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China and Singapore's economic growth (SUMIKO)

18:55 Anonymous 0 Comments Category :

China's economy has been on a boom for the past few years, in fact, decades.There are many factors that had contributed the fast growing economy in China.

Firstly because of the open door policy in China introduced by Deng Xiao Ping in 1978 to allow foreign businesses to be set up in China. As they opened up their country to international trade and allow foreign investors to invest in their country, this led China to the current strong economy it has. China ranks second in the world in terms of GDP(Gross Domestic Product),  since it allows foreign investors to set up business in China, at the corporate tax rate of 25%(one of the lowest in the world), and therefore with more people setting up businesses in China, China would produce more goods and services in a specific period of time. However due to China's big population, their GDP per capita would rank lower. And since the population in China is huge, cheap labour would also attract foreign businessman to set up businesses in China. Not only huge in population size, China is also huge in land mass, with 3,854,082 square miles, this would attract foreign businessmen as there would be more space for business to be operated at, for example office and factories. As compared to Singapore where land is expensive due to the little amount available, people would be attracted to China since it is cheaper to own land there. China also have several natural resources endowed with, such as coal, natural gas, steel, this would not involve import factors for production and easy access to these materials would save cost. The Chinese has also been accused of keeping the Chinese Yuan undervalued as by doing this Chinese exports would be cheaper and will cause more people importing from China. By doing this, ther would be more jobs available for the large population in China.

Singapore has a lot of investments in China, for example, the Suzhou Industrial Park, Sino-Singapore Tianjin Eco-city, Capitaland Malls in China, local brands such as Breadtalk, Osim. When the economy in China goes up, the economy in Singapore would be benefited due to the close partnership China has with Singapore. I agree that Singapore relies a lot on China's economy, as we have many Chinese tourists visiting Singapore, and if China's economy goes down, the amount of Chinese tourists would decrease and since China is one of the major tourists that visits Singapore, a decrease would impact the tourism business in Singapore, from hotels, retail stores, casinos and even the F&B business. With an impact at such impacts, the economy in Singapore would be impacted, since the consumption of Chinese tourists has decreased. Recently it had been reported that China is facing a slowdown from its rapid economic growth in the past few years, I think that even though this slow down might not be "fatal" to Singapore, we should be careful as if really one day the China economy goes down, it will bring trouble to Singapore as we would be impacted with a declining economy as well. However I believe that this will not be a problem as China is still attractive for businesses to be set up as with the factors that is mostly beneficial.

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