushan - many container vessels choose to fuel in Singapore due to keener fuel prices compared to China as well as extra services.
Dong said China's domestic bonded oil price was between $15-$20 higher per ton than that of Singapore's.
"As Chinese companies are keen to carry out the Going Global strategy, they can certainly take advantage of Singapore's status as a regional financial center to access financing, consulting, insurance and risk management services, before they enter other national or regional markets," said Li Gang, vice-president of the Chinese Academy of International Trade and Economic Cooperation in Beijing.
"Upgrading the current China-Singapore FTA will offer promising impetus to optimize the industrial and trading structures of the two countries in the long run."