Both China and India are now considered the twin engines of economic growth for the next century. According to economists, China's economy is expected to grow at an annual rate of 9.8% in the first half of this year, above the target set earlier by officials from the Ministry of Commerce. This new figure exceeds the official forecast of 7% for the period and puts the economy well on the track to beating the full-year target, also set at 7%.

Liang Hong, an economist with New York-based Goldman Sachs investment firm, said in a report that China is still in the initial stage of a new growth cycle. China's economy will maintain speedy growth before experiencing inflation and checking-account pressure incurred by the unduly high domestic demand. In 2004, "the three wagons" - consumption, investment and export - that are hauling economic growth will continue running fast.

India, meanwhile, has reported smaller economic growth figures of around 5.5-6% for the remainder of 2004. The country's domestic economy, however, is currently reacting positively to lower interests rates and liberal lending rates issued by its banks. "Once the new central government is in place and effectively pump-priming the economy, India could be another shooting star in the global economy next only to China," revealed a fund manager who manages Asian growth funds from Singapore.

With a population of only 4 million, compared to more than 1 billion in India and around 1.3 billion in China, Singapore's domestic market is nowhere near as large as the two Asian giants. It is also currently outclassed and outmaneuvered by both these countries in terms of attracting foreign direct investments and the pace of economic growth. But despite these factors, Lee was optimistic that Singapore still has much to offer.

"Singapore, with a strong rule of law plus Western economic and managerial practices and an effective, corruption-free administration, can add value to China, India and our ASEAN [Association of Southeast Asian Nations] neighbors in their interaction[s] with the US and EU [European Union] to the benefit of all," Lee stressed. Singapore could also play a growing role as a meeting place and homebase for students and entrepreneurs from China, India and Southeast Asia, all of whom can feel comfortable in Singapore, he added.

There is then a need for Singaporeans to have the right skill levels to be considered China and India specialists. Lee said that Singapore currently does not have an institution in place that can train people in certain specialized areas for careers in government or business. He added that there was a need to have a core set of players with a deep understanding of China and India in order to engage these countries effectively. "It is not enough to be bilingual, because bilingualism gets you through the door. But by being bi-cultural, it is how you go deep inside China to work with them," Lee said.

Lee was one of the earliest leaders in Asia to embark on a "Go-China" policy in the 1970s and was a prime advocate for the Singapore-Suzhou Industrial Park in China in the early 1990s, though it was only recently that results showed the industrial park was operating profitably. "It has been an arduous labor of love and commitment that finally paid off for the senior Lee. It is not an overnight success. Doing business in China in the early years has taught Singapore valuable lessons of how to engage Chinese businessmen and government officials. China is a different kettle of fish compared to the other Southeast Asian countries, and Singapore has learnt a valuable lesson the hard way," revealed Dr Chia Lin Sien, an academic adviser with the Singapore Chinese Chamber of Business.

Dr Chia is interested in establishing academic courses in China that would cater to indigenous Chinese and wants to set up academic courses in Singapore that would be of use to Singaporeans before they consider setting up roots in China. "It's a natural evolution of how we can reach out to citizens of both countries. The only obstacle seems to be the lack of funds to achieve our objectives," Chia said. He hopes the renewed efforts to reach out and train Singaporeans interested in setting up business in China would get a much needed stimulant package from the government in Singapore.

Meanwhile, closer trade relations with China and India seem to be on the drawing board. Singapore has indicated plans to ink a free-trade agreement (FTA) with China once several key issues are discussed. Singapore has also announced that it intends to sign an FTA with India by the end of this year, though progress on the FTA slowed somewhat after a new government came to power in New Delhi following elections in May.

Aside from trade issues, Lee praised the way China and its senior government officials were able to contain the outbreak of SARS (severe acute respiratory syndrome) last year, as well as the current fiscal measures that are in place to cool down the country's overheated economy. There was some fear put forward by economists earlier that China could be heading for a crash if its economic pace of development was left unchecked since prices for raw materials such as iron ore, pig-iron steel, coal and other commodity imports have started to increase rapidly.

"We have seen almost a 30% increase in shipping, and freight charges have increased significantly," revealed Tiann Ann, a shipping executive from COSCO Shipping Lines based in Shanghai. The initial fears have subsided, however. Now the only hotspot that remains, and one that could possibly derail China's rapid development, seems to be the Taiwan reunification issue. Lee, regarded as a good barometer by the international community for accurately assessing the relationship between China and Taiwan, said that the China-Taiwan relationship was testy at best.

According to Lee, the China and Taiwan issue could spin out of control due to miscalculations by any one party. "It's not going to affect just China, Taiwan and the US, but the whole of East Asia will be involved. The economic consequences will be considerable for all of us," revealed Lee.

He warned that, given the current situation, Beijing would not just sit by idly if Taipei decides to break away and declare independence since this was an issue that was close to the hearts of those involved and one that involved national pride.

Still, with all that Singapore has learned from its history of interaction in the region, the two Asian giants could learn a lot from the small island city.



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