CHAPTER 12: "Between Giants"
As the twentieth century progressed and China's role in the region began to shift in the aftermath of the Cold War, Singapore faced a complex and delicate diplomatic puzzle. The relationship between Singapore and the People's Republic of China was the most complex bilateral relationship that Singapore maintained, laden with historical, ethnic, and strategic complexity that other relationships simply did not carry.
Singapore's ethnic composition was seventy-four percent Chinese by the time of independence, making it a city with a predominantly Chinese population in a region where Malays and other Muslim peoples dominated. In the 1950s and 1960s, before Singapore's separation from Malaysia and immediately after, the People's Republic of China was engaged in supporting communist insurgencies throughout Southeast Asia. The government in Beijing, under Mao Zedong, saw the overseas Chinese as a potential base for communist expansion in the region. Singapore's government, led by Lee Kuan Yew and his PAP, was firmly opposed to communism, and Lee had spent the early years after taking power suppressing the communist insurgency within Singapore. The relationship with Beijing was therefore inherently tense.
For nearly a quarter-century after the Communist Revolution in China in 1949, Singapore did not recognize the People's Republic. This was not because of lack of interaction—Chinese officials and businesspeople visited Singapore, and Singaporean businesspeople conducted informal trade with China. But formal diplomatic recognition did not occur. Singapore maintained its diplomatic relations with the Republic of China (Taiwan), which had retreated to the island after losing the Chinese civil war. This recognition reflected Singapore's non-aligned stance (not taking sides in the Cold War), but it also reflected the practical advantage of maintaining ties with Taiwan's business community and the caution about becoming too closely tied to the PRC.
The turning point came in 1978 with Lee Kuan Yew's visit to Beijing and his meetings with Deng Xiaoping. This encounter was one of the most consequential moments in Singapore's diplomatic history. Deng Xiaoping had just consolidated his power in China and was beginning to chart a new direction for the nation. The Cultural Revolution had devastated China economically and socially, and Deng was determined to reform the Chinese system, opening it to the world and pursuing what would become known as "socialism with Chinese characteristics." Deng was not interested in supporting communist insurgencies in Southeast Asia; he was interested in pragmatic economic development and in learning from the successes of others.
Lee and Deng met, and it was a meeting of two pragmatists who respected each other's accomplishments. Lee explained Singapore's economic model—the use of foreign investment, the role of the state in guiding development, the importance of meritocracy and technical competence in government, the focus on long-term planning and rational administration. Deng was impressed. Over the years that followed, thousands of Chinese officials came to Singapore to study the "Singapore model." The relationship between the two countries began to warm. In 1990, Singapore finally recognized the People's Republic of China, becoming the last ASEAN state to do so.
But the relationship between Singapore and China remained far more nuanced and complicated than a simple alignment would suggest. Singapore and China had different interests, different strategic positions, and different concerns. China was a communist state (though increasingly focused on economic development); Singapore was a capitalist state with a significant role for the state in the economy. China was a rising superpower with ambitions to reshape the region; Singapore was a small city-state that wanted to maintain a regional order based on rules rather than on the dominance of any single power. And China, despite Deng's pragmatism and Lee's mutual respect, was still a large state with its own interests, and Singapore was still a small state vulnerable to great power competition.
One incident that illustrated the complications came with the Suzhou Industrial Park. In the 1990s, Singapore agreed to help develop an industrial park in Suzhou, a city near Shanghai in China's Jiangsu Province. The park was supposed to be a joint venture, a place where Singaporean expertise in industrial park development would be combined with Chinese labor and market access to create an engine of growth for the region. The Singaporean government invested heavily, and Singapore-based companies and investors moved in. But the Chinese government soon sidelined the Singaporean partners, taking over the management of the park and allowing Chinese developers to create their own competing industrial parks nearby. By the early 2000s, the Singaporean investment in Suzhou had largely failed, and Singapore had lost most of its stake. The incident was a salutary lesson in the limits of Singapore's influence even in places where its expertise and investment were welcome.
More recently, tensions have arisen over the South China Sea, where China has been building artificial islands and establishing military bases, claiming vast stretches of ocean in defiance of international law and the claims of other countries. Singapore, as a maritime trading state that depends on freedom of navigation, has taken the position that China's actions are a violation of international law and that the South China Sea disputes should be resolved according to the UNCLOS framework that Singapore had helped to create. This puts Singapore in a position of diplomatic opposition to China, even as Singapore seeks to maintain good relations with Beijing and to benefit from trade and investment flows.
In 2016, tensions escalated when nine Singapore Armed Forces Terrex infantry carrier vehicles, returning from training exercises in Taiwan via commercial shipping, were seized by Hong Kong customs authorities while transiting through the port. China held the vehicles for over two months before returning them. The message was clear: China was signaling its displeasure at Singapore's longstanding but discreet military training relationship with Taiwan. The incident illustrated the constraints on Singapore's strategic autonomy. The nation needed its relationship with the United States for security, but that relationship was subject to disapproval from China, which was becoming an increasingly dominant economic and military power in the region.
In 2017, Singapore's Ministry of Home Affairs identified Huang Jing, a Chinese-born academic at the Lee Kuan Yew School of Public Policy, as an agent of influence for a foreign government and cancelled his permanent residency. It was Singapore — not China — that expelled Huang. The case demonstrated Singapore's willingness to act against foreign interference regardless of the diplomatic sensitivities involved. The expulsion sent a warning to Singapore's academic and intellectual community that there were limits to what could be said about China, and that association with critics of the Chinese government could bring consequences.
Despite these tensions and complications, the economic relationship between Singapore and China has grown enormously. China became one of Singapore's largest sources of foreign investment. Singaporean companies have invested heavily in China. Chinese students attend Singapore's universities. There is extensive tourism between the two countries. The relationship has become deeply intertwined economically, even as the strategic and political dimensions remain complex.
Singapore's challenge in the China relationship is to maintain good relations with Beijing while also maintaining its commitment to international law and the rules-based order that serves small states' interests. This is not a contradiction that can be resolved through choosing one side or the other. Instead, it requires a careful balance—engaging with China, benefiting from economic opportunities, respecting China's legitimate interests, but also maintaining the position that the region should be governed by rules rather than by the dominance of any single power.
Singapore's relationship with the United States is more straightforward but no less important. The United States, after the Cold War, became the dominant military power in East and Southeast Asia. It maintained bases in Japan, South Korea, and elsewhere in the region, and it maintained the military capability to shape regional security. Singapore, despite its commitment to non-alignment, has maintained a close strategic partnership with the United States. American warships visit Singapore regularly. Singapore has allowed the United States to use its port facilities as a logistics hub for military operations throughout the Indian Ocean and the Pacific. Singapore participates in joint military exercises with the United States and other regional allies.
This relationship reflects Singapore's clear-eyed assessment of its own security. The nation cannot defend itself against a determined attack from a major power. Therefore, its security depends on a stable regional balance of power in which no single power dominates. The United States, as the dominant Western power in the region, helps to maintain this balance. Singapore's partnership with the United States is thus rooted in self-interest, not ideology or sentimental attachment. The Strategic Framework Agreement between Singapore and the United States, signed in 2015 and expanded in subsequent years, reflects this partnership. It covers areas of military cooperation, economic cooperation, academic exchange, and other domains. The agreement commits the two countries to regular consultation and coordination on regional issues.
For Singapore, the greatest challenge of the contemporary strategic environment is that it must maintain good relations with both China and the United States at a time when relations between those two powers are becoming increasingly strained. The U.S.-China rivalry is not a Cold War-style ideological conflict; it is a struggle for economic and strategic dominance in a region that Singapore considers central to its interests. Singapore cannot simply choose one side, because doing so would damage its relationship with the other side and would put it at risk of being drawn into a conflict that serves neither Singapore's interests nor the interests of Southeast Asia more broadly.
This strategic dilemma has become more acute in recent years as the competition between the United States and China has intensified. The Trump administration (2017-2021) adopted an explicitly confrontational posture toward China, restricting Chinese investment, imposing tariffs, and taking actions designed to limit China's technological advancement. The Biden administration (2021-2025) continued many of these policies while also emphasizing alliance relationships and the rules-based international order. Singapore, meanwhile, has tried to maintain balanced relationships with both powers, hosting American military personnel and Chinese investors simultaneously, making clear that it has no intention of choosing sides.
Singapore's trading-state model depends fundamentally on access to markets and on the ability to conduct commerce with as many countries as possible. Roughly one-third of Singapore's exports go to China, and roughly one-third go to the United States and other developed countries. The largest component of Singapore's economy is financial services, and much of that services sector depends on facilitating trade and investment flows between countries. If the United States and China move toward a full decoupling, with trade barriers, technology restrictions, and investment bans, Singapore's economy would suffer grievously. Therefore, Singapore has a fundamental stake in maintaining open trade flows and in keeping the U.S.-China relationship from becoming completely adversarial.
Singapore's relationships with other powers have also become more important as the regional balance shifts. India, historically peripheral to Southeast Asian security concerns, has become more engaged in the region as it has sought to balance China's rising power. Singapore has cultivated a growing strategic partnership with India, hosting Indian navy visits, conducting joint exercises, and increasing trade and investment ties. Japan and South Korea, both long-standing security partners of the United States, have also become increasingly important to Singapore as countervailing powers to China's rise.
In more recent years, Singapore has also taken positions on global issues that reflect its commitment to international law and rules-based order, even when those positions are at odds with Beijing. When Russia invaded Ukraine in February 2022, Singapore was one of very few Asian nations to vote in the UN General Assembly in favor of a resolution condemning the invasion. This was a remarkable position for an Asian country to take, reflecting Singapore's view that the invasion represented a fundamental violation of international law and the principle of territorial sovereignty. The vote cost Singapore economically—Russia retaliated with sanctions—but Singapore's leaders saw it as necessary to maintain the principle that large powers cannot simply invade and conquer their smaller neighbors. As Singapore's leaders recognized, accepting Russian action in Ukraine would undermine the very principles that protect Singapore from larger neighbors in Southeast Asia.
The India Relationship and the Indo-Pacific Pivot
India occupied a peculiar position in Singapore's strategic calculus throughout most of the post-independence period: obviously important in its proximity and scale, yet distant in the practical diplomatic relationship. India's economic dirigisme through the 1960s, 1970s, and 1980s—its protected markets, its scepticism of foreign investment, its non-alignment that sometimes manifested as anti-Western positioning—meant that economic ties remained limited despite the substantial Indian diaspora in Singapore.
The relationship transformed with India's 1991 economic liberalisation and subsequently with the "Look East" policy that successive Indian governments adopted from the mid-1990s onward. Singapore became one of the primary gateways through which Indian companies accessed Southeast Asian and global markets. The India-Singapore Comprehensive Economic Cooperation Agreement, signed in 2005, was the first FTA India signed with any Asian country—a signal of the bilateral relationship's depth. The agreement provided preferential access for goods, services, and investment, and Singapore became one of the largest sources of foreign investment into India, with Singaporean-based firms channelling global capital into Indian markets through Singapore's financial and legal infrastructure.
The strategic dimension of the India relationship also deepened as China's power and assertiveness grew. India and China had their own border disputes and strategic competition. A strengthening India-Singapore partnership served both parties' interests in a regional environment where Chinese power was becoming more pronounced. Singapore's foreign minister Vivian Balakrishnan's multiple visits to New Delhi, the joint naval exercises between the Singapore Navy and the Indian Navy, and the growing habit of consultation on regional security questions all reflected a relationship that had moved well beyond economic convenience into genuine strategic partnership.
Singapore and the US-China Competition
The intensification of strategic competition between the United States and China in the 2010s and 2020s placed Singapore in an increasingly uncomfortable position that was entirely familiar from its historical experience: a small state caught between great powers whose competition it could not resolve and from which it could not insulate itself. Singapore's response combined maximum diplomatic hedging with clear articulation of principles—maintaining economic engagement with China while preserving the security partnership with the United States, and articulating consistently that the competition should be conducted within the framework of international law and multilateral institutions.
The specific flashpoints multiplied as the decade progressed. The Trump administration's trade war with China, beginning in 2018, threatened to disrupt the supply chains and trade flows on which Singapore's economy depended. Singapore watched nervously as tariff escalation between its two largest trading partners threatened the open international trading system that had enabled Singapore's prosperity. The Biden administration's continuation of trade restrictions on Chinese technology companies—Huawei, SMIC, and others—created new pressures, as Singapore's technology sector had significant exposure to Chinese technology supply chains and to the Chinese market.
The question of Huawei's participation in Singapore's 5G network build-out crystallised these pressures. The United States pressed allies globally to exclude Huawei from 5G infrastructure on the grounds that Chinese state influence over the company created unacceptable security risks. Several US allies—the UK, Australia, Sweden—complied and excluded Huawei. Singapore chose a middle path: it awarded 5G contracts to Ericsson and Nokia rather than Huawei, but did not explicitly frame this as exclusion based on security concerns, instead presenting it as a commercial decision. This allowed Singapore to comply with the effective result the Americans sought without publicly characterising Huawei as a security threat—avoiding the diplomatic confrontation with China that an explicit exclusion would have provoked.
The Michael Fay Affair and American Relations
In 1994, a minor criminal case became an international diplomatic incident that revealed the depth of the cultural distance between Singapore's governing philosophy and American liberal sensibility. Michael Fay, an American teenager living in Singapore, was convicted of vandalism for spray-painting cars and possessing stolen road signs. He was sentenced to four months in jail, a fine, and—crucially—six strokes of the cane. Caning, a colonial-era punishment retained in Singapore's penal code, was routinely applied to numerous offenses and was unapologetically defended by the government as an effective deterrent. For most Singaporeans, the sentence was unremarkable; Fay had committed vandalism and would be punished.
For Americans, the caning sentence produced outrage. American editorial pages, television networks, and politicians condemned the sentence as barbaric. President Bill Clinton appealed personally to Singapore to waive the caning, calling it "extreme." The US State Department issued statements expressing concern. The American Chamber of Commerce in Singapore lobbied for a waiver. The pressure was sustained and intense.
Lee Kuan Yew and his government were unmoved. Lee gave numerous interviews making clear that Singapore would not adjust its laws or sentencing practices to accommodate American opinion. He noted, acidly, that American cities were violent and crime-ridden compared to Singapore, and that American observers might do better to reflect on the efficacy of their own approach to criminal justice before criticizing Singapore's. The sentence was carried out, reduced from six strokes to four as a gesture of diplomatic courtesy, but carried out nonetheless. Michael Fay was caned.
The affair crystallized something important about Singapore's relationship with the United States. The partnership was real, strategically significant, and mutually valuable. But it was not a relationship between equals who shared all values. Singapore's government was not apologetic about its governing philosophy and was not willing to defer to American cultural assumptions about individual rights, criminal punishment, or social order. Lee saw American criticisms of Singapore as reflecting American domestic dysfunction rather than universal principle, and said so openly. This willingness to push back against American pressure—while maintaining the strategic partnership—became a defining characteristic of Singapore's approach to the most powerful of its partners.
Taiwan and the Quiet Strategic Dimension
Singapore's relationship with Taiwan represented one of the most sensitive and carefully managed aspects of its foreign policy. Like most countries, Singapore officially recognized the People's Republic of China rather than the Republic of China (Taiwan), and Singapore's official position was that Taiwan was part of China. But beneath this formal position, Singapore maintained substantive connections with Taiwan that reflected its interest in maintaining a balance of power in East Asia and in preserving the rules-based order against a scenario in which China's dominance became uncontested.
Singaporean soldiers trained in Taiwan—a long-standing arrangement under which the SAF conducted military exercises and maintained training facilities on Taiwanese soil, a program known by its Mandarin name Xing Guang ("Starlight"). This program had been conducted since 1975 and reflected the realistic assessment that Taiwan, as a democracy outside PRC control, was a more comfortable training partner than other regional options. The training program continued even as Singapore's economic ties with the mainland deepened, a quiet signal that Singapore was not willing to abandon Taiwan entirely to Chinese dominance.
When the United States announced arms sales to Taiwan—a perennial source of friction in US-China relations—Singapore navigated carefully, declining to publicly criticize either party while making clear privately that it supported Taiwan's ability to maintain its own defense. Singapore's consistent position was that Taiwan's status should not be resolved by force and that any change in cross-strait relations should be voluntary and peaceful. This was, again, a position of principle dressed as neutrality: in practice, a commitment to preventing military reunification meant supporting Taiwan's continued separate existence, which was precisely what China was trying to prevent.
The Russia-Ukraine War and Singapore's Sanctions Response
Russia's invasion of Ukraine in February 2022 presented Singapore with its most direct test of the rules-based international order that it had long championed, and Singapore's response was more unambiguous than most observers had anticipated. Foreign Minister Vivian Balakrishnan rose in Parliament to condemn the invasion as a clear violation of the UN Charter's prohibition on the use of force against the territorial integrity of a sovereign state — language that left no room for the kind of studied neutrality that most Asian governments adopted. More significantly, Singapore imposed export controls on military-relevant items and coordinated these measures with the European Union, the United States, the United Kingdom, and other partners — becoming one of the very few non-Western countries in Asia to do so.
The decision was carefully framed in terms that Singapore's domestic and international audiences could both accept. Singapore was not adopting Western sanctions out of deference to Western pressure, the government emphasised; it was acting on its own assessment of a fundamental breach of international law. The parallel with Singapore's own geopolitical situation was left implicit but unmistakable: a small state invaded by a larger neighbour, its sovereignty overridden by military force, its government deposed — this was precisely the scenario that Singapore's entire foreign policy had been constructed to prevent. To remain neutral in the face of such an event would have been to signal that Singapore's own commitment to sovereign equality was contingent rather than absolute.
The specific measures Singapore adopted were calibrated to avoid appearing as an instrument of Western strategic competition with Russia while maintaining a principled position on the invasion itself. Singapore froze the assets of designated individuals and entities — oligarchs and companies directly connected to the Russian military-industrial complex — but did not adopt comprehensive financial sanctions that would have effectively severed Russia from the Singapore financial system. Export controls targeted items with direct military application: electronics, semiconductors, and equipment that could enhance Russia's military capabilities. The measures were consistent with Singapore's position that it was responding to the violation of international law, not taking sides in a geopolitical competition.
The response attracted criticism from different directions. International human rights organisations argued that Singapore had for years hosted significant Russian oligarch wealth — estimates placed Russian-linked assets in Singapore at several billion dollars before the invasion — and that the belated application of asset freezes was inadequate to the scale of the complicity. Russian officials characterised Singapore as a tool of Western sanctions pressure. Chinese commentators noted that Singapore's alignment with Western positions on Ukraine was inconsistent with its professed neutrality in great-power competition. Singapore's government absorbed these criticisms and maintained its position, issuing detailed explanations through Parliament and through the Foreign Ministry that emphasised the legal rather than geopolitical basis of its actions.
For Singapore's diplomatic standing, the Ukraine response was significant in both directions. It demonstrated to Western partners that Singapore's commitment to the rules-based order was real — that it would incur economic and political costs to uphold principles rather than merely invoking them rhetorically when convenient. It complicated the relationship with China, which had been careful to avoid condemning the invasion and which watched Singapore's posture with evident displeasure. And it created a template for future crises: Singapore had established that there was a threshold of international law violation that would prompt active alignment with the rules-based order's defenders, even at the cost of bilateral relationships.
The Iran-Israel-US War and the Hormuz Crisis (2025–2026)
The template established by the Ukraine response was tested almost immediately. The Iran-Israel-US war that erupted in February 2026 — triggered by US-Israeli airstrikes on Iran on 28 February 2026 that killed Supreme Leader Ayatollah Ali Khamenei and senior Islamic Revolutionary Guard Corps commanders — and Iran's retaliatory closure of the Strait of Hormuz on 2 March 2026 became the most consequential Middle East crisis in Singapore's post-independence history. More than twenty percent of the world's oil, twenty percent of its liquefied natural gas, and over a quarter of its seaborne trade transit the strait. For a city-state whose economy runs on open sea lanes and whose Jurong Island refineries process the bulk of their crude from the Middle East, this was not a distant geopolitical drama. It was an immediate test of whether Singapore's foreign-policy doctrines — UNCLOS-based freedom of navigation, principled refusal of coercive bargaining, calibrated humanitarian posture — could absorb a shock that simultaneously threatened economic survival, regional relationships, and domestic social cohesion.
The diplomatic response was characteristically Singaporean. Foreign Minister Vivian Balakrishnan declared in early April that Singapore would refuse to negotiate with Iran over Strait of Hormuz passage "as a matter of principle," citing UNCLOS as the legal basis and framing the closure as "an Asian crisis" rather than a Middle Eastern one. The framing was deliberate. By universalising the principle — freedom of navigation is a global public good, not a Western interest — Singapore sought to build a coalition of affected Asian states (India, Japan, South Korea, China) whose combined demand for Hormuz reopening would carry weight that Western pressure alone could not. The move drew sharp criticism from Malaysia, whose foreign ministry issued an unusual public rebuke — "we will not be lectured" — accusing Singapore of prioritising legal principle over pragmatic engagement with Iran and of failing to acknowledge Muslim-world solidarity. The exchange captured the enduring structural tension in Singapore's diplomacy: acting on universal principle while managing the sensitivities of neighbours who share geography but not always strategic logic.
The crisis activated Singapore's domestic crisis-governance architecture in its most comprehensive deployment since COVID-19. The Homefront Crisis Ministerial Committee, chaired by Coordinating Minister for National Security K. Shanmugam, coordinated responses across energy, supply chain, economic policy, security, and diplomacy. On 7 April 2026, the government delivered a coordinated set of ministerial statements unusual in their candour: Shanmugam catalogued vulnerability — over half of crude oil imports from the Middle East, approximately nine percent of natural gas from Qatar, critical industrial materials transiting Hormuz; Deputy Prime Minister Gan Kim Yong quantified the first-order economic impact at 0.3 to 0.5 percentage points of additional core inflation and 0.2 to 0.3 percentage points off Q1 2026 GDP growth; Brent crude peaked at $126 per barrel, the largest supply disruption since the 1970s shocks. The Ministry of Finance announced an approximately S$1 billion support package — accelerated Community Development Council vouchers, S$200 cash supplements for eligible households, expanded corporate tax rebates, and targeted relief for taxi and private-hire drivers. The package was deliberately calibrated to cushion household impact without signalling fiscal panic. The government simultaneously maintained opacity on actual strategic petroleum reserve levels, citing the operational risk of disclosing vulnerabilities that adversaries could exploit — a choice that reflected the same logic that had governed Singapore's reserves disclosure regime for decades.
The crisis exposed an uncomfortable structural contradiction in Singapore's energy strategy. Two decades of deliberate liquefied natural gas diversification — Australian, Qatari, and American supply, supplemented by pipeline gas from Malaysia and Indonesia — had substantially buffered the electricity grid against single-source shocks. But the refinery sector's deep dependence on Gulf crude had been allowed to deepen rather than diversify. ExxonMobil's expanded Jurong Island capacity, in particular, had been configured for heavy high-sulphur Gulf crude that could not simply be swapped for alternative grades without significant operational adjustment. The Jurong Rock Caverns underground storage facility and commercial stockpile drawdown provided short-term buffer; the longer-term lesson was that Singapore's diversification doctrine had been applied unevenly across the energy system, and that the refinery layer of the system was now likely to be the focus of a multi-year strategic reassessment.
The crisis also tested Singapore's management of its Israel relationship — historically the most carefully calibrated bilateral file in its diplomatic portfolio. Singapore had conducted substantive defence cooperation with Israel since the 1960s while maintaining studied rhetorical balance on Palestinian questions, supporting humanitarian aid, and voting sympathetically on Palestinian rights at the United Nations. The war's escalation to encompass Iran, and the heavy Palestinian civilian toll in Gaza that had preceded it, placed sustained pressure on this balance. Singapore's Malay-Muslim community — roughly fifteen percent of the population and embedded in a broader regional Malay-Muslim social fabric — experienced strong solidarity with Palestinian and broader Muslim-world perspectives. The government managed the tension through principled statements on international law, visible humanitarian contributions (acknowledged in an episode that Tommy Koh publicised, in which Palestinian parents in Gaza named their child "Singapore" in gratitude for medical aid), and careful calibration of public messaging. Singapore's most prominent public intellectuals occupied the space the government could not. Bilahari Kausikan warned that Iran would be "foolish" to block the strait, framing the closure as a strategic error within an unfolding sequence of strategic errors by multiple parties; Kishore Mahbubani went further, stating directly that "this is a war started by Israel with the aid of the United States" and advocating intrusive international inspections as an alternative to military force. The contrast illustrated the function of Singapore's public intellectuals as voices of strategic critique that the government itself, bound by the requirements of bilateral relationships, could not officially adopt.
By mid-2026 the crisis had not been resolved. President Tharman Shanmugaratnam had warned publicly of the risk of "a major economic downturn"; RSIS analysts were tracking accelerated nuclear-weapons discussions in Southeast Asia and elevated self-radicalisation risks domestically. The episode confirmed two things about Singapore's foreign-policy infrastructure. First, the doctrine inherited from the founding era — small-state principle anchored in international law, coalition-building across the Asian middle, candid domestic communication paired with strategic opacity on operationally sensitive details — remained the most coherent instrument available to a city-state whose vulnerability profile had not fundamentally changed since 1965. Second, the application of that doctrine could no longer rely on the relatively forgiving structure of the post-Cold-War order. The Iran-Israel-US war, like the Ukraine invasion before it, signalled that the period in which Singapore could expect its foreign-policy framework to be tested only occasionally was over. The frequency, severity, and overlap of crises had begun to define the operating environment itself.
The Gulf States and the Middle East Financial Hub Competition
From the 2000s onward, Singapore faced growing competition from Dubai and Abu Dhabi as alternative financial centres for international wealth management and as hubs for companies seeking access to Asian and global markets. The Gulf Cooperation Council states were investing heavily in financial infrastructure — the Dubai International Financial Centre (DIFC) offered common law jurisdiction, English-language courts, and zero taxation in a package explicitly modelled on Singapore and Hong Kong; Abu Dhabi Global Market (ADGM) provided a similar offering from the UAE capital. The rise of Gulf sovereign wealth fund assets — the Abu Dhabi Investment Authority alone managed over $800 billion by the early 2020s — created a large pool of capital seeking management infrastructure that could be based either in the Gulf or in established financial centres like Singapore.
Singapore's response was to position itself as complementary rather than directly competing. The Monetary Authority of Singapore signed regulatory cooperation memoranda with Gulf financial regulators, facilitating cross-border investment flows. Singapore's sovereign wealth funds — GIC and Temasek — co-invested with Gulf sovereign wealth funds on major transactions across Asia and globally, creating the relationships and deal-flow reciprocity that deepened financial ties. Singapore's Islamic finance sector grew to serve dual purposes: providing Shariah-compliant financial products for Singapore's Malay-Muslim community and positioning Singapore as a hub for the Southeast Asian sukuk market, which required the credibility that Singapore's regulatory environment provided.
The military relationship with Saudi Arabia, maintained through quiet cooperation agreements dating to the 1980s, created a political foundation for the economic relationship that was unusual in Singapore's portfolio. Singapore Armed Forces personnel had trained alongside Saudi forces and Singapore had provided defence advisory support — relationships that gave Singapore's government access in Riyadh that purely commercial approaches could not have achieved. The Abu Dhabi Investment Authority maintained a Singapore office, as did other major Gulf institutional investors, reflecting Singapore's place in their regional investment infrastructure.
The competitive challenge from Dubai was most acute in ultra-high-net-worth wealth management. Both cities competed for the same clientele: wealthy Asian families seeking to establish family offices, structure multi-generational wealth, and access global capital markets through a politically stable, legally reliable jurisdiction. Singapore's advantages were the depth of its professional services ecosystem — law firms, accountancy firms, trust companies, private banks — and the quality of its educational and healthcare infrastructure, which mattered to wealthy families actually resident in the city. Dubai's advantages were zero personal income tax (Singapore taxed personal income at rates up to 22 percent), proximity to Middle Eastern and South Asian wealth sources, and a lifestyle offering that some wealthy clients preferred. The competition remained live and unresolved, with both cities continuing to attract significant family office inflows through the 2020s.
China's Belt and Road and Singapore's Navigation
China's Belt and Road Initiative (BRI), announced in 2013 and gradually elaborated into a comprehensive framework for Chinese-financed infrastructure investment across Asia, Africa, and Europe, posed a complex multi-dimensional challenge for Singapore: the initiative threatened certain elements of Singapore's hub role while creating opportunities for Singapore companies with expertise in infrastructure development, project financing, and management. The challenge required constant calibration of Singapore's response across commercial, diplomatic, and strategic dimensions simultaneously.
Singapore's initial response was to engage constructively while articulating concerns about governance standards. Singapore joined the Asian Infrastructure Investment Bank (AIIB) as a founding member in 2015, demonstrating a willingness to work within the new Chinese-led multilateral financial architecture. Singapore companies — Sembcorp, Ascendas, CapitaLand, Keppel — participated in BRI-adjacent projects across China and Southeast Asia, leveraging their development expertise in a context where Chinese infrastructure investment was creating new demand for professional management and integration services. The Chongqing Connectivity Initiative, a government-to-government project involving Singapore's Economic Development Board and Chinese national development agencies, developed logistics, finance, and aviation connectivity between Singapore and Chongqing as a gateway to western China.
Yet Singapore also articulated concerns that other regional governments were reluctant to voice. In multilateral forums — the G20, ASEAN, the WTO — Singapore raised questions about BRI project quality, debt sustainability, procurement transparency, and consistency with international financial standards. The concept of "debt trap diplomacy" — the argument that BRI financing was structured to extract concessions from borrowing countries unable to service their debts — was not a formulation Singapore's diplomats used publicly, but Singapore's insistence that infrastructure financing should meet international standards implicitly challenged the framework that some BRI projects operated within.
The 2015 Terrex incident concentrated Singapore's concerns about China's use of economic leverage for strategic signalling. When Hong Kong authorities seized Singapore military vehicles — Terrex infantry carrier vehicles returning from training exercises in Taiwan — the timing was precise: the seizure occurred shortly after Singapore had made public statements supporting the legal validity of the South China Sea arbitration ruling that China had declared null and void. The message was unmistakable. Singapore's investment in maintaining the principle of UNCLOS-based maritime governance had produced a direct Chinese reprisal through economic and diplomatic channels. The vehicles were eventually returned, but the episode demonstrated that Singapore's navigation of BRI engagement and broader China relations required constant attention to the signals being sent and received, and that commercial opportunity and strategic independence were sometimes in direct tension.
The Taiwan Strait and Singapore's Most Sensitive Calculation
Taiwan is perhaps the issue on which Singapore has had to be most careful in navigating between the United States and China — more careful even than on the South China Sea, where Singapore at least had a clear legal framework (UNCLOS) to cite as the basis for its positions. On Taiwan, no such neutral legal framework existed. Singapore formally adhered to the One China Policy, recognising the People's Republic of China as the sole legal government of China and maintaining no official diplomatic relations with Taipei. Within that formal position, Singapore nonetheless sustained substantive functional ties with Taiwan across defence, economic, and educational domains that neither the PRC nor the ROC required it to publicly acknowledge in full.
The Starlight training programme — under which Singapore Army units conducted military exercises and maintained training facilities on Taiwanese soil — dated from the 1970s and represented one of the SAF's most important training relationships outside Singapore. Singapore's own territory offered limited space for large-scale combined arms exercises; Taiwan's mountainous terrain provided training environments quite different from Singapore's flat urban landscape. The programme was conducted under deliberate discretion for decades and was publicly acknowledged by Singapore's government only from around 2000, after the broad outlines had become known through other means. Its continuation after public acknowledgement — in the face of periodic Chinese pressure to wind it down — was a clear signal that Singapore would not sacrifice functionally important bilateral relationships with Taiwan simply because Beijing found them inconvenient.
Singapore's trade and investment ties with Taiwan were substantial and growing. Taiwan Semiconductor Manufacturing Company (TSMC) and other Taiwanese electronics and precision manufacturing firms maintained significant Singapore operations, and Singapore-based investment managers deployed capital into Taiwanese equity and fixed-income markets. The semiconductor industry's dependence on Taiwan — which produced the overwhelming majority of the world's advanced logic chips — gave Singapore a direct stake in cross-strait stability: a conflict that damaged Taiwan's semiconductor manufacturing capacity would have cascading effects on Singapore's electronics manufacturing and technology sector tenants.
Singapore's formal position on Taiwan was consistent and carefully worded: it supported the One China Policy; it supported the peaceful resolution of cross-strait differences; it did not support any unilateral change to the status quo by either side. The second and third elements of this formulation were the load-bearing ones. Supporting peaceful resolution meant opposing military reunification — since that would not be peaceful. Opposing unilateral change by either side meant opposing both Chinese military action and any Taiwanese move toward formal independence. The position was calibrated to be formally acceptable to Beijing while substantively maintaining the principle that Singapore would not endorse the use of force to resolve the Taiwan question.
When China conducted sustained live-fire military exercises near Taiwan in August 2022, following US House Speaker Nancy Pelosi's visit to Taipei, Singapore's foreign ministry issued a statement calling for restraint and dialogue and expressing concern about the risk of miscalculation — language that carefully avoided endorsing either the exercises or the Pelosi visit, while making clear that Singapore opposed the use of military pressure as a tool of political coercion. Chinese officials privately communicated displeasure with Singapore's refusal to characterise the exercises as a justified response to provocation. Singapore did not adjust its position. The Taiwan issue embodied a principle Singapore applied consistently across many diplomatic contexts: that outcomes in disputes between states should not be determined by the credible or actual use of military force, because that principle, once abandoned in any case, could not be maintained for the small states — including Singapore — who most needed it.
The IPEF and Indo-Pacific Economic Frameworks
The Biden administration's Indo-Pacific Economic Framework for Prosperity (IPEF), formally launched in May 2022 with fourteen founding members including Singapore, Japan, South Korea, India, Australia, and seven ASEAN states, was Washington's attempt to re-establish US economic engagement in the Asia-Pacific after the Trump administration's withdrawal from the Trans-Pacific Partnership in January 2017. The US Congress remained unwilling to ratify comprehensive trade agreements that required domestic market access concessions, and the Biden administration's political constraints were similar to Trump's on this dimension. IPEF was designed to be negotiated as an executive agreement rather than a treaty requiring Senate ratification, which meant it could not include the tariff reductions and binding market access provisions that would have been most economically significant.
Singapore's enthusiasm for IPEF was genuine but measured. The framework addressed supply chain resilience, clean economy transition, anti-corruption standards, and tax and transparency norms — issues of real substance in Singapore's policy priorities — but the absence of market access provisions meant it lacked the economic weight that a genuine trade agreement would have carried. Singapore's trade and foreign affairs ministries engaged seriously with the IPEF negotiations, contributing to the supply chain resilience pillar's early conclusion in 2023, which established information-sharing frameworks and investment screening cooperation mechanisms that had practical value for supply chain diversification planning. But Singapore's economic planners were frank internally about the gap between IPEF's ambition and its instruments: it was better than American disengagement, but it was not a substitute for the comprehensive economic engagement that the TPP had been designed to provide.
Singapore simultaneously pursued digital economy agreements as a distinct track of trade architecture. The Digital Economy Partnership Agreement with Chile and New Zealand, concluded in 2021 and making Singapore a founder of the world's first plurilateral digital trade framework, established binding disciplines on data localisation, digital customs procedures, and artificial intelligence governance that went substantially further than anything IPEF could achieve. Singapore signed bilateral digital economy agreements with Australia (2020), the United Kingdom (2022), South Korea, and France — building a web of digital trade governance that created norms and commitments that could eventually serve as the foundation for broader convergence. Singapore's strategy on digital trade architecture reflected its consistent approach to governance frameworks: establish high-standard agreements with willing partners, create institutional precedents and norms that others can join, and gradually expand the membership rather than waiting for universal agreement to begin.
Singapore's Middle Power Diplomacy
Beyond the US-China binary and the immediate neighbourhood, Singapore cultivated strategically important relationships with a range of middle and major powers whose combined weight gave Singapore diplomatic options that reduced its dependence on any single great power relationship. The European Union relationship was anchored by the Singapore-EU Free Trade Agreement, concluded after seven years of negotiations and entering into force in November 2019, making Singapore the EU's first ASEAN treaty partner and opening markets worth approximately €65 billion in bilateral trade. The companion EU-Singapore Investment Protection Agreement, ratified in 2022, provided binding international arbitration rights for investors on both sides — a governance standard that Singapore consistently championed as an alternative to purely bilateral dispute resolution frameworks subject to political pressure.
France maintained a particular relationship with Singapore that had a military dimension unusual among European partners. The French Navy used Changi Naval Base as its principal Southeast Asian basing facility, conducting patrols and exercises from Singapore that supported France's broader Indo-Pacific strategy and its overseas territory commitments in New Caledonia and French Polynesia. The basing arrangement gave Singapore a French security relationship that supplemented the US partnership and demonstrated to both Washington and Beijing that Singapore's security architecture was genuinely multi-directional rather than exclusively American.
With Germany, Singapore cooperated on vocational and technical education through a relationship dating to the early 1990s in which the Institute of Technical Education's curriculum and assessment model drew explicitly on the German dual-system apprenticeship approach — combining school-based technical instruction with workplace training in a structured partnership between educational institutions and industry. Singapore adapted the German model to its own industrial structure and labour market, but the intellectual debt was acknowledged and the bilateral education relationship maintained across subsequent decades. German industrial firms — BASF, Bayer, Evonik — maintained significant Singapore operations in the Jurong petrochemical cluster, and the bilateral investment relationship gave both sides economic stakes in maintaining the policy relationship.
With Japan, Singapore's relationship extended well beyond the 2002 EPA into sustained defence technology cooperation, intelligence sharing at a level that reflected genuine strategic alignment, and the personal diplomatic networks that Japanese prime ministers maintained with Singapore's senior leadership across generations of both countries' political successions. The Japan-Singapore relationship was one of the most institutionally dense bilateral partnerships in Southeast Asia — not the most publicly prominent, but among the most practically substantive. These middle power relationships collectively gave Singapore diplomatic depth that its bilateral relationships with Washington and Beijing alone could not provide. When China applied pressure on South China Sea-related statements, Singapore could point to its embeddedness in a web of relationships — with the EU, the UK, Japan, Australia, France, India — that meant its positions reflected genuine international convergence rather than mere American ventriloquism.