Do Lee and Xi see eye-to-eye?

Singaporean Prime Minister Lee Hsien Loong’s just concluded three-day official visit to China came amid recent uneasy ties on strategic and sovereign issues. It’s not immediately clear that Lee’s meeting with Chinese President Xi Jinping, despite the diplomatic niceties and assurances, necessarily put relations back on a cordial track.

Lee’s high-profile meetings with Xi, Premier Li Keqiang and other top officials signaled a renewed effort to reaffirm the two sides’ extensive and substantive relations after hitting a new nadir last year. The premier’s visit came ahead of preparations for China’s pivotal 19th Party Congress, where new leaders and policy directions will be decided.

Lee described his meetings as “warm” and that bilateral relations were “more than stable.” He said Chinese leaders were “keen on improving relations” and saw a “basic alignment” of the two sides’ interests and objectives. He also said Singapore aims to leverage the two countries’ “cultural affinity.”

Lee took the unexpected step of meeting anti-graft tsar Wang Qishan, who does not regularly host foreign leaders. Wang has overseen Xi’s sweeping anti-corruption campaign, which has included restrictions on capital flows overseas. It’s unclear what role, if any, Singapore has played in Beijing’s clampdown on illicit cash outflows.

Observers believe Lee sought an audience with Wang to get a read on China’s transition dynamics ahead of the party congress and perhaps forewarning of any further policy changes that could affect Chinese capital outflows. Standard & Poor’s downgraded China’s credit rating while Lee was in China on rising concerns about its debt profile.

Commercial relations have remained strong despite recent diplomatic twists and turns. China has been Singapore’s largest trading partner since 2013, with the two countries recording US$66 billion in two-way trade last year.

Chinese companies made US$4.2 billion worth of investments in Singapore property and non-financial sectors in 2016. Singapore is the second-largest investor in China, with some US$6.2 billion invested in 2016.

Lee’s discussions with Premier Li pertained to the establishment of financial, judicial and legal cooperation, as well as plans to upgrade aspects of the China-Singapore Free Trade Agreement. Li expressed his interest in bidding for a 350-kilometer high-speed railway project linking Singapore to Malaysia’s capital Kuala Lumpur, requesting Lee’s support for Chinese firms when the tender opens later this year.

Chinese media coverage of Lee’s visit was guarded though generally favorable, with some commentators expressing surprise that Lee’s trip to Beijing was announced with only a few days advance notice. Others surmised that Singapore’s ascension next year to the rotating chair of the Association of Southeast Asian Nations (Asean) regional grouping has spurred the two sides to return bilateral ties to a normal footing.

Some US$600 billion in commodities pass through Singapore’s strategic port linked to the Malacca Strait, the region’s primary shipping route and berthing hub linking to the South China Sea, disputed international waters through which some 80% of China’s energy imports pass.

Asean summits have been a platform for regional countries with conflicting territorial claims in the area to express grievances with Beijing’s efforts to assert its own expansive claims. China will be closely scrutinizing the position Singapore takes on the territorial disputes and would regard any advocacy of international arbitration settlements as indicative of a pro-American security orientation.

“Beijing would not want other members of Asean to see their chair publicly disputing China’s claims on the waterway,” said Hongyi Lai, a professor of Chinese studies at the University of Nottingham. “That’s probably the issue that has the potential to invite tension, contention and conflict.”

Last year’s downturn in ties followed Lee’s comments in support of a July 2016 ruling by the Permanent Court of Arbitration in The Hague that rejected China’s South China Sea claims by ruling in favor of the Philippines’ sovereign rights to contested waters.

The premier’s remark earned a rebuke from Liu Zhenmin, China’s vice minister for foreign affairs, who said that Singapore should refrain from comment as a non-claimant state.

Ties were further fraught last November when Hong Kong seized nine Singaporean infantry carrier vehicles en route from Taiwan which had been used in joint military exercises there. Singapore has a longstanding policy of conducting military exercises in Taiwan, which Beijing has grudgingly tolerated.

China returned the vehicles two months later, but the incident was viewed as a significant illustration of Beijing’s annoyance with Lee, whose Changi Naval Base hosts American military vessels and aircraft that conduct reconnaissance in the South China Sea. Lee is scheduled to visit US President Donald Trump next month in Washington.

China’s decision not to invite Singapore’s prime minister to the Belt and Road Forum held in Beijing last May underscored a protracted diplomatic spat. The snub was motivated by Beijing’s disappointment with Singapore’s failure to uphold its historic foreign policy of maintaining equidistance between the US and China, a policy developed and maintained by the premier’s deceased father and national founder, Lee Kuan Yew.

While the elder Lee is widely respected throughout China as a statesman who helped inspire the country’s reform process and development of ties with the West, the younger Harvard-educated Lee has come to be regarded with suspicion and skepticism in China due to his closeness to and affinity for the US.

“The current administration in Singapore is different from the generation of Lee Kuan Yew,” said Xue Li, a senior research fellow at the Chinese Academy of Social Sciences. “They are used to dealing with China from their Western perspective: that is, being a teacher of China rather than a follower of China.”

Beijing’s Belt and Road Initiative, stated plainly in editorials published by the state mouthpiece Global Times newspaper, will aim to undercut Singapore’s position as a transshipment hub by bypassing the city state’s port with projects like the Melaka Gateway, where a rival transshipment port is slated to be built in Malaysia by 2019.

Moreover, China’s plans for the East Coast Railway Line spanning the width of peninsula Malaysia to link the Malacca Strait to the South China Sea would also marginalize Singapore’s strategic utility.

While these developments present challenges, Singapore would still be strongly positioned as an unrivaled regional financial hub to facilitate investment. It is already known to be a top destination for foreign direct investment linked to China’s Belt and Road Initiative within Asean.

There is ultimately no shortage of areas where the strategic trajectories of the two countries can converge, returning now strained ties to solid ground. But the impression that Singapore only seeks economic and investment opportunities from China while supporting US efforts to strengthen its military presence in the South China Sea will remain hard for Lee to shake any time soon, even if he intends to do so.