Singapore and China: When the "golden bowl" begins to break

The city-state of Singapore has been building its position as the undisputed economic leader of Southeast Asia for decades. Today, this position requires significant reconfiguration—not due to its own mistakes, but because of fundamental geopolitical and economic shifts that China is consistently implementing. Singapore, which for decades benefited from its role as an intermediary in global trade, now discovers that its traditional economic advantages are losing their significance.

In 2023, Singapore’s GDP plummeted by $2.953 billion, and its GDP per capita experienced negative growth for the first time in three years. Although 2024 saw some recovery in the high-tech sector, the fundamental question remains: is this rebound sustainable, or just a short-term correction amid deep structural changes?

From Ports to Factories – How China is Seizing Dominance

Singapore’s success story is intertwined with the sea. The Malacca Strait, through which 140,000 ships pass annually, once held a monopoly on trade. It accounts for 80 percent of China’s oil imports, making Singapore an unmatched transit hub. But transit fees are only part of the story. The city-state created the third-largest global oil refining center and the largest Asian shipbuilding base, creating a ripple effect that attracts entire supply chains—from ship repairs and fuel supply to cargo transshipment.

However, as the Northern Sea Route handles over 40 million tons annually in 2025, and the number of rail connections from China to Europe reaches 110,000, the geopolitics math changes dramatically. The rail route from Chongqing to Duisburg now takes just 16 days—compared to the sea voyage from Shanghai to Rotterdam, which takes 38 days and costs an additional $3 million in fuel. High-efficiency goods, electronics, and auto parts no longer have reasons to wait in the Malacca Strait.

An even more direct threat comes from the Gwadar port in Pakistan. With a capacity of 547,000 tons in 2025, this port is transforming regional trade. After the launch of the Wahan corridor—an direct link to copper mines in Central Asia—the traditional 3,000-kilometer route of goods through Singapore becomes economically irrational. Thailand’s decision in 2025 to redirect 60 percent of official goods through Gwadar is just the beginning of this shift.

Semiconductors and Infrastructure – New Battlegrounds

Singapore’s electronics industry long served as a foundational pillar, similar to its ports. Over 40 percent of the country’s manufacturing output is electronics, and 60 semiconductor companies contributed 7 percent to the total GDP. TSMC and Micron factories located on this small island have made Singapore an “Asian Silicon Island.”

But China is methodically building an alternative. SMIC is already achieving mass production of 28-nanometer technology. Yangtze Memory Technologies has broken the 128-layer 3D NAND barrier. The industrial park in Lingang attracts international players—GlobalFoundries and Infineon are choosing local investments over the sensitive logistics through Singapore.

Data from 2024 speaks for itself: foreign investors in Southeast Asia’s manufacturing sector invested 17 percentage points more in China than in Singapore. When international corporations discover that the Pearl River Delta offers precise manufacturing with access to a market of 1.4 billion people, choosing a small island of 728 square kilometers ceases to be economically rational.

The Financial Center Losing Its Shine

Singapore was once the third-largest offshore platform for the yuan, managing assets worth SGD 26 trillion. This position has eroded with relentless efficiency. In 2023, the cross-border payment system in the Shanghai Free Trade Zone covered 92 countries. International infrastructure financing—from the China-Laos railway to the Jakarta-Bandung high-speed rail—is gradually falling into Chinese financial institutions’ hands.

The fact that Temasek, Singapore’s proud sovereign wealth fund, is increasing investments in Chinese renewable energy and AI companies indicates a shift in geopolitical pressures. Even more pragmatic is the tax competition. When Hainan Free Trade Port introduces a 15 percent corporate tax, a dozen Singapore-listed companies move their regional headquarters there, where capital gains tax is zero—though this is becoming less relevant amid the global shift in supply chains.

When a Country Learns from a Country – The Suzhou and Qianhai Model

The most concerning fact for Singapore is that China is not only competing but methodically copying its success model—on an incomparably larger scale. The Suzhou Industrial Park has evolved over 30 years from simple electronics manufacturing to advanced nanotechnology, generating a GDP exceeding SGD 340 billion. Financial innovations in Qianhai, Shenzhen, have enabled a fourfold increase in offshore yuan transactions in just three years.

Even the ability to expand territory through reclamation—an art Singapore has perfected over decades—is increasingly being mastered by China. The Chinese dredging fleet performs work 23 times greater annually than all Singaporean projects combined.

Hong Kong 20 Years Ago – A Lesson Singapore Should Remember

The history of Hong Kong two decades ago serves as a stark reminder. When Huaqiangbei in Shenzhen began offering 90 percent of global electronic components, and Hengqin launched more flexible financial pilots than Hong Kong itself, the once-unstoppable “super connector” realized it was no longer an indispensable bridge in global trade.

Singapore is in an even more critical position. Ninety percent of its agriculture depends on imports. Half of its drinking water comes from Malaysia. Even sand and gravel for reclamation projects must be imported from Indonesia. This country, which for decades has been “sucking global resources through a straw,” is ultimately forced to accept the reality of gradually “loosening that straw.”

Shift, Not Collapse

The current transformation is not just accidental adjustments but a profound shift of benefits in the era of global change. As China leverages infrastructure, technology, and trade to build a new economic network, Singapore must face the fact that its fundamental business model—being an intermediary between global centers—is losing profitability.

Data from 2024 shows that the reinvestment rate of foreign enterprises in Singapore’s manufacturing sector has fallen to its lowest in 12 years, while high-tech foreign investment in China increased by 28 percent. This is not just competition—it’s an inevitable geopolitical shift.

The future of Singapore, though challenging, does not have to mean turning back to the past. But to survive in an era where China systematically adapts its model on a larger scale, this small, resourceful country will be forced to redefine its economic identity.