Assignment on Us China Trade Tensions and Singapore
Added on 2022-09-12
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ECONOMIC POLICY AND
GLOBAL ENVIRONMENT
GLOBAL ENVIRONMENT
US CHINA TRADE TENSIONS AND SINGAPORE 1
Introduction
The US China Trade tensions is one of the significant political and economic event in the
present times, influencing the economies worldwide. Both the countries have engaged in a
bitter trade battle, in which each one is imposing tariffs on the goods of another. The reasons
for the trade tensions are stated to be China being accused of the unfair trade practices in the
US, and the perception in China that the growth of the country as a global economic power
would be curbed by US (BBC News, 2019). The results of the trade tensions among the two
giant economies was in the form of retaliatory trade actions in the form of tariffs, restrictions
on investments and others.
The following work is aimed at shedding light on the various aspects of the US China trade
tensions and the impact of the same on the economy of Singapore. The work would broadly
analyse the spill over effects of the trade tensions on Singapore, the serious concerns in the
Singapore economy, followed by a range of responsive measures and the conclusion.
Possible spill over effects for Singapore
The following segment would be descriptive of the possible spill over effects that would arise
in context of the economy of Singapore. The reason for the spill over effect on the Singapore
country is that the country is a hub for the regional electronics production, financial
intermediation services, air and sea transportations and a significant link in the value chain. In
addition, it is significant to note that the indirect contribution of the bilateral trade between
US and China is the 1.1 percent of the gross domestic product of the country (Kit, 2018).
It is vital to note that the negative spill over effect in the overall terms is in the form of the
deterioration of the trade environment. One of the prime spill over impact that would arise in
the Singapore economy is in the area of Research and Development. It has been stated that
Singapore would benefit from the investments in the Research and Development, and engine
manufacturing in future times from the sides of the United States. However, currently the
country’s exports have drastically reduced amid the spill over of trade tensions, because of
the global contraction in the demands of such commodities due to increased cost of
manufacturing of the same (Chan, 2019). The reason is squeezing demands of the technology
products, and the decreased demands from China. Thus, there is an overall slump in the
electronics.
Introduction
The US China Trade tensions is one of the significant political and economic event in the
present times, influencing the economies worldwide. Both the countries have engaged in a
bitter trade battle, in which each one is imposing tariffs on the goods of another. The reasons
for the trade tensions are stated to be China being accused of the unfair trade practices in the
US, and the perception in China that the growth of the country as a global economic power
would be curbed by US (BBC News, 2019). The results of the trade tensions among the two
giant economies was in the form of retaliatory trade actions in the form of tariffs, restrictions
on investments and others.
The following work is aimed at shedding light on the various aspects of the US China trade
tensions and the impact of the same on the economy of Singapore. The work would broadly
analyse the spill over effects of the trade tensions on Singapore, the serious concerns in the
Singapore economy, followed by a range of responsive measures and the conclusion.
Possible spill over effects for Singapore
The following segment would be descriptive of the possible spill over effects that would arise
in context of the economy of Singapore. The reason for the spill over effect on the Singapore
country is that the country is a hub for the regional electronics production, financial
intermediation services, air and sea transportations and a significant link in the value chain. In
addition, it is significant to note that the indirect contribution of the bilateral trade between
US and China is the 1.1 percent of the gross domestic product of the country (Kit, 2018).
It is vital to note that the negative spill over effect in the overall terms is in the form of the
deterioration of the trade environment. One of the prime spill over impact that would arise in
the Singapore economy is in the area of Research and Development. It has been stated that
Singapore would benefit from the investments in the Research and Development, and engine
manufacturing in future times from the sides of the United States. However, currently the
country’s exports have drastically reduced amid the spill over of trade tensions, because of
the global contraction in the demands of such commodities due to increased cost of
manufacturing of the same (Chan, 2019). The reason is squeezing demands of the technology
products, and the decreased demands from China. Thus, there is an overall slump in the
electronics.
US CHINA TRADE TENSIONS AND SINGAPORE 2
One of the yet another prime areas where the spill over effects of the trade tensions are
widely seen is that of the Shipping and Maritime Industry. The effect of the trade tension is
negative for the world shipping industry, including that of Singapore, as per the reports of the
United Nations Conference on Trade and Development (UNCTAD) (The Business Times,
2019). The reason for the said negative spill over is that the various trade practices between
the two countries have drastically reduced leading to the reduced flow of shipping business
between two and the other intermediaries. This highlights that the countries like Singapore
were an important component of the supply chain, and changing the whole chain is not easy
and would require considerable investments to do so.
Apart from the above discussed, the next spill over impact of the trade war in context of
Singapore is that shifting of the places of the production of the multinational companies. The
same can be viewed as a positive spill over for the country of Singapore. In the words of the
Monetary Authority of Singapore (MAS), there are numerous US businesses that have
already moved or are considering moving their production houses from China, and the
country Vietnam is on the top of the list because of its location and connectivity in the South-
east Asia region (Mediacorp Pte Ltd, 2018). In such an event of successful relocation,
Singapore would be positively impacted and benefitted from the point of view of the
wholesale trade, and the transportation and the storage services due to the central hub status
of Singapore. Hence, it can be stated that there are mix of positive and negative spill overs of
trade tension among US and China, for the country Singapore.
Serious concerns of the Singapore economy in event of escalation in
trade tension
The segment would highlight some of the key concerns that would arise if the US China trade
tensions further escalate. The prime concern for the Singapore economy is in the form of the
disturbed business sentiments. In the words of the Permanent Secretary of the Ministry of
Trade and Industry (MTI), loss of business confidence is the most crucial outcome of the
trade tensions, because of the Singapore economy stuck in the cross fire and the same can
pose serious threats in future too (The Singapore Contractors Association Ltd, 2017). The
concern is serious in terms of the economic growth rate of the country being forecasted to 2.5
percent only as was in the year 2018, in spite of the strong financial performances across
various sectors.
One of the yet another prime areas where the spill over effects of the trade tensions are
widely seen is that of the Shipping and Maritime Industry. The effect of the trade tension is
negative for the world shipping industry, including that of Singapore, as per the reports of the
United Nations Conference on Trade and Development (UNCTAD) (The Business Times,
2019). The reason for the said negative spill over is that the various trade practices between
the two countries have drastically reduced leading to the reduced flow of shipping business
between two and the other intermediaries. This highlights that the countries like Singapore
were an important component of the supply chain, and changing the whole chain is not easy
and would require considerable investments to do so.
Apart from the above discussed, the next spill over impact of the trade war in context of
Singapore is that shifting of the places of the production of the multinational companies. The
same can be viewed as a positive spill over for the country of Singapore. In the words of the
Monetary Authority of Singapore (MAS), there are numerous US businesses that have
already moved or are considering moving their production houses from China, and the
country Vietnam is on the top of the list because of its location and connectivity in the South-
east Asia region (Mediacorp Pte Ltd, 2018). In such an event of successful relocation,
Singapore would be positively impacted and benefitted from the point of view of the
wholesale trade, and the transportation and the storage services due to the central hub status
of Singapore. Hence, it can be stated that there are mix of positive and negative spill overs of
trade tension among US and China, for the country Singapore.
Serious concerns of the Singapore economy in event of escalation in
trade tension
The segment would highlight some of the key concerns that would arise if the US China trade
tensions further escalate. The prime concern for the Singapore economy is in the form of the
disturbed business sentiments. In the words of the Permanent Secretary of the Ministry of
Trade and Industry (MTI), loss of business confidence is the most crucial outcome of the
trade tensions, because of the Singapore economy stuck in the cross fire and the same can
pose serious threats in future too (The Singapore Contractors Association Ltd, 2017). The
concern is serious in terms of the economic growth rate of the country being forecasted to 2.5
percent only as was in the year 2018, in spite of the strong financial performances across
various sectors.
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