EFFECTS OF CHINA TRADE WAR ON SINGAPORE ECONOMY IN 2020
Abstract
The objective of this study was to understand how the trade war has affected Singapore’s economy by comparing trade between Singapore and China using comparative advantage and trade specialization. Moreover, the money market and capital market are used for comparing the interest rate as the main effect on the trade war for both short-term and long-term bonds. The methodology uses comparative advantage and trade specialization during the year 2020, and 2015 – 2019 as the period of interest rate, via a Revealed Comparative Advantage Index (RCA Index) calculation. The results of this study include (1) China has a comparative advantage with the lowest cost in intensive labor, while Singapore has a comparative advantage regarding the lowest cost of intensive capital, (2) the gain from the trade war is that Singapore sends these products to China for labor intensive production and (3) China imports these goods from Singapore and produces electronic goods such as telephones, exporting them to the US. The implications of this study regarding the comparative advantage and trade specialization used by RCA for calculation between China and Singapore can illuminate the ideas for academic, government, and private sector planning of management strategies in terms of trading cooperation. However, the interest rate also b benefited (can also benefit?) to show the effects along with money market and capital market in Singapore for helping the investors on the investment plan for both short terms and long terms.
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