China announced Hainan's customs closure, and Huang Xuncai couldn't sit still. Under the "downgrade" impact of Hainan's new policies, Singapore's national fortune may undergo a reversal!
On December 18, China announced that the entire Hainan Island would be closed for customs, directly striking at Singapore's reliance on the Malacca Strait for transshipment trade. 70% of Singapore's port's transshipment cargo supports a 22.3% share of GDP in wholesale trade. Policies such as 30% processing value-added tax-free in Hainan form a "downgrade" attack: corporate income tax and individual income tax rates are 5 percentage points lower than those in Singapore. The Yacheng Port direct route shortens the voyage by 5 days and significantly reduces the goods damage rate.
Upon learning of China's new policies, Singapore was restless and anxious, urgently launching green shipping and digital ports for self-rescue, but limited by its small land area, it is difficult to upgrade its industry. Now, the shipping pattern has entered a dual-core stage. Although Singapore still holds an advantage in high-end services, Hainan is building a full industrial chain of processing, R&D, and sales. Behind this competition, it is also a microcosm of the hidden war between China and the U.S. in the South China Sea. Institutional innovation is subverting the traditional model of geographical advantages.
[Clever] Hainan's customs closure turns the table — the good old days of Singapore's toll station are over! For years, Singapore relied on the narrow Malacca Strait to make easy money, but now, with Hainan Island fully closed for customs, it is finally brought back to reality. This narrow strait once choked the throats of 37% of global maritime trade, allowing Singapore port to earn a fortune with a throughput of 38 million TEUs, directly supporting one-fifth of GDP through wholesale trade. It has been playing both sides between China and the U.S., living a very comfortable life.
However, Hainan's move is a "downgrade" attack: 15% corporate income tax is 5 percentage points lower than in Singapore. The policy of 30% processing value-added tax-free directly saves Indonesia's Golden Group about $120 million annually. The Yacheng Port direct route shortens the voyage by 5 days and cuts the goods damage rate by half. In contrast, Singapore's $300 million investment in green shipping and digital ports is not accepted by 63% of Southeast Asian companies. Singapore is really worried this time!
Some comments state that the previous example of Dubai Port rising from 3 million TEUs to 21 million is right in front of them. However, Singapore is still busy clinging to the U.S. back, with military exercises increasing by 40%. On the surface, it is friendly with China, but secretly flirting with Taiwan. Now, the era of making money by relying on geographical advantages is finally coming to an end. In this competition, Singapore's anxiety is just the lament of monopoly, but it is already too late!
Original article: toutiao.com/article/1851923578808396/
Statement: This article represents the views of the author only.