Lessons from the pioneers for the future

Message by Chen Deming, Ex-Minister of Commerce, PRC
President, China Association of Enterprise with Foreign Investment (CAEFI)

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Time flies; we are now celebrating the 30th anniversary of the formal establishment of Diplomatic Relations between China and Singapore. Many of the people who laid the foundation for the exchanges and cooperation between our two countries are now of advanced age, while some have since passed away. But we will always remember and honour their outstanding contributions.

At the beginning of 1992, China was exploring new routes of development. During his “Southern Tour”, Mr Deng Xiaoping said: “We must boldly absorb and take reference from the fruits of civilisation created by human societies…Singapore’s society is considered well-ordered, and it is carefully governed. We should learn from their experience.” Rallying to his call, the two countries embarked on interpersonal interactions and economic exchanges.

In September of the same year, Singapore’s Senior Minister (SM) Lee Kuan Yew and Deputy Prime Minister (DPM) Ong Teng Cheong visited China, meeting with Chairman Jiang Zemin and Premier Li Peng to discuss economic cooperation between the two countries. The Singapore leaders also visited Suzhou and Wuxi, cities in Jiangsu province. On the return leg of their journey, DPM Ong spoke to reporters in Hong Kong about the idea of building a “model city” in China. In April of 1993, Singapore’s Prime Minister Goh Chok Tong visited Beijing, and submitted to Premier Li a proposal to build an industrial park in China. The following month, SM Lee and DPM Ong visited China again, and began deeper discussions with Chinese leaders about the Suzhou Industrial Park project, which had received endorsement and support. Thus, the seeds were sown for the first development zone that would be jointly nurtured by the government of both countries. Looking back on the growth of Suzhou Industrial Park, we must express admiration and respect for the leaders of both countries for their foresight. The significance of this project for China’s reform and opening up is keenly felt.

In 1994, the Suzhou Industrial Park project was approved by China’s State Council, and Singapore’s Prime Minister and China’s Premier witnessed the signing of the formal Agreement on the Joint Development of Suzhou Industrial Park by Chinese Vice Premier Li Lanqing and SM Lee. A groundbreaking ceremony took place at the site in May that year, and its farmlands would soon bear the imprints of Singapore’s bureaucratic leaders, engineers and technicians, and be shaped by the hard work, unity, and cooperation of the people of both countries.

Today, Suzhou Industrial Park has accumulated a trade volume of over USD $1.1 trillion and tax revenue of over RMB $800 billion. There are more than 4,500 wholly foreign-owned enterprises from 96 countries and regions based in the park. Of these, 84 companies on the Fortune 500 list are helming 131 projects. From this base, over 300 Chinese enterprises have invested in and set up industrial parks in 53 countries and regions. Suzhou Industrial Park has gradually moved from assembly and subcontracting to a higher position in the global value chain — its four industrial clusters of information technology, advanced manufacturing, biotechnology and nanotechnology now generate hundreds of billions in value.

The park has over 8,000 companies working in science and technology innovation, more than 2,000 Chinese High and New Technology Enterprises, 41 listed companies, and boasts 167 invention patents per 10,000 people.

Even more heartening is the presence of 31 notable universities and colleges. In fact, almost half of those working in the park are college graduates. Enterprise research and development expenditure makes up 4.2 per cent of the park’s GDP, and despite its high productivity, the park’s energy intensity is only 0.236 tons of standard coal per 10,000 yuan of GDP. In a comprehensive evaluation of China’s 219 state-level economic and technological development zones by the Ministry of Commerce, Suzhou Industrial Park has taken the top spot four times in a row. This is why the training facilities for such zones is located in this park.

Despite the impact of China-US trade frictions in 2019, the park’s output still totalled over RMB $270 billion, with a per capita GDP of USD $48,000. This year, even as COVID-19 ravaged the world, the park’s total output value and trade volume continued to grow from January to July. Paid-in foreign investment grew over 200 per cent, indicating that international capital continues to value Suzhou Industrial Park.

Looking back at the history of the park, it is clear that friendly cooperation was the key to its success. Firstly, robust coordination mechanisms were put in place. The China-Singapore Joint Steering Council established by leaders of both countries has been steadfast in fulfilling its mission over the ensuing decades. The Mayor of Suzhou and the chairman of Singapore’s JTC Corporation (later the Permanent Secretary of the Ministry of Trade and Industry, or MTI) formed a bilateral working committee, to coordinate specific matters of cooperation. A liason body was set up between the Office for Learning Singapore’s Experience of Suzhou Industrial Park and the MTI’s Software Project Office.

Secondly, the insights gleaned from Singapore’s success stories were consistently adapted to harmonise with China’s own culture and needs over the course of Suzhou’s development. Thirdly, the Chinese government implemented enabling policies with regards to the park, including the full coverage of retirement, medical and unemployment insurance. Additionally, Suzhou Industrial Park organised over 200 trips to Singapore for over 3,800 people, who were trained in multilateral regulations for international trade and investment, as well as urban planning. As a result, over 110 regulations were published, a very targeted and forward-looking step, especially as China would soon join the World Trade Organization.

From a broader historical perspective, economic globalization enjoyed a golden era of rapid growth in the 1990s. Information technology started to make an impact; the West was a strong proponent of a new liberalism; and the end of the Cold War had returned the world to a common market where factors of production flowed globally, and multinational corporations set up bases all over the world. China was able to meet this pivotal moment, and China-Singapore cooperation enabled the grasping of these opportunities.

After working together on the Suzhou Industrial Park project, the government of China and Singapore embarked on bilateral cooperation for the Sino-Singapore Tianjin Eco-City and the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity. In 2018, as Premier Li Keqiang and Prime Minister Lee Hsien Loong paid official visits to each other, the China-Singapore Guangzhou Knowledge City was upgraded to a state-level project. In October 2019, Chinese Vice Premier Han Zheng and Singapore DPM Heng Swee Keat jointly announced that the upgraded China-Singapore Free Trade Agreement would take effect, and that negtiations on investment liberalisation would ensue this year.

The road of cooperation between China and Singapore grows broader. With the Belt and Road Initiative, both countries have been working together in the areas of connectivity, financial support, and third-party cooperation. In 2018, Singapore’s Minister for Trade and Industry Chan Chun Sing attended China’s first International Import Expo (CIIE). The event saw participation from 109 Singapore enterprises, whose presence took up almost 3500 sq m. That kind of engagement was extended to the second CIIE, and we look forward to the success of the third CIIE. As both countries battle COVID-19 this year, our mutual assistance in the area of public health has also given rise to many inspiring stories.

The past has provided a solid foundation for the future. Extraordinary changes unseen in a century are a challenge for the whole Asia, between China and ASEAN, and, in particular, China and Singapore’s steadfast commitment to multilateralism, openness, and cooperation. I would like to express my wish for our shared future, and my belief in and anticipation for continued collaboration between our two countries in the decades to come.