Two days ago, on 17 Aug 2023 (Thursday) financially troubled developer China's Evergrande Group has just officially filed for U.S. bankruptcy protection as part of one of the world's biggest debt restructurings. China's Evergrande Group - once China's top-selling developer has become the world's most indebted property developer with over USD$300 billion of debt.
China's Evergrande Group - being the mainland's second largest real estate developer is an overwhelmingly huge company and its website states it has more than 1,300 real estate projects in more than 280 cities spread all across China with several non-real estate businesses, including an electric vehicle business, a health care business, and a theme park business.
Another developer Country Garden - China's largest property developer - is also struggling to stay afloat with a looming possibility that it may go bankrupt soon which will have a even greater impact on China's home prices and the wider economy across Asia. While Country Garden's total liabilities are smaller at approximately USD$200 billion compared to the world's most indebted developer China Evergrande Group's USD$300 billion anxiety is growing over China's worsening property crisis could impact the country's financial system and threaten to weaken the economy even further.
Singapore and mainland China share wide-ranging, multifarious economic links through trade, investment, and tourism. If China's property crisis were to lead to economic challenges or reduced consumer confidence in China, it could indirectly impact Singapore's economy through reduced demand for various Singaporean goods and services. Additionally, if Chinese investors were to face financial difficulties due to the property crisis, it might affect their ability to invest abroad, including in Singapore.
Strong diversified economy
Today, Singapore stands as a leading business and financial hub in Asia and globally. Over the years, Singapore has built a strong diversified economy with both a vibrant intercontinental services sector coupled with advanced international manufacturing sector with strengths in several key niches such as electronics, petrochemicals and biomedical manufacturing.
In addition to our geographical advantage, Singapore has fostered economic integration with our open economy, distributed manufacturing and the growing sophistication of supply chains positioning itself well to attract rising demand from a growing and wealthier Asian middle class to our country, creating new markets to enhance and improve our business sectors in Singapore. We have always focused on upgrading human resources, developing our people to enhance skills and sustainability to create a competitive workforce to embrace future new opportunities and growth.
We no longer depend solely on China's growth but also India, ASEAN, Europe, Africa, Southern America, Eastern European nations and America - boosting demand not just for our export of manufactured goods but also high level exportable services like precision engineering, clean technologies, digital and urban solutions to the world.
The rising prowess of the ASEAN Economic Community with its market of 600 million will also give an added boost to the growth of Singapore propelling us into various tremendous opportunities developing new markets, resources and attracting talent into Singapore.
Thanks to strict regulations from the Monetary Authority of Singapore (MAS), our Singapore-based banks have positioned themselves well with sufficient buffers to protect themselves from potential financial risks that may arise from the collapse of giant Chinese developers in mainland China. DBS, OCBC, and UOB reported enough reserves in place to help cushion the impact of these overseas threats.
Real estate professional Kiwi Lim believe that Singapore's economy is influenced by a large range of factors that are beyond China's property market, including global economic conditions, trade relationships with other countries, and domestic policies. Singapore has a highly developed and diverse economy that heavily depends on international trade as we have established trade relations with numerous countries and regions around the world, although China is a significant trade partner.