Singapore: The Belt and Road’s Gateway to India

Singaporean companies facilitate Chinese Belt and Road funding in outspoken critic, India.

Singapore: The Belt and Road’s Gateway to India

Singapore’s Prime Minister Lee Hsien Loong, left, and Indian Prime Minister Narendra Modi pose for the media ahead of their meeting in New Delhi, India, Thursday, Jan. 25, 2018.

Credit: AP Photo

Next year, the United Nations’ convention on mediation is to be named after Singapore. The city-state’s position as a neutral mediator has been in focus since hosting the U.S.-North Korea summit on June 12. However, Singapore has also been the partner of choice in facilitating cooperation, particularly for businesses, between the larger conflicting nations, China and India, since 2015. What is especially interesting is Singapore’s role in India, where it has acted as an intermediary for Chinese investment as a part of the Belt and Road Initiative (BRI). The success of Sino-Indian cooperation on the commercial front lends hope for the future of the political relationship considering the recent warming of ties between the two states.

India has been one of the BRI’s biggest critics. At the Shanghai Cooperation Organization (SCO) days before the Singapore summit on June 10, India was the only country to renounce China’s BRI, a trillion-dollar global investment project, on the grounds that it encroached upon the sovereignty and territorial integrity of participating countries. In the past, New Delhi lawmakers have criticized the BRI’s China-Pakistan Economic Corridor (CPEC), which passes through what India considers its territory in Pakistan-administered Kashmir. For its part, Beijing has been accepting of New Delhi’s perspective, conceding that the latter’s position is “quite normal” and emphasizing a common desire to support “interconnectivity.”

In contrast, Singapore has been an early and strong supporter” of the BRI, according to Prime Minister Lee Hsien Loong. The young city-state has been eager to fortify its role as regional financial hub, and it has been successful in doing so. Thirty-three percent of all investments from China to BRI countries and 85 percent of investments bound for China from BRI countries flow through Singapore. Both governments have even signed a Memorandum of Understanding where the two will cooperate under the BRI in third-party markets by developing and financing projects in sectors of mutual interest.

Although the agreement was only signed in April this year, Singaporean companies have been working together with their Chinese counterparts to invest in other countries along the Belt and Road for several years. Specifically, Singaporean state-owned Ascendas-Singbridge agreed to collaborate with China Machinery Engineering Corporation (CMEC) to develop industrial and business parks in India, among other countries, as part of the BRI.

OneHub Chennai is one such key joint project. Ascendas-Singbridge developed the industrial park with Indian real estate company IREO and Japanese businesses, and partnered separately with CMEC and China National Machinery Industry International (CNAICO) for the project’s preliminary investigation, promotion, and investment viability in the Chinese market as a BRI project. In addition, in February 2017 CMEC Chairman Sun Bai met with the Chinese ambassador to India and referenced another cooperation project in the Indian state of Andhra Pradesh — most likely the startup region of Amaravati City, slated to be the state’s new capital. It is striking that CMEC is involved, however indirectly through the Singaporean consortium, in the development of a key city in India.

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These projects remain largely unpublicized because although India is ideally positioned to benefit from Chinese business investment, direct BRI investment is not possible due to New Delhi’s strong stance on the initiative. As a result, Singaporean companies provide a convenient and indirect conduit for Chinese funding. This kind of arrangement is possible given Singapore’s history, since 1992, of successful cooperation projects individually with both countries.

Another reason this arrangement is politically expedient to New Delhi is that India has been trying to balance interests with its eastern rival by capitalizing on relations with the United States. Former U.S. Secretary of State Rex Tillerson endorsed India’s position on the BRI in 2017, part of a strategy to challenge China’s increasing influence in the region. In line with this approach, the United States revived the Quadrilateral Security Dialogue along with India, Japan, and Australia in 2017, and formulated plans for a BRI “alternative” in February this year. Thus it has been in New Delhi’s interests to keep any BRI-related involvement in India under wraps to align its position with Washington’s.

From Singapore’s perspective, there is also a strong incentive to play this intermediary role to smooth over recent frictions in its relations with China. The city-state’s relations with Beijing have been tense amidst the backdrop of the South China Sea dispute. Singapore has tried to maintain its neutrality between Southeast Asian claimants (Vietnam, the Philippines, Indonesia, and Malaysia) and China, but has faced Beijing’s criticism for not fully supporting its position when it is the city-state’s largest trading partner. Tensions were so extreme that in 2017, China did not invite Singapore, one of the BRI’s biggest proponents, to a Belt and Road Summit in Beijing. As such, the cooperation between Singaporean and Chinese firms in India is a way to exploit business relations toward improving political ties with China, especially as Singapore completes its rotation as Association of Southeast Asian Nations (ASEAN) chair.

It is particularly interesting to consider the China-Singapore-India arrangement as it correlates to the recent Sino-Indian rapprochement. Indian Prime Minister Narendra Modi’s stance has shifted to be more inclusive of Beijing and its role in Asia. On August 7, India announced that it will no longer take part in the Quad’s BRI alternative to avoid the formation of security blocs in the region. While this shift in foreign policy may seem surprising, it builds off of the same principle of mutual benefit that underpins the business cooperation in India that China has been a part of since 2015.

Singapore opened the gate for Chinese cooperation with India in the economic realm, and it seems that New Delhi and Beijing are open to expanding their cooperation to regional politics, as demonstrated by the warming of ties under Modi. One would hope that Sino-Indian ties will continue this positive trend — perhaps in the future, an intermediary may not even be needed to pave the way for such cooperation.

Divya Ryan is an International Relations major at Pomona College. She grew up in Singapore, and is an intern in the Asia Pacific program at the EastWest Institute

The views expressed in this article are the author’s own and do not necessarily reflect the views of the EastWest Institute.