By Zhang Jiuhuan
This has been the most unforgettable experience of my diplomatic career. A window of reform and opening-up, China-Singapore Suzhou Industrial Park (SIP) in eastern China’s Jiangsu Province broke ground in 1994. It remains a flagship intergovernmental project between China and Singapore, and the first industrial park built by China in partnership with another country. Although the park is now regarded as a key test field for China’s reform and opening-up and international cooperation, the process was far from smooth.
Motion: Choosing Suzhou
In August 2000, I assumed the post of Chinese ambassador to Singapore. I was greeted by a ticklish problem regarding the building of SIP. The two sides were divided on some issues. Some from Singapore had no interest at all in the cooperation and wanted to just end the talks.
To understand the situation, we should go back to the beginning. In 1992, former Chinese leader Deng Xiaoping gave the famous “southern tour talks” during his visit to the four southern cities of Wuchang, Shenzhen, Zhuhai and Shanghai. “Singapore has good social order,” Deng declared. “We should learn from it, and we could do better.”
People in Singapore keenly sensed opportunities from Deng’s talks. The same year, then Prime Minister Goh Chok Tong and Senior Minister Lee Kuan Yew made a visit to China. During the trip, they expressed willingness to work with China and proposed introducing Singapore’s practices to China by jointly establishing an industrial park. China responded with interest in this proposal. After several field surveys and rounds of negotiations, the two countries agreed to build an industrial park in Suzhou.
On February 26, 1994, China and Singapore signed an agreement on such a partnership in Beijing, pledging to build a large-scale modern industrial park backboned by high-tech industries and supported by the tertiary industries and public services. The two sides jointly set up China-Singapore Suzhou Industrial Park Development Co., Ltd. as the developer. The company was established with registered capital of US$ 50 million and an estimated total investment of US$ 100 million, with Singapore and China holding 65 percent and 35 percent of the shares respectively.
On May 12, the SIP was launched in a jubilant atmosphere. “Singapore and China have been working hard on this project,” stated Lee Kuan Yew in his opening remarks. “I believe it will help spread Singapore’s experience to China, push its reform and opening- up, and foster development of bilateral relations.”
Frustration: Adjusting the Share Ratio
At first, the project progressed smoothly. Problems first arose over disagreements between local partners in Suzhou and the Singaporean side. Singapore demanded rigorous standards on construction of water and power supply facilities, roads and factories. For example, Singapore required tap water to be drinkable, which was an impossible task to Suzhou. But people from Singapore insisted on standards that were commonplace back home.
Before the SIP, the local municipal government had established a new economic district in the west of the city. It aimed to relocate people living in downtown areas as it underwent renovation and upgrades. Thanks to business incentives, the district attracted many investors. This sparked concerns from the Singaporean side over the negative impact on their investment in the SIP.
Their concerns increased until it was a pressing issue. The Chinese side proposed a solution after mature deliberation and negotiation with Singaporean partners. The plan suggested a reversal of share ratio, meaning China would replace Singapore’s proportion of 65 percent of the shares in the China- Singapore Suzhou Industrial Park Development Co., Ltd, allowing it to play a dominating role in developing and managing the industrial park. In June 1999, the two sides made it formal after inking a supplementary agreement, which took effect on January 1, 2001.
The signing of the supplementary agreement signified a big step toward a solution. However, some from Singapore were still skeptical on whether the industrial park could overcome the local competition. When I took office in August 2000, I sensed pessimistic feelings from Singapore. It was my job to clear the air and set their hearts at rest. I made visits to local dignitaries, attended events in academia and business circles, and took every opportunity to talk and communicate with locals to gain understanding and build common ground.
Cooperation: Transplant to Adaptation
In the process, I pinpointed the crux of the problem. Singapore had intended on transplanting its practices when building SIP from the start. The country’s Jurong Industrial Estate is one of the first industrial hubs of Asia and the cradle of its industrialization. The estate has been regarded as a successful project since the early days of Singapore’s economic takeoff. Consequently, the country planned to completely transplant the entire practice to Suzhou, where it ran into major snags with local partners.
Many people from Singapore were quite familiar with Chinese culture. I shared a Chinese story with them. Citrus fruits grow on both sides of the Huaihe River in China. However, trees on the south side produce sweet tangerines, while those on the north have bitter oranges. I continued with the story of Yuan Longping, dubbed the father of hybrid rice in China. Yuan developed hybrid rice based on Chinese national conditions and enabled Chinese people to receive adequate food through increased rice yields. Some 20 to 30 years after its independence, Singapore successfully emerged as a developed country. It was not just because it adopted Western practices. No matter how many techniques were at its disposal, Singapore’s experience could not generate fruit without adapting to local conditions. After rounds of exchange and discussion, the Singaporean side acknowledged that it was not feasible to transplant everything to Suzhou.
After the share ratio was adjusted, Suzhou took the primary responsibility of development and management, while Singapore continued to provide technical and expertise support. By the end of 2003, China-Singapore Suzhou Industrial Park Development Co., Ltd. had maintained profitable for three years in a row and offset the cumulative losses after its inception. The total output of the SIP that year was equivalent to the municipal GDP in 1993. It is no exaggeration to say that the SIP re-created Suzhou in 10 years. Since then, the industrial park has continued on a fast-growing track.
In 2004, I visited then President S. R. Nathan to bid him farewell at the end of my term. He brought up the SIP, noting that while spreading experience to Suzhou, Singapore also learned a lot from China over the years of cooperation. The SIP has become a model of China’s cooperation with foreign partners in building industrial parks. The successful experience has been widely recognized. As the Belt and Road Initiative expands, China and Singapore will embrace new opportunities and achievements in cooperation.