Original Paper Singapore Model and Mainland China Model in Terms of GDP Development

The research investigates the Singapore model and mainland China model in terms of its’ GDP development. It covers ideologies, methods and reasons for government interventions, the roles of state-owned businesses and the issues of labor in accordance to the different stages of GDP development. The interventions from the governments that caused the market to rebound and resilience are found in two countries. The article also redefines the developmental state as unlimited methods and ideologies under a government-led economic development economy.


Introduction
Singapore was originally a place with limited resources and a small island with poor soil. In 1965 during its independence, Singapore's relationship with its neighbor Malaysia was not friendly at the time, and the country must survive on its own ever since. In the process of becoming independent, Singapore's government played an important role in the economy. Since 1980, the country went through the stage from struggling to survive to economically on top within Southeast Asia and known as one of the "four dragons of Asia". Today, Singapore has been listed as one of the developed countries, with a GDP per person of over USD$50,000.
Compared to successful economic results, Singapore politics have often been criticized as being highly inflexible as a result of having a single political leader and a dominant political party. Opposition power

Communism Ideology and GDP of the Founding Nations
During the founding period of both nations, Singapore and mainland China were deeply affected by the ideology of communism.

Singapore
After the Second World War, the ideology of communism has spread to Singapore. The island was colonized by the English and the Japanese, and therefore, it should have adapted to the ideology of its governors. It was difficult to clarify its own ideology and development strategy under the circumstances. Until the post-war period in the 50s, the Singapore communists established labor unions and Chinese schools, which resulted in turmoil causing multiple riots. Under such circumstances, the people of Singapore electeda left wing leader David Marshall. The leader was not recognized by the English (Note 1). Until the leader Lim Yew Hock was elected and since then Singapore's self-governed status had been recognized by UK. Not long after, Lee Kuan-yew of "the People's Action Party" was elected as the president, Lee Kuan-yew believed that Singapore could not survive on its own, and therefore he proposed to join Malaysia as one of its states. Although communists in PAP opposed to this proposition, Singapore still joined Malaysia as a federal state. However, Singapore failed to build up a good relationship after joining Malaysia due to political differences, which lead to multiple blood-shed incidents. In 1965, Singapore was expelled by the Malaysian Federation and soon latter announced its independence (Note 2).
After the Second World War, a massive amount of unemployed population emerged, causing a jump in unemployment rate to 12-14% in Singapore (Note 3). The environment played an important role in the support of communism. In the 50s, the China communist party had become the dominant party in mainland, and the original governing party Chinese nationalist party retreated to Taiwan (Note 4).
Moreover, the Marxism ideology exists in the colonizing country UK. All these internal and external factors, as a result, boosted the development of communists (space) in Singapore. It was unknown whether or not Lee Kuan-yew's strong proposition to join Malaysia is the result of that he did not want to see the communism grow. After Singapore was expelled from the Federation of Malaysia, Lee took a great effort to urge Singapore join the liberal alliance such as United Nations and the Commonwealth of Nations. Internally, no matter before and after Singapore's independence in 1965, Lee took a great interest in reducing the member of communists in PAP. Economically, he focused on reducing the unemployment.  1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 8.1% 7.1% 10.0% -3.7% 7.6% 10.9% 12.3% 13.6% 13.7% 13.9% 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 12.1% 13.5% 11.1% 6.5% 4.6% 7.4% 7.5% 8.7% 9.4% 10.0% www.scholink.org/ojs/index.php/ape Advances in Politics and Economic Vol. 1, No. 2, 2018 94 Published by SCHOLINK INC. 1981198219831984198519861987198819891990 10   (Kuang, 2015, pp. 9-14). The successful improvement in the economy and society made the removal of communists in PAP easier without causing any political turmoil or riot in society. Under the system of direct election, PAP was still the dominant party, but its ideology had changed from the communism led nation founding model to the economic development-led model and greatly accepted by the voters.

PRC
Although during the founding period of Singapore and mainland China were both affected by  (Smil, 1999). The whole society was generally stagnated in poverty. In the regard of history, we know that giving such background the country more likely results in the rise of communism. But in mainland, which was already dominated by the communists, people seem to see these movements as part of the nation's founding campaign. The movements rather did not cause any political turmoil or

Two Types of Developmental State Models
The developmental state was a term defined by renowned author Chalmers Johnson. His research on Japan defined that the developmental state is a nation that is being governed by technocrates in the administration withinbureaucracy, a well-planned economic structure can be organized by government interventions to adjust the market with an acting department as the lead (Note 12) (Adrian, 1994). From the above definition, it is obvious that developmental state suggests that it is a government-led economic development, while the action and methods taken by the government is unlimited. In this research, although (space) even Singapore and the People's Republic of China have various ideologies in the development of the country, it is obvious that the two nation's governments both take the lead in the process of economic development, and this fact has been recognised by the leaders of both countries.
Therefore, it is reasonable to define that both Singapore and mainland China adopted the methodology of the developmental state.
Although Singapore and mainland adopted the method of developmental state after their own nation's founding period, they still have a great difference in ideologies in regard to their economic development.

Singapore
The ideology of Singapore's development is actually based on state capitalism (Note 13) that operates in contrast to Neo-liberalism (Chua, 2016, p. 499 phenomena such as labor movements and therefore causes economic stagnation. The government often faces a dilemma between enterprises and workers. In some countries, there are political parties that are in favor of enterprises while the others political parties favor workers. These parties take turns to be governing parties in order to apply different labor policies that achieve the purpose of checks and balances. Such problem never exists in Singapore. In Singapore's economy, most of the enterprises are SOEs that belongs to the government. Government shares the profit with its shareholders, and the shareholders are also voters as well. In this case, they share the same benefits together along with expectations and target. A great part of Singapore voters works in foreign firms (Note 14); these foreign firms rarely cause any labor movement. Generally, a foreign firm established in another country usually has their purposes.
They either want to extend their access to the market or seek more opportunities for enterprise development. Therefore, these firms usually tend to choose countries with less-developed labor movements. Even when there is a labor dispute involved, the firm can easily transfer its operations to other locations. And countries like Singapore with higher average income workers, foreign firms usually seek for talents and the remuneration offered by foreign firms usually is not disappointed. As a result, the chance of having a labor dispute is reduced.
Other than foreign firms, SOEs and SOEs related enterprises, companies that really have no connection to government capitals are small retail businesses. These are often family businesses mainly run by family members, and they rarely cause any labor movements.
Singapore is like a gigantic enterprise. To workers in SOE and SOEs related enterprises, they are also voters and their benefits are shared. Foreign firms and small retailer employees have none or very limited influence on politics. When the economy is in an expansion state, foreign and small retailers can share the benefit as well. Under the given structure, Singapore never had any large scale of labor movement that occurred, and its economic prosperity had already been listed as a developed country.
Voters evaluate the capability of PAP is likely the same as evaluating the profitability of SOEs. PAP as the dominant political party, has been favored by voters from independence ever since. Before 1970, EDB's mainly focus on helping firms investing in Singapore. EDB was also being called the "generator of state enterprises (Note 16)" (Chua, 2016, p. 503).
Between 1965 to 1970, it was a period of survival for Singapore. GDP increased from US$516 in 1965 to US$925 in 1970. In these five years, the average economic growth rate was 12.88%. This value is more than double to the average economic growth rate during the nation's founding period. Singapore's export was generally close to balance (Note 17). Since the colonization to the nation's founding period, Singapore has always been an important transshipment port because of its geographical location at the upper tip in the Strait of Malacca. However, Singapore obviously was not satisfied with being only a transshipment port. The establishment of EDB has shown the determination of Singapore's willingness to transform by introducing multiple companies into the country; Singapore transformed from a country relies on transshipment port trading economy to an industrialized economy.
The nation of Singapore founded in 1965. Among the "four Asian dragons", Singapore was the latest country to begin industrialization. Other countries such as Taiwan (Note 18) (Chu, 2017) and Korea (Note 19) (Cui & Park, 2010) had begun since 1950. By manufacturing products locally, these countries replaced the need for imports to sustain economic growth. And by the 1960, these countries have already greatly grown. Singapore was the latest nation in this economic race, but it also gave Singapore a different advantage, which was also known as the leapfrogging argument.
Leapfrogging argument (Hobby, 1995, p. 137 unable to adjust the sudden increase in wages and the poor decision resulted in economic turmoil. In the 80s, how the Singapore government managed to resolve its economic turmoil. In the early 80s, Singapore greatly increased the salary of workers, which resulted in a spike of the unemployment rate from below 3% to 6%. Economic growth decreased to -0.7% in 1985. The inflation caused by an overheated economy suddenly dropped from 10% to almost zero (Note 25). Singapore urgently revised its labor regulation, so that salaries may be adjusted freely. After a period of adjustment, the salary income falls back from 48% to 42% of the GDP, and the rate stabilized between 42%-44% until 1997.
Economic growth in 1987 resumed to 10.8%. The method of increasing salaries to resolve inflation and an overheated economy in order to increase overall technological level was a risky strategy. But from the above example, we can see that salaries will eventually fall back to the supposed level of the market, and government intervention may not always influence the market. During the financial crisis in 1997, the influence on the finance sector in Singapore was not significant.
Singapore has been attracting foreign firms to invest since 1970. In order to increase the export of foreign firms, it is essential that capital could be transferred easily. Singapore wanted to develop into another regional financial center after Manila (Note 28) (Cook, 2008, p. 122), which was not successful; and for that reason, the (space) Singaporean government (space) made the internal and external financial sectors clearly separated. Regulators information were kept concealed, and any domestic bank may not be owned by foreign firms for more than 20% of its shares. Foreign banks were required to maintain a high percentage of reserved capital (Note 29) (ibid;123-125). And as a result, during the financial crisis in 1997, real estate and price of shares fell, but the banks were unaffected. Local banks outperformed foreign banks. However, Singapore firms were still affected by the international financial crisis, and so in 1998 economic growth was reduced to -2.2%, but soon it resumed to 8.9% in 1999.
Singapore's industrial structure made itself volatile to changes in the international economic crises. The major manufacturers in Singapore are related to crude oil and electronics. At the end of the 20th century, 80% of the gross national income came from service industries, and 20% among it belonged to industry (Note 30) (Chua, 2016, p. 502). Foreign firms accounts for 80% of the export in 2008 (Dent, 2008, p. 87) (Note 31). Singapore also actively established free trade agreements with other countries all over the world. The nation has no agricultural or sunset industries, and therefore, it would be easier for Singapore to establish agreements with other countries. Whenever Singapore conducted to establish an agreement, any conditions related to the United States would offer them the greatest advantage. This is also known as "American Exceptionalism" (Note 32) (Cook, 2008, p. 131), where the United States was always being offered with the best conditions. Therefore, Singapore had always maintained a great relationship with the United States and its allies. Moreover, Singapore is being considered as an Asian country, and so it rather faces fewer obstacles on trade agreements, compared to Japan and other countries. For these reasons, Singapore's leading position as a transshipment port has never been shaken, and it is becoming a nation of export products for the whole Malay Peninsula and to the world.
Therefore, whenever international trades are being affected by the economic crisis, Singapore will always be influenced by the aftershock. In 1998 after the 1997 financial crisis, the economic growth of Singapore's average economic growth was reduced to 5.9% in this decade, which is much lower than in the previous decades.
The operations of enterprises focused on profitability and efficiency, and the government may have a different interest in the matter, thus this may create the roles of conflicts from the aspect of being a company manager and a governor. In 1981, Singapore established a foundation known as Government of Singapore Investment Corporation (GIC). Its capital source mostly comes from worker's pension and the fiscal dividend of the central bank, which is also the Monetary Authority of Singapore. GIC is Singapore's largest international investment organization. In order to avoid speculator attacks, it conceals most of its information and keeps a low transparency. However, the public thinks otherwise.
They believe that the government is taking profit from the citizens, and even the way how pensions are being paid sometimes causes dispute (Note 33) (Chua, 2016, pp. 509-510). It is not surprising to hear that the expansion of SOEs would compete for profit with private enterprise. Singapore intended to create an institution with standardized state capitalism, such as the sovereign fund and SOEs. The government regulates the profits of sovereign fund and SOEs; 50% of the profit will be invested and the other 50% will be contributed to the government budget. It is a source for the government spending on public services, subsidize low-income families and wages. SOEs and the sovereign fund between 2009-2013 contributed to 12-15% of the nation's budget (Note 34) (ibid; 515), but the extreme disparity between the poor and the rich did not change. The GINI coefficient was maintained at around 0.42 since the year of 2000 in Singapore (Note 35).
Singapore government obtained a positive fiscal surplus in 2017 (Note 36), but the government still owed a great amount of debt. Singapore government has a debt to GDP ratio of 110.6% in 2017 (note 37), this value is the highest among the "four Asian dragons". Singapore is unlike Hong Kong which constantly has a massive amount of capital investment from mainland (Note 38) (Dayo, 1987, p. 89).
The Singapore economy is led by the government, and therefore the government often needs to provide assistance to the enterprise that faces a crisis. For example, the government helps SOEs to increase their competitiveness, provide beneficial policies such as tax exemption and deficit reduction. In case of an economic and financial crisis, the government reduces the taxes paid by enterprises, rent, real estate tax or provide a wage subsidy to assist enterprises. Including the expenditure of social welfare, Singapore government owes the highest debt among all countries in Southeast Asia, only second to Japan.

Mainland China (PRC)
In the ideology of early economic development of the PRC, it is close to Neoliberalism that the government favored minimal intervention, light tax or even zero tax. In 1976  Following the economic liberalisation in local areas (Note 40) (Huang, 2008, p. 52); private sectors grew rapidly. A few private business owners who know how to manage business believed that in order to expand their size, a financial loan friendly environment supported by the government will be necessary. Under the permission of the PRC government, the banking sector agreed to offer loans with loose conditions. If the small enterprise was unable to get loans from the banks, they could reach unregulated loans such as loans purchased in small groups. In regard of agricultural loans, the funding could be provided by the Rural Credit Cooperative. Starting from 1980, a high ratio of loans was borrowed for entrepreneurs to start their businesses, and agricultural loans were increasing rapidly (Note 41) (ibid, pp. 140-147). These standard or non-standard financial enterprises had not been closely regulated or conducted strategic planning in loans by the financial authority. The environment of the whole society was acting laissez-faire and supportive towards individuals and households who wanted to start a business. private business scale was generally small, the low number of employees in these medium-to-small enterprises would hardly organize any labor unions. New enterprises were very young and industry clusters still yet to be found. In the given environment, industrial labor organization could hardly be formed.
From 1976 to 1990, the GDP in mainland China went from US$165.41 to US$317.89, and an average GDP growth of 8.5% per annum. In the rapid development of local economy, people started to see higher expectation on the political freedom. PRC leader Zhao Ziyang suggested the separation of political party and the government (Note 42) (Guo, 2016, p. 164) (Liu, 2001). His opinion was greatly supported by students at that time. Unfortunately, the Tian An Men incidents broke out. It caused a massive crackdown on the students in 1989. The demand of a democratic political system in PRC faced a defeat, and the route towards political freedom became an empty talk by the time.
After the student movement in 1989, the government regarded the country and communist party as a whole; the government started to actively control the economy, and the Neoliberalism environment had come to an end. Instead, an economic development model of state capitalism alike has been implemented.
In order to further command the economy efficiently, more tax reform policies were implemented after 1990. Most of the tax revenue was being collected by the central government. The insufficient budget reduced in local tax was then subsidized by the central government and therefore, the authority of local government was greatly reduced (Note 43) (Huang, 2008, pp. 163-168) which resulted in building a stronger governing power to the central government. Private enterprises in villages was no longer allowed to trade fertilizers, and the government started to form nation-owned enterprises that lead trade in these sectors (ibid, p. 162) (Note 44). Since fertilizers trading has great importance in agricultural production, containing fertilizers meaning the government could have taken the grip of village economy.
The government implemented strategic economic policy in the 1990s. Policies were in favored of the cities and attracting foreign investments. Deng Xiaoping gave a crucial speech during his visit to the south in 1992. He wanted a small portion of people in the country to "become wealthy" first. The government policy would favor the cities, which later caused a large portion of population moved to the cities for work. Many laborers work in cities away from home for years, and they only return home once per year during major holidays such as the Chinese New Year. And as a result, all transportation systems were overloaded during major holidays due to the high demand, causing a massive number of people seeking for ways of transportation.
In order to create a beneficial export environment for businesses, the Chinese Yuan went through a long depreciation against the US dollar. Since 1980, CNY depreciated from CNY$1.4883: US$1 to the level of CNY$3.7: US$1 in 1987 (Note 45). The currency has been depreciated a total of 149%. In addition to the overheated economics, the economy suffered a half state-generated inflation in the mainland.
In 1987-88, the inflation rate hiked up to 27% (Note 46). When the depreciation of the mainland Chinese currency has stopped, the inflation followed to slow down shortly. In the 1990s, the reduction in assets of SOEs went through a reform including privatising enterprises.
SOEs were making an average of no profit at the very beginning. The government started to close down poor performing companies, reduce a large number of workers, and get the enterprises listed on the stock market. These actions created a positive balance of net income to the SOEs (Note 53). Instead of using the old strategy that the SOEs run multiple businesses in every sectors, now the SOEs mostly run in finance, energy, telecommunication, and manufacture sectors. It has become obvious that many SOEs has become private businesses. The assets of SOEs reduced from 70% of the nation total assets in 1997 to 45% in 2012 (Note 54). However, the average profit of SOEs is still lower than the private enterprises.
The profit of private enterprises continued to rise after the economic liberalisation, and has been increased to about 9% until it turns stagnant in 2008. SOEs profit climbed to 7% in 2007, but reduced to 4% suddenly and keeps dropping (Note 55) (Gao, 2010). On the other hand, SOEs debts greatly hiked in a sudden.
The reasons behind the profit decrease in state-owned enterprises are worthy to be studied. In 2007, the debt to equity leverage ratio suddenly hiked, which was even higher than the private sector. Since the turning in 2007, the debt to equity leverage ratio of SOEs increased to reach almost 150% until 2013.
However, the ratio in private enterprise decreased to 75% in 2014 (Note 56). These data reflects directly on (space) profit of SOEs; their profits are shrinking, while private enterprises' are growing. The performance was rather poor, the SOEs that has basic industrial businesses, energy and other industries in control, tended to sacrifice their profit in order to subsidize private businesses to increase their competitiveness. Therefore, the increase in debt of SOEs was possibly caused by the sacrifice and the government call for demand strategy.
From the 1990s state-owned enterprise reform to after 2010, mainland China's GDP growth has not seen being influenced by the reform of SOEs. After 2007, the economic growth has not decreased because of the great debt of SOEs. It could be said that the greatest achievement of the reform in mainland's SOEs was performing at the expectation of the market. The SOEs do not drag down the economy because of the monopoly, inefficiency, or placing priority in political agenda over profit.

Discussion and Summary
The SOEs in Singapore and mainland China are similar in some extent, but their operation focuses on different targets. Singapore and Chinese SOEs are both major players of investing overseas. Politically, the Chinese government uses SOEs as a tool to maintain political stability. SOEs in mainland China are largely made up by members of the Chinese Communist Party. The SOEs consists of 400,000 CCP organizations, and CCP members of 10 million. The Central Administration, known as the SASAC, is responsible for monitoring SOEs and all overseas investments made by the SOEs. 60% of the total overseas investments of mainland comes from SOEs (Note 57) (Wu, 2017). If we say an enterprise is regarded as capitalistic and mainland China equals to the communist party, SOEs owns half of the total assets (Note 58) (Nordqvist, 2014), it is reasonable to believe that PRC engages in the same form towards state capitalism as Singapore. However, SOEs in Singapore have been the generators of GDP.
Singapore SOEs focus on profit and efficiency as their goals. Internal affairs such as stabilizing export or expanding demand are still being managed through the government budget. In mainland China, SOEs consider their political agenda as the first priority, while making a profit is their second concern.
The SOEs of mainland China act as a supporter in the economic growth.
Singapore and PRC both wanted to implement policies that over rules the market through government interventions, but the market strongly resisted. The Singapore government used its political power to increase wages in the 80s in order to upgrade its industry, but as a result it ended with a hike in unemployment. In 1985, economic growth reduced to a negative level, which was a sign of a depression. In mainland China, the government greatly depreciated the mainland Chinese currency in the 80s and 90s in order to attract foreign investments, which caused a great hike in inflation but not much influence on GDP growth. From the above, it is obvious that when a government considers only economic growth while ignoring any political turmoil and livelihood of the people, the currency devaluation strategy of PRC seems to be possible after all. However, in countries of direct elections, such strategy may force the political party to step down.
The ideology of Singapore and PRC adapted influenced the GDP growth of both countries. Their influences may be categorized into the "unstable economy" of the country founding period and the "economic development" period. It is particularly interesting that Singapore and mainland were both influenced by communism during their founding period. The economy greatly fluctuated during this period of time. In the worst year, mainland China lowest GDP was -27.3% of 1961 and Singapore was -3.7% of 1964. Communism perhaps was suitable when founding a nation, but it can cause great economic fluctuations comparing to the economic development stage. During the economic development stage, neoliberalism or state capitalism's influences were not significant on GDP growth as exampled by Singapore and mainland China. However, the success of Singapore and mainland were only viewed from a historical perspective, their strategies may not work out the same results in other countries.
Singapore, in 1968, already surpassed average GDP of the world, while PRC has become closer to this same average than ever. The mainland's GDP gap away from this average was US$689.3 in 1970 (Note 59), which was 18 years behind this average. In 2015, the average was only 8 years behind, and the gap seems to be closing quickly. Comparing with average GDP of each countries and world GDP average, it could see more similarities and differences of Singapore and mainland China's models. More time is needed to observe the development of mainland China in order to continue with this research.