In the last few years, the Singapore government has increased its investments in the three northeastern provinces of China – Liaoning, Jilin and Heilongjiang with the latest project in the pipeline being a food farm twice the size of Singapore in Jilin.
Major cities in the region such as Shenyang and Dalian have received substantial amounts of Singapore investments too including nearby Tianjin where Singapore is currently building an eco-city in.
Northeast China is touted as the next frontier in China’s economic miracle as it had been neglected largely during its boom years in the 1980s and 1990s which focused on the Special Economic Zone (SEZs) and coastal cities in the Pearl and Whampoa Deltas.
On paper, Northeast China is an attractive investment destination due to its relatively low cost of doing business, high educational level of the people and its proximity to South Korea and Japan.
Unfortunately, the rise in tensions between the two Koreas present a potential threat to stability in the region which will retard its growth should an armed conflict breaks out.
Relationship between North and South Korea has reached a nadir under the South’s current President Lee Myung-Bak who has eschewed the “sunshine policy” of his predecessor and adopted a tough stance against the North.
The sinking of the South Korean corvette “Cheonan” purportedly by a North Korean torpedo may spark a wider conflagration engulfing the entire region.
While the South has shown restrain in its response so far, the North has struck a belligerent note so far, threatening “all-out war” if South Korea were to take any punitive actions against it.
In retaliation, South Korea has resumed its psychological warfare against the North and pull out of the joint inter-Korea industrial complex in Kaesong.
Though hawish voices within the South Korean government are calling for a putative strike against the North, Seoul’s immediate reaction is likely to focus on more economic sanctions which will hardly have any effect on the regime in Pyongyang.
North Korea’s attack on the South may have stemmed from internal turmoil looming ahead of its expected transfer of power from the ailing Kim Jong-Il to his third son Kim Jong-Un which is not going well as expected.
A botched economic reform earlier this year supposedly spear-headed by the younger Kim sparked massive public protests across the country prompting the North’s Prime Minister to apologize and the Finance Minister executed by the firing squad.
Kim Jong-Il reportedly suffers from end-stage kidney failure and may not have more than three years to live, according to North Korean defectors.
A succession plan gone awry in the Stalinist state may trigger a much-feared internal implosion and collapse with refugees spilling across the border into China, thereby destabilizing the entire region.
There is a sizeable Korean minority in Jilin province in the cities of Yanji, Ji’an and Tumen which were previously part of the “Gando” region ceded to Japan when Korea was annexed in 1910.
An uncontrollable influx of North Korean refugees across the Yalu and Tumen rivers into China’s Northeast will radically alter the demographics of its border cities, a situation which Beijing will not want to find itself stuck in.
In the worst-case scenario, the North may launch its nuclear warheads on the South, reigniting a second Korean War which will surely end all economic prospects in Northeast China.
In the light of fast escalating tensions in the Korean Peninsula, it may be prudent for Singapore to review its future investments in the region till the political situation has stabilized.
An inter-Korea conflict which will have widespread repercussions in the Asia-Pacific is not that far-fetched judging from the recent turn of events and the impending demise of North Korean leader Kim Jong-Il.