China’s plan to build a nautical Silk Road runs through Singapore
As the son of a man who journeyed from China to Singapore and founded a shipping business a half century ago, Teo Siong Seng sees his life as one immersed in the ancient trading networks of Asia.
So the managing director of the Pacific International Lines Group is seeking to benefit as China rejuvenates its Silk Road routes to the Middle East and Europe. He is setting up a joint venture with China Cosco Shipping Corporation Ltd. to help China’s largest shipping group build connections in Southeast Asia and beyond.
“Chinese companies alone may not have enough experience to carry out their investments in other countries,” said Teo, who’s also chairman of the Singapore Business Federation. “To cooperate with companies like us would also make their businesses smoother. They have to learn the way we deal with local people and the way we do business.”
The venture underscores Singapore’s potential as a gateway to Southeast Asia for China as President Xi Jinping seeks to export excess industrial capacity while building influence overseas. Lured by shared cultural bonds and the former British colony’s legal and financial systems, the number of Chinese companies registered locally has almost doubled in the past five years to more than 7,500.
Exploiting Singapore’s regional familiarity could help Chinese companies navigate local politics complicated by tensions over China’s territorial claims in the South China Sea. It could also help them avoid pitfalls from prior investment in Africa and Latin America, where China has faced criticism at times for a heavy-handed approach, insisting for example its companies and laborers carry out the bulk of a contract.
“From all the failures, Chinese have learned that they need a local broker,” said Gao Zhikai, a board member of coking coal distributor Winsway Enterprises Holdings and former vice president of crude oil giant CNOOC Ltd. “Chinese companies believe Singapore companies are easier to deal with and they know how to deal with different markets.”
Xi is offering vasts amounts of money to Southeast Asia for infrastructure projects for the maritime portion of his revitalized Silk Road. Combined with an overland route through Eurasia, the project is known as “One Belt, One Road.”
For Beijing, the project is a solution to the industrial overcapacity that has built up in many sectors. It’s also the economic carrot of Xi’s push to make China a regional power and challenge decades of U.S. dominance in Asia. Greater trade and investment could blunt concern over the country’s military expansion and its territorial ambitions.
Investment company Fosun International — one of the largest private groups in China — set up its Southeast Asian headquarters in Singapore last year. “Chinese companies have to pick the right platform and springboard before making an international move, and Singapore is a very good choice,” said chief executive officer Liang Xinjun.
China’s relations with Southeast Asia are deeply rooted in history and the region’s trading culture. Some Chinese Singaporeans, like Teo’s father, migrated from Chinese provinces like Fujian during the second Sino-Japanese War in the 1930s, and ethnic Chinese traders had been plying routes in the area for centuries before.
China has looked to Singapore before: The country in late 2015 hosted the first summit between Taiwan and China in seven decades, while late leader Lee Kuan Yew was seen as a regional voice of counsel on China relations. Many Chinese officials tread a path each year to Singapore to study its political model.
Singapore has the largest ethnic Chinese population in the region, at nearly 75 percent, and is China’s largest foreign investor. More than 20 percent of its gross domestic product is linked to China, according to Natixis SA.
“Xi is offering vasts amounts of money to Southeast Asia for infrastructure projects for the maritime portion of his revitalized Silk Road. Combined with an overland route through Eurasia, the project is known as “One Belt, One Road.”
“Singapore has the largest ethnic Chinese population in the region, at nearly 75 percent, and is China’s largest foreign investor. More than 20 percent of its gross domestic product is linked to China, according to Natixis SA.”