IMPORT OF CHINA GOODS INTO SINGAPORE (Effects of Suspension)

Mr Lim Cher Kheng asked the Minister for Commerce and Industry whether he will make a statement on the effects of the suspension by China, as reported in the local press, of the import of certain goods into Singapore, and what steps does he propose to take to ensure that the entrepot trade of Singapore will not be jeopardised and that the cost of living in Singapore will not rise as a result of this suspension.

Mr J. M. Jumabhoy: Sir, I have had no official intimation of any suspension of exports by China to Singapore. If, however, the reports in the newspapers of suspension of exports of certain preserves, salted vegetables and fruits are correct, it could create some difficulty in supplies for those who prefer these articles; but it is unlikely to have any significant effect on the cost of living as a whole. It might perhaps be beneficial by switching the taste preference of consumers to similar locally produced articles. It is also unlikely to have any significant effect on our entrepot trade, as indications show that not much of the above goods go into the entrepot trade stream and also because most of the goods required for our entrepot trade are freely available from other sources.

Looking at the picture of China's trade as a whole with Singapore, we have been exporting to China much less than we have been importing from China. In short, the balance of trade is against us. Our total trade with China in January to September 1958 has been under four per cent of our total overseas trade.

Sir, I must take the opportunity of correcting some misimpressions that might have been created in the minds of the people of Singapore -

Mr Speaker: Order. I was wondering whether that statement would not arise on the adjournment, as I see that the hon. Member for Changi has obtained the right to raise the matter of the importance of unrestricted trade between Singapore and China. If what the Minister is saying would more appropriately be said at the adjournment, I would suggest that he say it at the adjournment.

Mr J. M. Jumabhoy: With respect, Sir, when the Member for Changi finishes his adjournment speech, it is possible that the time might be too short for me to give an appropriate reply.

Mr Speaker: Order. If the Minister agrees then that what he has to say will arise on the adjournment, then I am afraid he is anticipating, and he cannot do so.

Mr J. M. Jumabhoy: Sir, I do not think it will arise, but I was wondering whether what I have to say might better be a part of my statement in reply, because the Member has been asking me for a statement on the effects of this suspension of trade by China.

Mr Speaker: Order. If the Minister then assures me in no uncertain terms that what he has to say will not arise, or is not relevant to the subject to be discussed on the adjournment, then he can continue.

Mr J. M. Jumabhoy: I do not know what the Member will say in his adjournment speech, but I can give the assurance that what I am going to say is relevant to the question asked.

Mr Speaker: Order. That is quite irrelevant to my ruling. If the hon. Member for Changi, in the process of asking supplementary questions, also anticipates what he wishes to say on the adjournment, then, of course, he will be out of order.

Mr J. M. Jumabhoy: To continue, Sir, -

Mr Speaker: The Member can, if he assures me that what he is going to say will not be raised on the adjournment.

Mr J. M. Jumabhoy: Yes, Sir, I will do that.

Mr Speaker: Please continue.

Mr J. M. Jumabhoy: I must take this opportunity of correcting some mis-impressions that might have been created in the minds of the people of Singapore by certain statements alleged to have been made by trading agencies in China in their correspondence with Singapore merchants, as quoted in Press reports.

It has been alleged that the reported suspension by China in certain lines of exports to Singapore resulted from certain discriminatory actions of the Singapore Government. The only action by Singapore which could be construed as such was the ban imposed last month at the request of the Federation Government on imports of certain types of textiles. The first and foremost duty of any elected Government in any country is to safeguard the economy of the country. As far as Singapore is concerned, the economy of Singapore and that of the Federation is so closely interlinked that any damage to the economy of the Federation is bound to have a much stronger repercussion in Singapore.

If we are looking to a merger with the Federation, it is the clear duty of any Singapore Government to do its best to prevent the undermining of the Malayan economy. The step taken by the Singapore Government at the request of the Federation Government to temporarily safeguard their textile industry is not therefore a discriminatory step against China as such; but a step taken for the benefit of the Malayan economy as a whole. I can well conceive such a step being taken against any other country if it was considered necessary in the interests of our economy, bearing of course in mind any officially recognized contractual obligations.

It might bear a little explaining why the step was taken against the particular types of textiles only from China. It is quite apparent that the trading policy of China is strongly influenced by political considerations, as is evidenced from the fact that China has been selling these goods below the comparative producing cost of countries like Japan, where there is a high degree of automation and labour is cheap. In fact, China has been able to underprice her goods even below the cost of Hongkong producers who have had at their command cheap refugee labour.

It is apparent, therefore, that China's policy has been to dump its goods in certain markets at a price which has no bearing on the cost of production in order to undermine the industries of certain countries. This undercutting cannot, however, go on indefinitely without having an effect on China's economy, and it is possible that the present move may be due to the adverse economic results of the undercutting policies being felt in China.

It is also possible that long-term credit arrangements may have been stretched too far and that China may be feeling that the time has come to stop these credit facilities and ask for cash payments.

Mr Lim Cher Kheng: Nonsense!

Mr J. M. Jumabhoy: Fair competition in trade has always been encouraged by the Singapore Government but where undercutting with political motives results in damage to the Malayan economy, the Government feels that it has an obligation to the Malayan economy as a whole, even though the particular industry concerned may be located in the Federation.

In short, while the Singapore Government has no intention or wish to hamper trade between China and Singapore, it is its clear duty to see that such trade is not to the detriment of any of our industries or to the Malayan economy as a whole, and this not only applies to China but to any other country.

To blame the Singapore Government in the fashion reported by the Press is therefore a clear indication of China's desire to make political capital out of what is purely a step dictated by economic necessity to Singapore as far as Singapore's action is concerned, and possibly for the same reason to China as far as China's present reported action is concerned.