Can Tiny Singapore Win Big from the US-China Trade War?

Singapore’s demographics

Until 1965, Singapore was part of Malaysia. Singapore is the smallest country by area (710 square kilometers) in the Association of Southeast Asian Nations and the second-least populous country (population of 5.9 million) in the region.

Singapore was the only developed country in the region with a per capita GDP of $57,714 in 2017. With a median age of 40.5 years, Singapore’s population is considerably older than its peers’. Singapore’s female labor force participation rate of 60% is higher than in most of its peer countries’ except Vietnam’s.

Because Singapore is a tiny country with an older population and higher wages, demographics may be its weak point in terms of its being a formidable replacement for China.

Export and manufacturing capabilities

Singapore’s strategic location makes it a trading powerhouse. Its exports stood at a whopping 173% of GDP against China’s 19.8% and the world average of 29% in 2017. A large part of these exports are re-exports, as Singapore acts as a trading hub between the east and the west.

In terms of manufacturing, Singapore is well known for manufacturing semiconductors and circuit boards, which could help it become the preferred destination for high-tech goods manufacturers looking to shift away from China. Nomura believes that Singapore could be the third-largest beneficiary of production relocation away from China.

Relations with the US and China

Singapore is a long-standing US ally. However, the country is trying to balance its relationship with China and the US. President Donald Trump surely wouldn’t mind factories setting up shop in Singapore.

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