Singapore signed an agreement with China to strengthen cooperation on the Belt and Road Initiative, aiming to expand the city-state's involvement in massive infrastructure projects led by Chinese companies.
The two sides inked a memorandum of understanding in Beijing on Sunday to set up a governmental working group tasked with formulating plans for greater collaboration between companies from both countries in third-country markets covered by the Belt and Road initiative.
Singapore and China will also work with financial institutions in the two countries to assist with financing and consulting needs.
The understanding was signed by Singapore's National Development Minister Lawrence Wong and Zhang Yong, China's National Development and Reform Commission vice chairman. Chinese Premier Li Keqiang and Singapore's Prime Minister Lee Hsien Loong were also at the signing ceremony.
The agreement "will pave the way for closer partnerships between our companies in third-party markets, one of the key cooperation pillars that Singapore and China have identified under the Belt and Road Initiative," Lim Hng Kiang, Singapore's trade minister, was quoted as saying by Channel NewsAsia. "Singapore's strength as a key infrastructure, financial and legal hub in the region will add value to Chinese companies expanding along the Belt and Road," Lim said
For Singapore, taking part in the Chinese led development project has become vital to economic growth as the city-state struggles to remain an Asian trade hub and attract international companies.
Singapore was slow to get involved in the initiative. Prime Minister Lee, unlike many Asian leaders, was not present for the first international conference hosted by China on the project in May 2017.
To shore up relations, Lee visited Beijing last September and met with Chinese President Xi Jinping. The following month, Singapore sent Finance Minister Heng Swee Keat, who is seen as a contender to become Singapore's next prime minister. Singing the deal further cements Singapore's ties with Beijing.
There are risks in becoming too cozy with China, however. The city-state has been careful to maintain its relationship with the U.S. With Beijing continuing to build artificial islands in the South China Sea, Singapore cannot afford to alienate Washington, which it relies on for security.