- 2018-10-29
Is Singapore's economic crisis emerging?
The second son and daughter of former Singapore Prime Minister Lee Kuan Yew, and Singapore’s Prime Minister Lee Hsien Loong’s younger brother Lee Hsien Yang and younger sister Li Weiling, issued a six-page statement entitled "Where are Lee Kuan Yew's Values?" at 3 a.m. on June 14. His elder brother, the current prime minister of Singapore, Lee Hsien Loong, lost confidence and was worried about Singapore’s future.
We will not elaborate on the political field. Let’s take a look at Singapore’s economic situation in recent years.
Singapore's economic rise: Lee Kuan Yew contributed a lot
In 1965, Singapore was expelled from Malaysia. When the prime minister heard the news, he couldn't help crying. That poor fishing village that was forced to become independent. Even drinking water needs to be provided by Malaysia. Who would have thought that it could become one of the four dragons that took off in Asia under the creation of Lee Kuan Yew.
Today, 50 years later, Singapore has become the fourth largest international financial center after London, New York and Hong Kong, one of the world's electronic industry centers, the third largest oil refiner in the world, and one of the richest countries in the world.
Lee Kuan Yew’s economic strategy is to make Singapore a base for foreign investment. For this reason, his choice is to establish a capitalist free market system, protect property rights, open the country to international trade and investment, and welcome multinational companies to invest and set up factories.
At the same time, what Lee Kuan Yew pursued is not a market economy in the full sense of the word. Companies owned or controlled by the Singapore government account for more than 60% of the economy, covering many fields such as manufacturing, finance, trade, shipbuilding, energy, and telecommunications. The most commendable is the cleanliness of Singapore. Lee Kuan Yew uses severe penalties to combat corruption and has zero tolerance for corruption. Once discovered, he will inevitably be punished severely. There is no chance that corrupt elements will escape by chance. In addition, in order to protect local banks, the Singapore government has restricted market access for foreign banks for more than 30 years after the founding of the country.
The most important thing is the Strait of Malacca. The Strait of Malacca is one of the world's most important maritime channels for energy and trade, and a quarter of the world's trade and energy share passes through here. China, Japan, South Korea, North Korea, Taiwan, Hong Kong and Macau, and even the Far East of Russia. Goods from Africa and Europe must pass through the Strait of Malacca.
The decline of Singapore's economy: Lee Kuan Yew passes away
Singapore is a foreign trade-driven economy. The total amount of foreign trade is about 4 times Singapore’s GDP. The source of the economy mainly depends on the Strait of Malacca. It has become an important financial center and shipping center in the world. It is very dependent on overseas markets. The importance of globalization to Singapore can be imagined. However, there are signs of retrogression in globalization and the rise of trade protectionism. The open economy of Singapore is undoubtedly very vulnerable to shocks: Singapore has experienced a significant decline in the past two years.
Economically, in the first three quarters of 2016, there was a month-on-month contraction. Although a major explosion occurred in the fourth quarter, the overall growth rate of 2% for the whole year made the previous economic glory gradually fade away. Singapore's two pillars of the national investment company-GIC (Government Investment Corporation of Singapore) and Temasek also suffered heavy losses, and Singapore Airlines Group's rate of return continued to decline.
In terms of diplomacy, Singapore’s international status is deteriorating. The TPP it promotes has been abandoned by the United States. Its foreign policy under the U.S. system has not received obvious support from the Trump administration, and its intervention in the South China Sea issue has failed to do so. The international rating agency Moody's released a report, downgrading the outlook rating of the Singapore banking system from "stable" to "negative". Fitch also pointed out that DBS, UOB and Overseas Chinese Banks in Singapore had a significant increase in default rates from the end of last year.
In the longer term, the competition in cities such as Shanghai and Shenzhen has also made Singapore dwarfed. In a great sense, the prosperity of Singapore in history has robbed Shanghai's jobs. Regarding the monopoly of the Malacca Strait, China is gradually breaking away from this predicament-preparing to cooperate with Thailand to dig a canal in the Kara region to open up the Indian Ocean and the Pacific Ocean.
Now, the policies of the Shanghai Free Trade Zone, the facilities of the Yangshan Deepwater Port, and China's huge hinterland advantage are taking back Singapore's status as a "super logistics center" little by little. However, Singapore has internal worries despite the unresolved external troubles, and the future economic development can be said to be worrying.
Is Singapore's internal and external troubles exhausted?
To solve economic problems, while dealing with internal worries, it is necessary to consider the actual situation of Singapore’s lack of resources, overcome the deformity of its own economic structure, and solve the problem of Singapore’s lack of national core competitiveness. It is necessary to adopt measures such as introducing talents and reducing costs to build Singapore into a "Silicon Valley" with "finance, intelligence, and life sciences" as its core competitiveness.
At the same time, in addition to its unique geographical location, Singapore’s past economic development and take-off benefited from its role as a bridge between China and the Western world. Therefore, Lee Hsien Loong must realign Singapore’s position and eliminate the negative impact of previous policies. Only by getting on the fast train of China's economy can the long-term prosperity of Singapore's economy be guaranteed.
Successor issue
Looking back at the hidden question inspired by this incident: Who will succeed Lee Hsien Loong?
Judging from Lee Kuan Yew’s arrangement, it is obvious that Lee Hsien Loong is designated as his successor. Whether this hereditary system can be passed down for several generations, to be honest, the three Lee’s brothers and sisters are probably not sure, because Lee Hsien Loong suffers from two types of cancers and his destiny can go. How far is unknown. If Lee Hsien Loong is suddenly unable to govern due to physical reasons, it will lead to political turmoil in Singapore. This is probably a concern for all Singaporeans, so the succession issue has been listed as a major political issue in Singapore. To pass the throne, I am afraid that it can only be passed to the son of Lee Hsien Loong. Li Weiling raised this topic as a test of Singaporean public opinion. If there is no strong opposition, Lee Hsien Loong's son will be trained as a successor.
Judging from the two problems of Li Weiling and Li Xianyang's Facebook accusations against Li Xianlong, the infighting of the three Li brothers and sisters is intensified. It is purely external, not internal. The real internal cause is to test the emotional and loyalty of Singaporeans towards Lee Kuan Yew and the Lee family through hype about the demolition of Lee Kuan Yew’s old residence. If there are not many people who oppose it, and there are many people who support it, it means that Singaporeans support the hereditary system of the Lee family, then Lee Hsien Loong’s son will formally enter the ranks of successor training and assume an important role to ensure Singapore’s political stability.