Economics Assignment: Analyzing Singapore's Economic Challenges

This economics assignment analyzes the impact of the US-China trade tensions on Singapore's economy. The report explores the reasons behind the trade disputes, examines the spillover effects on Singapore's maritime, manufacturing, and financial sectors, and highlights the serious concerns arising from escalating trade tensions, such as slow demand in China and increased import tariffs. The assignment also investigates the Singaporean government's responses, including expanding regional markets, fostering technological innovation, and diversifying international connections to mitigate the negative impacts. The report concludes with a summary of the challenges and potential strategies for Singapore's economic resilience in the face of global trade uncertainties. The student has used newspaper articles, magazines and journals to support the economic concepts discussed in class.

Running head: ECONOMICS ASSIGNMENT
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Name of the Student
Name of the University
Author Note

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Table of Contents
1. Introduction.........................................................................................................................2
2. To explore the spillover effects for Singapore....................................................................2
3. To highlight the serious concerns of the Singapore’s economy if there is an escalation
trade tension...............................................................................................................................4
4. How the Singapore government should be responded the current situations?.......................6
5. Conclusion..........................................................................................................................8
6. Referencing.........................................................................................................................9

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1. Introduction
1.1. What is trade tension?
The term Trade tension can be explained as the discrepancies which has happened at
the time of trade between the two countries. There are several causes through which the trade
tension can arise, some of the cause can be the growing complexity and the number of trade
organizations.
1.2. What are the reasons behind the US-China trade tension?
There are several reasons in which the trade tension is being arise between the United
States and China. At the time of trading, China has used some unfair means, so the President
of United States was not eager to trade with Chine anymore. On the other hand, China thinks
that due to the rise of the power in their economy, Unites States is not interested in trading
with them anymore.
2. To explore the spillover effects for Singapore
2.1. Maritime and Shipping
One of the largest port which is being enjoyed in the region of the Asia-Pacific is by
Singapore. The major portion of the that region is being enjoyed by Singapore mainly
because of the Strait of Malacca. With the help of Strait of Malacca, they have achieved the
level of success in the maritime industry (Rugman and Verbeke 2017). There are many areas
in which the Singapore has succeeded, they are ship financing, bunkering, forward freight
agreement trading, port terminal operations, marine insurance, ship brokering, maritime
lawsuit jurisdiction and offshore building (Carleton and Hsiang 2016). In performing all these
activities, there are 1,70,000 who are employed here and has made more than 5,000

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achievements and as per the reports their revenue has contributed more than 7 per cent of the
GDP.
With a growth in the economy, China is expanding the market in the market of marine
insurance. Due to this expansion there are various achievements which they have achieved,
one of them is becoming the second one to have the largest market in the cargo insurance
sector and further they have regained the position and achieve the top position in that market
segment (Zhang, Fung and Changhong 2017). China has done major investments in the sector
of the maritime insurance, because of the economy of the Singapore has facing a tough
competition. China is doing this investment so that they can achieve the level at which
Singapore is at right now, with the terminal efficiency and the ability of the post
transshipment. In the area of the currency exchange, China does get help from Singapore as it
can convert the American Dollars easily at the time of payment.
2.2. Manufacturing or electric sectors
The economy of Singapore has affected badly due to the trade war between the China
and United States, most of the products that are manufactured in China is banned as per the
order of President of United States. The sales of many products is decreasing day by day and
because of these that manufacturers are forced to stop the production as there is almost no
demand both in the economy and also for exporting (Stubbs 2017). There are several
subsidiary organizations in Singapore who use to supply goods to the Chinese market, is also
suffering a huge loss as the Chinese products are banned in several markets. There were
imposing of tariffs on most of the Chinese products which were done by the Government of
United Sates, due to all these reasons both the economy of Singapore and China is facing
imbalances and is running through a period of recession (Li, He and Lin 2018). One of the
major issue that has been faced by the tech giant Huawei is that the smartphones which they

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do manufacture are all banned form the market of Unites States and as the President Mr.
Trump started that China has some security issues with the smartphones, so it has been
banned not only from United States but also from the neighbor countries of that region.
2.3. Attracting financial investment
Singapore’s economy has been affected badly upon the trade war between the two of
the biggest economies in the world i.e. Unites States and China. Although the shares that are
listed of the organizations from that country was giving a much higher dividend if compared
to the organizations of rest of Asia (Awan 2016). The currency of Singapore is really stable
as it is controlled by the financial regulator i.e. Monetary Authority of Singapore. Thus, the
investors have trust upon the stock that are listed in the stock exchange as there is much less
fluctuations in the currency of that country. As the investors are doing investment in bigger
number, the equities are also growing and the economy of Singapore is recovering from the
effect of trade war (Athukorala 2017). As Singapore is located in the Asia Pacific region it
does the investors as it is one of the fastest growing and developing center in that region. So,
the investors will get a much higher return as they have anticipated at the time of investment.
3. To highlight the serious concerns of the Singapore’s economy if there is
an escalation trade tension.
3.1. Slow demand in China
As the differences between the two counties Unites States and China increases, the
economy of China is suffering more day by day. In both the economy of China and
Singapore, the demand of airlines has decreased and because of this the freight has also
decrease of the flights (Guo et al. 2018). It can be observed from the reports of IATA that, in
the holiday season there is no such demand in comparison to the previous years. The airline

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business in the region of both the Asia Pacific and middle east region has suffered a huge loss
because of this affect. Another area, in which the demand has fallen is related to the products
which the Chinese manufacturers is making, as most of the products got banned in various
markets (Rodan 2016). The neighbor countries also get affected as they were receiving the
material from China. The products that are manufactured in the country is price much higher
than the imported products. The whole economy is suffering and there is much less liquidity
in which they are suffering more at the time of import and export.
3.2. Increase import tariff (indirectly)
The condition of the economy of Singapore is degrading day by day due to imposing
of tariffs which is done by the Government of United States. Both the countries i.e. Singapore
and China is trying to revert the amount of tariffs which they have paid at the time of trading
(Liu and Woo 2018). Singapore helps China with currencies as it is easy to trade in American
dollars for Singapore. The Government officials of both Singapore and China has approached
to the Government of United States for the removal of tariffs that were imposed on the goods
which were manufactured in both the countries (Abiad et al. 2018). The Deputy Prime
Minister Heng Swee Keat, also mentioned at which state the country is in right now, as it is
one of the difficult position to recover that Singapore is facing because of the trade war
between China and United States.
3.3. Regional recession
The current situation which is being faced by the Singapore right now is the period of
recession, as the economy is badly affected. Some of the biggest organizations is shutting
down their production process and because of this many of them is getting unemployed and it
is also affecting the supply chain between several organizations (Uphoff 2018). The President
of United States has stated that China uses some unfair means at the time of trading, so the

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Government of United States is imposing all this tariffs and banning the products that are
manufactured in China and Singapore (Park 2018). Thus, Singapore is facing much more
difficulties as their main source of income of the economy comes from trading, so it is
affecting very severely
4. How the Singapore government should be responded the current
situations?
4.1. Expand regional markets
As per the situation of trade war between the United States and China, Singapore is
trying to expand their business is several regions as their trade business is getting affected.
Singapore is situated in the South Pacific region, where there is lot of opportunities for
growth in several sector of businesses (Xiao and Lam 2017). Other countries are also
interested in the expansion that is to be done in the economy of Singapore, as it is known as
the dynamic region it has several growth opportunities that will help the economy to recover
from the situation that they are facing right now. Although the institutions those who are
participating will also have to take care as after some time they will get stability upon the
certain period (Ann 2016). Some of the difficulties will be there related to the languages in
which they speak, but these issue can be solved in talking with some people in that region.
New organizations will get a vast opportunities and can implement several approached
related to the marketing, so that they can able to reach to the consumers and through this, the
consumers will have an idea about the products which the sellers are offering.
4.2. Technological innovation
Singapore is one of the established country if it is seen in reference to technological
advancement. It has a hub of entrepreneurs who help in the innovation and it is known in the

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whole world for their innovation and the advanced technology that they produce (Tremewan
2016). From many reports of the World Bank, it can be observed that the country of
Singapore has proved itself one of the best countries in which several organizations has
become successful in doing business. Singapore ranked fourth in the sector of IP protection
and it is stated in the reports of the Economic Forum’s Global Competitiveness (Denoon
2016). There were several investments that were done by the Government of Singapore upon
the research of the nation's science and technology, through this it will support Singapore's
economic transformation. With this transformation, the existing industries will also get help
from that and they can also have growth opportunities in the near future.
4.3. Diversity international connections
The Minister of Trade and Industry of Singapore, Mr. Chan Chun Sing; has stated in
the parliament that they will obtain certain strategies that will help in diversification,
innovation and the government will train several workers, so that they can overcome the
effects that will be caused by the trade war between the United States and China (Brown
2017). This will be done because of the ongoing global uncertainty, that affects the economy
of Singapore very much. The innovation will also help in a great way, but at the same time
training will be provided to the workers for better skills of them (Munir and Ameer 2018). It
has been observed from the reports that, due to the uncertainties, many neighbor countries are
also getting affected namely Hong Kong, Japan and South Korea. Not only it affects the
countries, it also affects the system of the World Trade Organizations. Thus, the Government
of Singapore has taken the approach that it will diversify with the international markets, will
try to connect all the supply chains and the product mix. All the organizations that are
operated in Singapore will be provided with free trade agreements so that they can have
access to all the markets all over the world.

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5. Conclusion
It can be concluded as per the discussion of the effects which is faced by Singapore
and China because of the trade war between the two biggest economies China and United
States. The trade war started at the time when the Government of United States has imposed
the tariffs on the products that are manufactured in the China and most of the products are
also banned from selling the in the international markets. So, the effect is upon the economy
of Singapore and China, but Singapore is recovering as they are inviting many international
organizations to trade with them as they have the most advanced technology and process of
innovation.

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6. Referencing
Abiad, A., Baris, K., Bernabe, J.A., Bertulfo, D.J., Camingue, S., Feliciano, P.N.,
Mariasingham, M. and Mercer-Blackman, V., 2018. The Impact of Trade Conflict on
Developing Asia. Asian Development Bank Economics Working Paper Series, (566).
Ann, L.S., 2016. Governance and economic change in Singapore. In Singapore's Economic
Development: Retrospection and Reflections (pp. 17-33).
Athukorala, P.C., 2017. China’s evolving role in global production networks: Implications for
Trump’s trade war. China’s New Sources of Economic Growth: Human Capital, Innovation
and Technological Change, 2, pp.363-388.
Awan, A.G., 2016. Wave of Anti-Globalization and Capitalism and its impact on World
Economy. Global Journal of Management and Social Sciences, 2(4), pp.1-21.
Brown, D., 2017. Globalisation, ethnicity and the nation-state: The case of Singapore. In
Singapore (pp. 45-56). Routledge.
Carleton, T.A. and Hsiang, S.M., 2016. Social and economic impacts of climate. Science,
353(6304), p.aad9837.
Denoon, D., 2016. The strategic significance of Central Asia. The Global Financial Review.
Guo, M., Lu, L., Sheng, L. and Yu, M., 2018. The Day After Tomorrow: Evaluating the
Burden of Trump's Trade War. Asian Economic Papers, 17(1), pp.101-120.
Li, C., He, C. and Lin, C., 2018. Economic Impacts of the Possible China–US Trade War.
Emerging Markets Finance and Trade, 54(7), pp.1557-1577.

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Liu, T. and Woo, W.T., 2018. Understanding the US-China trade war. China Economic
Journal, 11(3), pp.319-340.
Munir, K. and Ameer, A., 2018. Effect of economic growth, trade openness, urbanization,
and technology on environment of Asian emerging economies. Management of
Environmental Quality: An International Journal, 29(6), pp.1123-1134.
Park, S.C., 2018. US protectionism and trade imbalance between the US and northeast asian
countries. International Organisations Research Journal, 13(2), pp.76-100.
Rodan, G., 2016. The political economy of Singapore's industrialization: national state and
international capital. Springer.
Rugman, A.M. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Stubbs, R., 2017. Rethinking Asia's economic miracle: The political economy of war,
prosperity and crisis. Macmillan International Higher Education.
Tremewan, C., 2016. The political economy of social control in Singapore. Springer.
Uphoff, E., 2018. Intellectual property and US relations with Indonesia, Malaysia, Singapore,
and Thailand. Cornell University Press.
Xiao, Z. and Lam, J.S.L., 2017. A systems framework for the sustainable development of a
Port City: A case study of Singapore's policies. Research in Transportation Business &
Management, 22, pp.255-262.
Zhang, K.H., Fung, H.G. and Changhong, P., 2017. China and the challenge of economic
globalization: The impact of WTO membership. Routledge.