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After several years of one of the most severe lockdowns in history, China is finally reopening up to the world.
During the past three years, China has ruthlessly clamped down on Covid-19. Lockdowns, mass testing, travel restrictions and long quarantines were enforced, and became routine for many Chinese citizens.
These efforts were rewarded with some success. For the better part of three years, China reported less than a hundred new cases per day.
But in many other aspects, the impact has been less than ideal. China’s GDP recorded its lowest growth in decades, and as other countries began opening up, China’s zero-Covid policy began to draw ridicule as outdated and impractical.
At long last, however, the government has indicated a policy reversal — travel restrictions have been lifted, and infected personnel will be allowed to self-isolate at home instead of having to go to a hospital.
The policy reversal has received mixed reactions from Chinese citizens, but it’s not just them that have something to think about.
China’s population of over 1.4 billion people, and an economy second only to the US in terms of GDP, is nothing to sneeze at. What China does and what its citizens can do, is certainly of significant importance to Singapore and the rest of the world.
So what does the new policy mean for Singapore, and what should Singapore be prepared for?
What are the chances of a renewed wave?
As Chinese citizens celebrated the end of the zero-Covid policy, many also began to make travel plans. Trip.com reported a surge in outbound flight bookings from mainland China, with top destinations including Singapore, South Korea, Hong Kong, Japan, and Thailand.
Amidst all this, Singaporeans began expressing worries of another Covid-19 wave. After all, infections are on the rise in China and with many planning to come to Singapore, it sparks concerns of whether there will be a surge of imported cases here.
Some local clinics are gearing up to handle a potential surge in cases, with some already reporting an increase in Covid cases.
Certainly, there is a chance that some foreigners who enter Singapore will be carriers of the virus. But rather than asking ‘will foreigners carry the virus’, a better question to ask is, ‘is there a heightened risk that foreigners from China will be carrying the virus?’
New variants have already been found in places aside from China. The Delta variant was first detected in India in October 2020, the Omicron variant was detected in South Africa and Botswana in November 2021, and the more recent XBB variant has been detected in several countries including Australia, Japan, and the United States.
As it stands, new variants can come from anywhere in the world, and China is no exception.
While Chinese nationals may be travelling to Singapore and there is indeed some risk of them carrying the virus, it does not seem too big of a deal. Health Minister Ong Ye Kung has provided a helpful breakdown to illustrate just how prevalent the virus is among Chinese travellers coming to Singapore.
In a ministerial statement to Parliament, he said that only about 200 travellers from China during the last four weeks of 2022 were detected to have Covid-19.
This comprised less than five per cent of all imported cases during the period, and imported cases make up only five to 10 per cent of all infections. In addition, there was only one imported case from China that led to severe illness.
If anything, imported cases from China are really not much to look at, especially since China has just revoked its zero-Covid policy. The past few years have seen lockdowns of entire cities in order to curb the spread of the virus, and large-scale testing of Chinese citizens. Should we not be concerned with other countries that have been lax with regulations instead?
China’s reopening does bring some risk of a new Covid wave, but Singapore too has shifted from a zero-Covid strategy to a living with Covid strategy, which has been in place for almost a year. We should already be prepared for spikes in cases — should they materialise — and be able to deal with them accordingly.
China’s reopening is an opportunity that we should not miss
Instead of simply looking at the possible negatives, we should also examine whether China’s reopening presents any opportunities for Singapore as well. Indeed, there may be good reasons for Singapore to welcome China’s policy U-turn with open arms.
The most obvious benefit is that Singapore’s tourism sector can now prepare for a recovery. Pre-pandemic, China contributed more than three million tourists a year, making up around 19 per cent of our tourist arrivals.
Naturally, this figure plummeted during the pandemic, and the past three years have seen record low numbers of tourist arrivals. Tourist arrivals have not fallen this low since the SARS outbreak of 2004.
2022 saw some recovery, but Chinese tourists are still conspicuously missing. Now that China is also relaxing its travel restrictions, Chinese tourists are eyeing Singapore as a top travel destination.
China’s reopening is good news for the tourism industry in Singapore — an increase in arrivals from one of the largest economies in the world will mean increased footfall and increased business.
On top of this, borders are reopening just before the Chinese New Year period, meaning that Singapore can capitalise on Chun Yun, the Spring Festival travel rush.
This yearly travel period has been called the largest annual human migration in the world, and given how long Chinese citizens have been unable to travel, its not a stretch to say that many may come to Singapore to visit family and friends that they have not been able to see for the past few years.
With tourist consumption likely to increase, the government is also likely going to see an increase in revenue.
Given that GST has just risen to 8 per cent at the start of the year, tourists’ spend in Singapore will be contributing to government coffers, which will eventually come back to Singaporeans in the form of social spending and government investment.
Singaporeans may also have to prepare for higher inflation
China’s reopening means more than just a rejuvenation of tourist hotspots in Singapore.
It also means that businesses can open, and be sure to stay open in China. What this means is that one of Singapore’s largest export markets will soon be rejuvenated — not only by means of direct exports to Chinese consumers, but also of exports to Chinese businesses.
Singapore, as a prominent part of the Bamboo Network that links China to Southeast Asia, is likely to be the recipient of such increases in Chinese demand.
Machinery, transport equipment, electronics, petrochemical products, and pharmaceutical products make up a significant portion of Singapore’s exports to China, and with business as usual in China, many of these businesses will once again be ordering products from Singapore.
Large Singaporean companies like BreadTalk and Capitaland are already prominent in China, and even local consumption from Chinese citizens will count as exports from Singapore’s economy if they buy from Singaporean firms in China.
For Singapore, this means inflationary pressure from exports and at a time when Singapore is already suffering from high inflation, this may not be an entirely welcome development.
While the Monetary Authority of Singapore (MAS) has already strengthened the Singapore Dollar to make imports cheaper for Singapore, it may not be sufficient given how large China’s economy is. With China moving to a consumption-based economy, these pressures may not be transient, but sustained.
Singaporeans, therefore, should also be prepared that inflationary pressures are here to stay, barring any move from MAS to further strengthen the Singapore Dollar.
At the same time, an overly strong currency would also make our exports more expensive and less attractive to other countries, so a balance must be struck between keeping inflation at bay and maintaining our position as an export hub.
For now, much of the impact is speculative — Chinese tourists have not yet booked their flights and hotels, and many are still looking for signs on how far the government will go in relaxing Covid restrictions.
China’s reopening is likely to be the defining event of the year for many economies. As the world’s second largest economy, the dramatic policy U-turn has caught many off-guard. How well Singapore is prepared to deal with it will have consequences for Singaporeans that may last for years to come.
Featured Image Credit: Thomas Peter via Reuters