The China-Singapore Chongqing Connectivity Project: A Cornerstone for Bilateral Relations

Abstract

As part of a country’s overall diplomatic strategy, (Hocking, Localizing Foreign Policy: Non-Central Governments and Multilayered Diplomacy, Palgrave Macmillan, London, 1993) argues that its central government can effectively use local external cooperation to break down sensitive and difficult political issues to the local level, thereby helping to reduce external pressures on the central government and helping state institutions to reduce the burden of complex policy implementations.

5.1 Literature Review on the Chinese Provinces’ Ties with ASEAN

As part of a country’s overall diplomatic strategy, Hocking (1993) argues that its central government can effectively use local external cooperation to break down sensitive and difficult political issues to the local level, thereby helping to reduce external pressures on the central government and helping state institutions to reduce the burden of complex policy implementations. Van der Pluijm (2007) argues that self-interest is the main driver of local engagement in diplomacy and that participation of local governments in diplomatic activities can benefit the local area in two ways. On the one hand, the place can attract tourists, foreign companies and host international events by participating in external activities. On the other, local governments can export services and knowledge through their external activities or sign cooperation treaties with local authorities in foreign countries. He believes that the traditional structure of diplomatic engagement must be changed to include non-state governments in order to defend local interests.

China’s local governments are not passive implementers of central policy or simple participants in foreign affairs. Local officials can enhance their performance via their participation in international cooperation and this can increase their enthusiasm for participating in international affairs (Su 2010). Chen (2014) proposed that China’s local participation in international affairs can provide the means and channels for the implementation of national strategies. Chen (2018) identified the concept of “city diplomacy” as playing a role in China’s overall diplomacy strategy. Through urban diplomacy, the social foundation of relations between major countries can be consolidated from the bottom up. Li (2014) studied the role of local governments in China-ASEAN relations and proposed “local liberalism”. He claimed that local authorities in China are not only central policy implementers, but also actively formulate their own foreign policy plans and bilateral cooperation initiatives, and, in so doing, seek the support of the central government. Yang (2018) stated that ASEAN countries have become important external economic partners of China. Chinese local governments that participate in China-ASEAN cooperation go through three stages: passive implementation of policies (1991–2003), active action (2004–2013), and acceleration of central-local cooperation (since 2014), which are characterized by diversity, non-balance, competition and multifaceted influence.

The participation of Chinese provinces and cities in foreign affairs and international cooperation will help local governments to promote local economic development by using the international arena to obtain external funds, information and talents. International exchanges and economic growth are related to local interests and are also important weight indicators that determine the promotion of local officials. Local governments in China are oriented towards economic development and formally or informally participate in foreign affairs and strengthen international connectivity and external ties, with the goal of pursuing local interests. At the same time, these local endeavours help China achieve its overall foreign policy goals.

Economic globalisation and China’s deep integration into the world economy have pushed Chinese provinces into the trend of internationalisation and strengthening international ties. Through China’s economic development and the expansion of foreign relations, its provinces and cities have increasingly gained the strength to participate in international cooperation and local diplomatic affairs to further expand the market space for economic development. China has 17 provinces and regions whose economic output exceeds that of South Africa and Argentina, respectively, which are G20 countries with respective economic output of around US$419 billion and US$450 billion.

However, when engaging in foreign exchange and cooperation activities with foreign countries, local governments are inevitably influenced by China’s current foreign policy and the relationship between the central and local governments. Under the current institutional framework, the central government grants local governments the authority to carry out such activities. From an institutional point of view, the lack of legal authorization has made China’s participation in foreign affairs and foreign exchanges ambiguous and uncertain.

China’s local diplomatic activities and participation in international cooperation practice are beset by problems of unclear powers and responsibilities and ambiguous boundaries for authorization of the relations between the central and local governments, between ministries and commissions, and between local and foreign countries. Hence, foreign countries and international organisations tend to have doubts about engaging in exchanges and cooperation with the Chinese local governments.

Therefore, the participation of local provinces and municipalities in international cooperation requires both the authorization of the central government and the establishment of a coordination mechanism between the central and local governments. In the process of local participation in international cooperation, there are contradictions between the handling of legal mandates and the granting of transactional mandates by the state, comprising a contradiction between centralization and decentralisation and another between central policy and the local governments’ need to obtain central approval, which limit the actual external autonomy obtained.

In foreign relations, the factors considered by local governments in China-ASEAN cooperation are different from those considered at the central government level. Local governments give primary consideration to local economic interests and do not pay attention to broader macroareas such as international politics, foreign relations, geostrategy and security. Although the considerations and starting points of the central and local governments are not necessarily contradictory, in the practice of foreign exchanges, the interests of the central and local governments will also differ from time to time, and there will be conflicts between local and central policies.

The outstanding problem in relation to cooperation between local provinces and cities and ASEAN countries is that in the course of exchanges with the ASEAN countries, some localities are vague about their role as “limited participation actors”, unilaterally promote local-led ASEAN cooperation strategy and often lack communication and coordination with the central government. This has led to confusion in ASEAN countries.

5.2 The Role of Chinese Provinces in China-ASEAN Relations

In China’s relations with the ASEAN countries, the role played by China’s local governments cannot be ignored. China’s diverse topography, uniqueness and vast geographical area give local governments the advantage of participating in international cooperation. The economic development of local governments, especially in coastal provinces and municipalities such as Guangdong, Shanghai, Zhejiang and Jiangsu provinces that rely on foreign trade and foreign investment, cannot be separated from foreign economic and trade cooperation and the expansion of international ties.

Chinese President Xi Jinping delivered a speech at the “Symposium on China's Peripheral Diplomacy” held in October 2013: “Accelerate the opening up of border areas and deepen mutually beneficial cooperation between border provinces and regions and neighbouring countries”. President Xi’s statement has laid the foundation for local provinces and cities to strengthen ties with ASEAN countries and participate in multilateral cooperation in the subregion.

Extensive and in-depth local cooperation is a highlight of China-ASEAN relations and an integral part of bilateral cooperation. The breadth and depth of local provinces and municipalities participating in bilateral relations between China and ASEAN countries are not commonly replicated in China’s cooperation with countries in other regions.

Local areas are among the players affecting China-ASEAN relations and have an important role in the development of bilateral relations. Chinese localities, especially provinces with land and water borders with Southeast Asian countries, are very active in engaging in cooperation and bilateral exchanges with ASEAN.

Local economic and trade cooperation with ASEAN countries is more conducive than central government activities to diluting ASEAN’s sense of inequality in cooperation with China and eliminating ASEAN countries’ suspicions and concerns about China’s expansion of geopolitical influence through bilateral trade. For ASEAN countries, working with Chinese provinces and cities can help them to feel more equitable in cooperating with China, reducing resistance and eliminating anxiety and inequality. This, in turn, will help promote bilateral economic and trade exchanges between China and ASEAN.

Local areas’ cooperation with ASEAN countries is conducive to their own economic development and opens up foreign trade markets for enterprises. For many provinces and cities in China, ASEAN is an important partner in carrying out foreign economic and trade cooperation. Regional economic integration and the establishment of the China-ASEAN Free Trade Area have led to the strengthening of bilateral relations between China and ASEAN countries. This also gives local provinces and regions more space to participate in bilateral cooperation and expand the field of bilateral exchanges. Local governments in China are actively seeking central support from the central government, hoping to incorporate local-ASEAN cooperation into the country-ASEAN cooperation framework in order to win central fiscal and other preferential policy support.

5.3 Overview of the China-Singapore Relations

Singapore is strategically located to guard the Strait of Malacca. It is also one of the most important financial centres in the Asia–Pacific region, a major commodity trading market and transshipment logistics centre in Southeast Asia, and an important financial and shipping centre.

Singapore has a comprehensive range of international leading professional intermediaries in finance, auditing, legal, consulting and intellectual property protection. In addition, it has world-class infrastructure, a first-class business environment, clean and efficient government, high social stability, a sound rule of law system, predictable policies and transparent governance, and an open economy with low tax rates.

These factors have, in combination, attracted the attention of Chinese companies. Singapore’s unique strengths place it in a prime position to act as a bridge between East and West. The strengthening of bilateral relations between China and Singapore can act as a template for the development of relations between China and the ASEAN as a whole.

Singapore’s relationship with China can be dated back to the forging of personal friendship between Singapore’s late founding Prime Minister Lee Kuan Yew and Chinese paramount leader Deng Xiaoping. Lee Kuan Yew had always supported China’s reform and opening up, believing that Singapore had to strengthen its engagement with China. Up to his death, he was always concerned with convincing China of Singapore’s relevance as a reference for China’s reform and development.

China’s leadership is well aware that Singapore, despite being a small island economy, is uniquely positioned to be a trusted partner that can add value to China’s reform and development. Bilateral cooperation between the two countries has been developing with the times and is today focused on infrastructure construction, financial services and the third-country market, and professional services cooperation, among other fields.

Since the formal establishment of diplomatic relations between China and Singapore in 1990, bilateral relations have developed rapidly. In 2015, Chinese President Xi Jinping visited Singapore, and China and Singapore established an all-round cooperative partnership that is keeping pace with the times. Based on mutual trust and the particularity of their bilateral relations, China and Singapore have launched four intergovernmental cooperation projects, including Suzhou Industrial Park (launched in 1994), Tianjin Eco-City (launched in 2007), China-Singapore (Chongqing) Strategic Connectivity Project (launched in 2015), and Guangzhou Knowledge City (launched in 2009 and upgraded to a state-level cooperation project in 2018). In addition, the two countries have collaborated on numerous other bilateral cooperation projects, such as the Jilin Food Processing Zone, the Sichuan-Singapore Innovation and Technology Park, and the Shenzhen Smart City.

Singapore has been deeply involved in China’s opening up and regional economic development. Although Singapore is a small city-based economy, it has special advantages that have enabled it to become a reliable partner of China and add value to China’s development. On 6 September 2020, Singapore’s Minister of Trade and Industry, Chan Chun Sing, spoke in an interview with Singapore’s Lianhe Zaobao about the reasons for the enhancement and consolidation of relations between China and Singapore over the past 30 years:

Deep and updated understanding of China’s different stages of development and regional needs, deep mutual trust, and a common pragmatic work culture. ... The relationship between the two countries is not static or one-dimensional, but multifaceted and evolving, and the two sides set the theme and approach of cooperation in line with China’s priorities, which is quite different from Singapore’s relationship with other countries (Han, 2020). 

Economic and trade cooperation between the two countries has in recent decades played a leading and forward-looking role in China’s foreign economic and trade policy. The bilateral trade in goods between the two countries reached US$89 billion in 2020. China has been Singapore’s largest trading partner, largest export market and largest source of imports since 2013. With bilateral trade in services worth US$36.9 billion in 2020, Singapore is China’s fourth-largest services trading partner. In 2021, bilateral trade in goods between China and Singapore reached US$94.05 billion.

Singapore has also been the largest source of foreign direct investment to China since 2013. According to the Ministry of Commerce of the People’s Republic of China, the cumulative direct investment of Singaporean enterprises in China reached US$102.78 billion as of the end of December 2019 and was mainly focused on manufacturing, services and transportation. Singapore’s investment in China accounts for more than 87% of all investment in China by BRI countries (see Table 5.1).

Table 5.1 Milestones in development of bilateral economic and trade ties between China and Singapore

Singapore, as a tiny city-state economy, is highly dependent on foreign trade and investment, since it lacks a hinterland for the domestic market. Therefore, supporting Singapore’s sustainable economic growth requires external raw material and consumer markets, as well as markets for outbound investment, to achieve capital investment appreciation. China and Singapore are geographically close and culturally connected, and China has become an important destination country for Singapore’s national capital and private enterprises and provided an export market for its products.

Since the two countries formally established diplomatic relations in 1990, Singapore’s direct investment in China has surged from just US$50 million in 1990 to US$10.3 billion in 2021 (see Fig. 5.1). In 2021 alone, Singapore set up nearly 1300 new enterprises and investment projects in China.

Fig. 5.1

Source Ministry of Trade and Industry, Singapore; National Bureau of Statistics, Singapore

Singapore’s outbound investment to China.

Temasek Holdings is a Singapore-based sovereign investment company with active investments worldwide. China has become Temasek’s largest investment destination, based on investments spanning a wide range of sectors, including financial services, telecommunications and media, technology, real estate, transport and logistics, industrial manufacturing, life sciences and agri-food manufacturing. According to Temasek’s Annual Investment Report, 27% of its global portfolio (S$381 billion) was invested in China as of March 2021, accounting for S$102.9 billion.

Temasek was established in 1974, in which the Singapore government has a 100% controlling stake. Temasek is also a state-owned enterprise registered in a private name. Temasek manages 23 multinational companies, commonly referred to as subsidiaries, on a holding basis, including 14 wholly owned companies, seven listed companies and two limited liability companies. These companies are also about 2000 large and small enterprises, with a total number of 140,000 employees and total assets of more than S$42 billion. These firms combined under Temasek account for about 8% of the country’s GDP. Temasek controls Singapore’s key sectors such as finance, transport, communications, real estate and energy and dominates Singapore’s economic lifeline.

In the 46 years since Temasek’s establishment and 16 years into China, China has become Temasek’s largest single market for global investment, and the development of the Chinese market is an important factor in the enduring prosperity of Temasek. Today, Temasek’s investment in China has already been pervasive, including China Construction Bank, Industrial and Commercial Bank of China, Ping an Insurance of China, Alibaba, JD.com, Didi Chuxing, Huiyuan Juice and other well-known enterprises.

Furthermore, Singapore is one of the three important overseas RMB offshore settlement centres, alongside Hong Kong and London. It has also become an important destination for Chinese outbound investment and has attracted the largest share of Chinese investment among all the Belt and Road countries. Between 2007 and 2018, Chinese direct investment in Singapore grew nearly ninefold, from US$398 million to US$3.55 billion. By the end of 2019, China’s investment stock in Singapore reached US$33.45 billion, accounting for more than 20% of China’s total investment in countries along the Belt and Road routes.

Building on the four bilateral country-level cooperation projects, Singapore can leverage its advantages as an international financial centre to enhance China’s ability to open up to the outside world and accelerate the pace of internationalisation of Chinese enterprises through increasing China’s investment in the region and throughout the world.

Singapore plays a special and important role in China’s Belt and Road Initiative, having been one of the first countries to endorse and participate in the BRI. On 17 March 2023, Singapore’s Prime Minister Lee Hsien Loong said in an exclusive interview with China Central Television (Prime Minister’s Office Singapore 2023):

The Belt and Road Initiative, in our view, is a way for China to contribute to regional development. The Belt and Road Initiative has been welcomed by the entire region as it helps China integrate into this regional network of cooperation and interdependence, which is mutually beneficial and win-win. Regional development requires infrastructure, and infrastructure needs financing. China has these capabilities to build infrastructure, provide financing, and develop economic and trade ties with countries in the region. With the Belt and Road Initiative, there is a framework within which these ideas can be realized. ... China is the largest economy in our region, and it is important to have an open, sustainable and mutually beneficial relationship with China. From this perspective, we believe that the Belt and Road Initiative is meaningful and we support it. From Singapore’s perspective, what are we contributing to the Belt and Road? First of all, we are a financial center and many projects can be financed and evaluated in Singapore. This is an important infrastructure for the Belt and Road, that is, soft infrastructure. In fact, Singapore is one of the largest offshore RMB trading centers internationally. This is one aspect, on a legal level, Singapore is an arbitration and mediation hub with many international law firms. It is also important to us that countries participating in the Belt and Road Initiative can meet these needs if they need to find a seat of arbitration or provide legal advice.

The cooperative relationship between China and Singapore is also evolving with the times. At present, the investment of Chinese enterprises in Singapore covers e-commerce, financial services, shipping, third-party market cooperation, trade, energy, and infrastructure, logistics, professional services, tourism, real estate and education and training. In addition, Chinese and Singaporean enterprises have successfully joined forces to carry out third-party market cooperation based on their respective advantages (see Table 5.2 for details). Singaporean companies hope to participate with Chinese partners in cooperation with neighbouring countries in Southeast Asia.

Table 5.2 Selected third-party country cooperation projects between Chinese and Singapore enterprises

In April 2018 and April 2019, China’s National Development and Reform Commission and Singapore’s Ministry of Trade and Industry signed the Memorandum of Understanding on Third-Party Market Cooperation and the Memorandum of Understanding on Strengthening the Implementation Framework for China-Singapore Third-Party Market Cooperation, which encourages enterprises of the two countries to use their respective advantages to carry out third-party market cooperation in the fields of logistics, e-commerce, infrastructure, finance and legal and other professional services to achieve mutual benefit and win–win results.

The Singapore government has set a goal of making Singapore a global technology and innovation hub. As a result, China and Singapore have gradually established and developed close cooperation in science and technology and innovation. To keep pace with future competition, countries must vigorously encourage and pursue innovation in science and technology to drive productivity growth and as an important engine of future development. China and Singapore share similar views on the important role of innovation in accelerating the country’s economic transformation and sustainable development. At present, the two countries are engaging in close cooperation in high-tech fields such as artificial intelligence, big data, electric vehicles, new energy development and utilisation, biotechnology and aerospace, and there has been an increase in exchanges of scientific and technological personnel between the two countries.

5.4 Chongqing Connectivity Project and the Western Corridor

In March 2015, the Chinese government issued the “Vision and Actions for Jointly Building the Silk Road Economic Belt and the 21st Century Maritime Silk Road”, which emphasises the following objectives:

To promote the construction of the Belt and Road, China will give full play to the comparative advantages of various regions in China, implement a more proactive opening strategy, strengthen interaction and cooperation between the Eastern, Central and the Western regions, and comprehensively enhance the level of an open economy.

Since the Chinese government proposed the Belt and Road Initiative in 2013, central ministries and commissions have issued preferential policies to promote the Belt and Road Initiative. Moreover, all of China’s provinces and regions (especially those along the ancient Silk Road) have put forward their own schemes for promoting the initiative, hoping to gain a strategic position in the nation’s promotion of the BRI and win preferential policy support from central government, to promote economic development in their local areas.

The China-Singapore (Chongqing) Connectivity Project, which is a flagship project between the two countries under the BRI, is the third government-to-government cooperation project between the two countries and the only one to be established in the western region of China. In November 2015, during China’s President Xi Jinping’s state visit to Singapore, the two governments signed the Framework Agreement on the Construction of the China-Singapore (Chongqing) Strategic Connectivity Demonstration Project and other relevant supplementary agreements in Singapore, which marked the official launch of the China-Singapore (Chongqing) Connectivity Project (the Chongqing Connectivity Project). In 2021, the governments of China and Singapore jointly completed the China-Singapore (Chongqing) Strategic Connectivity Demonstration Project Master Development Plan (2021–2025), and both countries intend this project to become a flagship project under the Belt and Road Initiative.

With Chongqing as the fulcrum, the China-Singapore Connectivity Project will help enhance the internationalisation of the entire western region. The western region needs to open up more in order to attract foreign investment. The China-Singapore Connectivity Project and the construction of new land-sea corridors will promote vitality of the provinces in the western region, accelerate their industrialization and create more local employment opportunities, as well as promote the overall economic and social development of the western region.

The implementation of the China-Singapore Chongqing Connectivity Project is a vote of confidence in the Singapore government’s continued openness towards development of China. Modelled on Singapore’s experience, the China-Singapore Connectivity Project will contribute to China’s new round of opening up and the development of the vast western region.

This platform will also enable Singaporean enterprises to participate fully in the development of the BRI and the western region. In particular, it will encourage sharing of the opportunities brought by the development of the Chengdu-Chongqing Twin Cities Economic Circle. This project expands the hinterland of the overseas market of Singapore enterprises, since it encompasses one of the fastest-growing regions in China in recent years, with a total population of 52.18 million. The Chengdu-Chongqing Economic Circle accounted for about 4.2% of China’s total economy and 12.4% of China’s total foreign investment in 2020.

Chongqing was chosen for the China-Singapore Connectivity Project because of its preferential geographical location and administrative structure as a municipality directly under the central government. Chongqing is the only municipality directly under the central government in the western region and enjoys political resources and preferential policies that other cities in the western region cannot match.

Although it has been 20 years since China promoted the strategy of large-scale development of the western region, this region is still the soft underbelly of China’s development. Economic development in the western region lags far behind not only that of the eastern coastal areas, but also the central region. While the western region accounts for 70% of China’s land area and 27% of China’s total population, it makes only a 20% contribution to the national economy.

However, under China’s “dual-circulation” development strategy, the western region is not only the biggest driving force behind China’s new round of opening up, but also has the greatest potential in terms of building a robust and dynamic domestic economy.

From the Chinese perspective, leveraged on Singapore’s investment, urban management and knowhow on connectivity and industrial development, the strategic goal behind developing the Chongqing connectivity project and the western corridor is to build a convenient trade corridor and integrate the western region into the global economy.

Geographically speaking, Chongqing is located at the junction of the Silk Road Economic Belt and the Maritime Silk Road and therefore plays an important role in the initiative. It is also located in the upper reaches of the Yangtze River waterway, which connects to the domestic Yangtze River Economic Belt. Chongqing has developed into one of the main economic centres in western China and a major global assembly and production base for notebook computers.

The International Land-Sea Trade Corridor (or Western Corridor) is a key cooperation project under the Chongqing Connectivity Project, while the Qinzhou Port in Guangxi is at the intersection of water and land routes in the Western Corridor. The Western Corridor connects Chongqing and Western China with Singapore and Southeast Asia as a whole. The cargo transit route under the Western Corridor is based on the use of a variety of transport modes, including expressways, railways and inland waterways, and maritime shipping, to the southward route reaching Singapore and ASEAN major logistics nodes, and then radiating to the Middle East, Australia and other regions.

The New International Land-Sea Trade Corridor has been gaining political momentum in both countries over the past few years. In June 2022, the governments of China and Singapore jointly signed the Cooperation Plan for the China-Singapore (Chongqing) Strategic Connectivity Demonstration Project “New International Land-Sea Trade Corridor”, proposing to build an efficient, convenient, open and competitive trade logistics channel by 2025. Singapore’s Prime Minister Lee Hsien Loong recently commented on the significance of Chongqing Connectivity Project and the Western Corridor:

The integrated transport corridor of the new international land-sea trade corridor from Chongqing to Guangxi to Beibu Gulf is part of the Belt and Road initiative, opening up new routes connecting Chinese mainland abroad. China has established access roads to foreign countries through the Yangtze River, but the distances are long and water transportation is very busy. Therefore, we believe that the establishment of another shorter and faster corridor with Southeast Asian countries and the rest of the world makes a significant contribution to the joint construction of the Belt and Road Initiative.

For Singapore, participating in the construction of a new land-sea corridor in China’s western region, will help cement its position as a key maritime trade hub in the region. Singapore is no stranger to Chongqing, which has been the largest source of foreign investment for many years. Many Singaporean companies have settled in Chongqing and subsequently radiated across the entire western Chinese market. For example, CapitaLand, Mapletree, Raffles Medical Group and BreadTalk all have entered Chongqing. The three major banks in Singapore, including DBS Bank, United Overseas Bank (UOB) and OCBC Bank, have also established presences in Chongqing.

With Singapore and Chongqing as the hub, the China-Singapore Connectivity Project can facilitate the connection and further integration of China’s western provinces with the ASEAN countries. Through the interconnection between Chongqing and Singapore, Chongqing and other western provinces will be more widely interconnected with Singapore and Southeast Asia.

The Chongqing Connectivity Project has made substantial progress in the past five years, and the Western Corridor is attracting further participation by 13 provinces, municipalities, and autonomous regions, including Inner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Shaanxi, Tibet, Gansu, Qinghai, Ningxia, Xinjiang and Hainan, as well as the Zhangjiang city of Guangdong, which have already signed the agreements and formally participated in the project.

The China-Singapore connectivity project focuses on the areas of transport and logistics, financial services, aviation and information and communications, through which bilateral cooperation is progressing. Enterprises from Singapore and China have cooperated to establish the China-Singapore (Chongqing) Huilian Pucheng Multimodal Intelligent Logistics Base to enhance the external connectivity of Chongqing’s logistics industry.

In the financial services industry, western provinces, including Chongqing, have received more than US$10 billion in different forms of financing through Singapore, which is conducive to the economic development of the western region. In the aviation sector, Singapore’s Changi Airport Group has worked with local partners to manage Chongqing Jiangbei Airport’s catering, retail and advertising businesses to enhance the airport’s international service standards. In the field of information and communication, Singapore Press Holdings Group cooperated with ZBJ.com in Chongqing to build a bilingual e-commerce platform, which has been launched in Singapore.

The Chongqing Connectivity Project uses Chongqing as its operation centre, but it is an open and shared development platform for the entire western region of China and the ASEAN. The project welcomes the participation of all 12 provinces in western China, as well as ASEAN partners. Openness is a feature of the Chongqing connectivity project that represents one of its biggest advantages.

The port of Qinzhou, located in Guangxi, is the meeting point of the sea and land routes of the Western Corridor. The Western Corridor connects Chongqing and Western China with Southeast Asian countries (via Singapore). Once the new international land-sea trade corridor, a southbound strategic channel with equal emphasis on railway, sea and land, is open and its operations start to mature, it will effectively reduce the costs and transit time of logistics in the western region. For western provinces such as Yunnan, Guizhou and Sichuan, the new international land-sea trade route is more advantageous than the existing land transport through China-Thailand and China-Myanmar, or the sea freight through ports such as Guangzhou, Shanghai or Shenzhen, which can greatly reduce the distance, transportation cost and transit time of goods (Table 5.3).

Table 5.3 Comparison of cargo shipping routes from Chongqing to Singapore

The Western Corridor provides convenient and direct access to the sea for the western provinces of China and is also the most convenient passage connecting western China with the world. On the one hand, more Singaporean enterprises will be attracted to invest in the western region, including Chongqing, through the Western Corridor. On the other hand, more western enterprises and products will enter Singapore, ASEAN countries and even the global market through the Corridor.

Since the launch of the new corridor, the volume of goods transported through the corridor has grown rapidly, from 3382 TEUs in 2017 to 756,000 TEUs in 2022 (Fig. 5.2). Singapore is an important node of the BRI, based on its status as one of Asia’s main trading hubs. This new trade corridor connecting China’s western hinterland with Singapore will enable fresh agricultural products from China’s vast western provinces to be quickly transshipped through Singapore to markets in such as Southeast Asia, South Asia, the Middle East, Europe, the South Pacific and Africa.

Fig. 5.2

Source Ministry of Commerce of China; Ministry of Trade and Industry, Singapore

Cargo transportation volume by Western Corridor.

5.5 Building the Western Corridor Requires the Participation of More Partners

The new international land-sea trade corridor or Western Corridor is gaining strong political support and development momentum, based on endorsement by the Chinese and Singapore authorities. Nevertheless, its development sustainability and commercial viability not only depend on political support, but also the participation of the private sector and other multiple stakeholders, such as the Chinese western provinces and the ASEAN countries.

The Western Corridor is still in its infancy and the relatively high costs of operation and logistics are thorny issues facing the Western corridor. First, Li’s study (2020) found that the Western corridor faces the problem of insufficient volumes of cargo goods for transport, especially for the return trip from Southeast Asia to China’s western provinces. Although Chongqing is an important economic centre in the western region, its economic volume is small and it lacks regional economic radiation capacity. In 2019, Chongqing’s GDP was RMB2.36 trillion (S$472 billion), accounting for only 2.3% of China’s economy. In terms of foreign economic ties, Chongqing accounts for only 2.4% of the bilateral trade volume between China and ASEAN.

In economic development terms, Chongqing not only lags far behind coastal provinces such as Shanghai and Zhejiang, but its total economic output is smaller than that of other western cities, namely Sichuan and Shaanxi. The supply of goods from Chongqing alone is not enough to support the sustainable development of inflow of goods through the Western Corridor.

The western corridor faces the problems of insufficient sources of foreign trade goods. The Western Corridor needs to attract active participation of more enterprises from western provinces and ASEAN countries in order to achieve economies of scale and further reduce logistical costs. This will help to strengthen economic momentum and achieve sustainable development of the Western Corridor.

Moreover, the China-Singapore connectivity project needs to enhance the commercial attractiveness of the western corridor by reducing the cost of transporting goods, improving operational efficiency and facilitating customs clearance. For example, at present, there is considerable imbalance between southbound cargo transportation and northbound cargo transportation in the western corridor.

To achieve smooth operation of the corridor, it is essential to break down the institutional barriers in transportation, logistics, trade and other fields along the route, coordinate the customs systems and standards for market access and supervision, and establish mutual recognition of quality and qualifications between regions. It is necessary to deepen international collaboration on customs, focusing on the efficiency of multimodal customs declaration and convenient customs clearance policies.

While attracting more participation in western China is critical to the prospects of the China-Singapore connectivity project and the western corridor, in the case of the China-Singapore Chongqing Connectivity Project, there is as yet no institutionalised coordination mechanism covering all participating provinces and regions in the western region. The Chinese central government needs to further demonstrate leadership by coordinating the participation of western provinces and regions in the Chongqing connectivity project and the construction of the Western Corridor at the national level. Such a mechanism, led by the Chinese central government, would help to resolve the interprovincial disputes and to standardise cross-provincial customs clearance.

Local governments in China are oriented towards economic development and strive to pursue local interests by strengthening external connectivity and international cooperation. Therefore, local participation in the China-Singapore connectivity project will depend on whether the project can meet the local economic development needs.

The changing global geopolitical environment could also have a potential impact on regional logistics and transportation and industrial chain layout, thus bringing new variables and uncertainties to the Chongqing connectivity project and the development of the western corridor. Hence, the China-Singapore connectivity project needs to demonstrate flexibility and resilience in response to external changes.