After Labour's ill-conceived Chinese surname saga, Finance Minister Bill English gave a hint about potential backlash (though, not in so much words) from the Chinese Government after returning from that country recently. But if Singapore example is anything to go by, protecting one's national interests (read - selling milk to China) without upsetting the Chinese Government (read - enforcing a stamp duty on foreigners buying property in Auckland) is certainly feasible.

Mike Yardley, a columnist for The Press, last year argued for New Zealand Government introducing cost-prohibitive stamp duties to cool down the property market. “It's precisely what Singapore and Hong Kong have successfully done, to protect their housing from being gouged by their omni-potent brother, while maintaining immense trade relations,” he wrote.

And as is detailed below, Yardley had hit the bull's-eye here!

In fact, given the state of affairs now, its difficult to believe that Singapore was the last country in ASEAN to formalize relations with China in 1990, shortly after Indonesia did so.

Nowadays, Sino-Singapore relations are often described as - pragmatism at its best - in diplomatic circles.

A hedging approach

“Ultimately, Singapore must always be pragmatic above all else. While Singapore will remain optimistic and work towards the prospect of a peaceful and responsible China, she must always retain its fall-back options of US involvement and a credible Singapore Armed Force (SAF).” This conclusion which appeared in Pointer – official journal of the SAF, under the article, Hedging for maximum flexibility: Singapore’s pragmatic approach to security relations with the US and China, aptly summarises Singapore approach to its relationship with China.

Maj Cai Dexian, who is an armor infantry officer in SAF further wrote, “Singapore has always taken great pride in her pragmatic, non-ideological approach to foreign policy, adhering to lord Palmerston’s (British PM between 1855-1865) invocation that 'we have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow'.”

“Singapore has not and will not adopt pure balancing or bandwagoning strategies, because neither fulfils her core interests of survival and prosperity through regional stability and freedom of manoeuvre. Instead, Singapore must find ways to position herself via-à-vis the great powers in a way that will maximise her interests while minimising risk, and therefore should take up a 'hedging' approach.”

Praise all around

Dexian's point is stressed again by the London School of Economics (LSE) and Political Science in its publication, The New Geopolitics of South-east Asia.

“Singapore hedges its cultural, spatial and economic proximity to China with robust diplomatic, military and economic relations with the US and through regional participation in ASEAN and international organisations. By doing so, Singapore pursues its grand desire to remain uniquely Singaporean,” wrote Robyn Klingler Vidra in LSE's publication.

In a report prepared by the Congressional Research Service, which was submitted to the members and committees of US Congress, it was noted that while Singapore has praised the Obama Administration's renewed “rebalancing efforts” towards Asia, it has been careful to warn that anti-China rhetoric or efforts to “contain” China’s rise will be counterproductive.

During an April 2013 visit to Washington, Singapore's Prime Minister Lee advised the US to strengthen its economic ties to the region and develop more trust with Beijing, the report said.

“Maintaining strong relations with both China and the United States is a keystone of Singapore’s foreign policy. Singapore often portrays itself as a useful balancer and intermediary between major powers in the region. In the South China Sea dispute, for example, in 2011 Singapore—a non-claimant—called on China to clarify its island claims, characterizing its stance on the issue as neutral, yet concerned because of the threat to maritime stability. At the same time, Singapore was hosting a port visit by a Chinese surveillance vessel, part of an ongoing exchange on technical cooperation on maritime safety with Beijing,” added the report authors.

Reasons

An explanation of Singapore's highly successful pragmatic approach in dealing with China is given by The National Institute for Defense Studies (NIDS), Japan, in its publication, The Rise of China: Responses from South-east Asia and Japan.

“The tired but not retired cliché that Singapore, because of its large ethnic Chinese constituency (nearly 76% of the total population), constitutes a 'third China' fails to take into consideration the fact that Singapore, ensconced between two larger Malay-Muslim neighbours, treads very cautiously when relating to Beijing. In this regard, Singapore has worked especially hard to shake off the label of itself as 'a Chinese island in a Malay sea' so as to avoid being distracted from its domestic goals by unnecessary attention provoked by any perceived effort on its part to bandwagon with China,” argued See Seng Tan in his article Riding the Chinese Dragon: Singapore's Pragmatic Relationship with China, for NIDS.

“For example, in deference to regional sensitivities and concern over criticism that its foreign policy is ethnically oriented, Singapore’s normalization of ties with China did not occur till November 1990, after Indonesia had done so in August 1990. Moreover, it is not simply external considerations that argue against bandwagoning with China, but domestic interracial cum socio-economic ones as well, not least the small yet politically sensitive non-Chinese constituencies of the city-state.”

The Taiwan issue

What is even more remarkable in Singapore's pragmatic “hedging” approach towards China is how it has managed to deal with the “Taiwan issue”.

Vidra in his LSE article explained it further. “In the early years, Singapore and its ASEAN partners were sceptical of China’s motives and approached the relationship with apprehension. Today, however, much of the remaining tension between Singapore and China relate to Singapore’s relationship with Taiwan.”

Taiwan and Singapore have held large-scale military exercises annually for over 30 years and, in 2010, announced the launch of talks related to a free-trade pact under the framework of the World Trade Organization.

“Formal negotiations between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), both members of the World Trade Organisation (WTO) , have commenced for the 'Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership (ASTEP)',” informs International Enterprise (IE) Singapore, the government agency driving Singapore’s external economy.

Maj Cai Dexian also sees it as the clearest example of how Singapore has maintained her political independence by having a close relationship with Taiwan, despite Chinese displeasure.

“Notwithstanding her adherence to the 'One-China' policy and her non-establishment of formal diplomatic ties with Taiwan, Singapore continues her friendly and mutually beneficial relations with Taiwan the defence and economic spheres. While Singapore has at times deferred to China over the Taiwan issue (eg. voting in favour of China’s admission to the UN in 1971, as opposed to Taiwan), she nevertheless continues to display a remarkable degree of independence. For example, Singapore has declined China’s offer of Hainan Island as a training ground to replace Taiwan, demonstrating loyalty to an old friend,” he wrote.

Thus, if Singapore can do it (curb property speculation without offending the Chinese Government), then - and to quote Yardley again - “our ultra-pragmatist Prime Minister” with “his well-tuned instincts” can too, surely.

What Singapore does in its property market to curb speculations

Notwithstanding certain exemptions, remissions and reliefs, there are three types of duties payable on the sale, purchase, acquisition or disposal of properties in Singapore:

Buyer's Stamp Duty (BSD) - payable on the purchase or acquisition of properties, computed based on the purchase price or market value of the property, whichever is higher; rates vary from 1 to 3 percent
Seller's Stamp Duty (SSD) – payable on buying residential properties and industrial properties if the properties are sold within the holding period, which varies from one year to up to four years
Additional Buyer's Stamp Duty (ABSD) – introduced in 2011; payable on top of BSD; applies to foreigners, as well as Singaporeans buying more than one residential property; the rate for foreigners is 15 percent flat

ABSD is something for the New Zealand Government to look into so as to curb property speculation either from foreign buyers or even from wealthy New Zealanders.

Inspite of the above the recent Sino-Singapore collaborations include:

China became Singapore's largest trade partner in 2013
The China-Singapore Free Trade Agreement (CSFTA), which came into effect in January 2009, is the first comprehensive bilateral FTA that China has concluded with an Asian country
Two flagship government-to-government projects – Suzhou Industrial Park and Tianjin Eco-city
Private sector-led initiatives including the Guangzhou Knowledge City, Singapore-Sichuan Hi-Tech Innovation Park, and Jilin Food Zone
Singapore's development as an offshore Yuan hub, with the Industrial and Commercial Bank of China started its Yuan-clearing services in the city-state in 2013