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Sunday, July 18, 2021

Why is Singapore including Sinovac in its official national vaccination program soon?

The Singapore government has come to terms with the reality that covid cannot be eradicated and SG needs China more than the US for its economic growth.  Therefore, the SG government will be approving and including Sinovac in its official national vaccination program soon.

Let's see the importance of China to SG and the world.


China contributed almost 27% to the world economic growth despite being the 2nd largest economy compared to the US with only 11.6% world economic contribution.


China, including HK, contributed 26.2% of SG international trading and is SG's largest trading partner compared to the US (10.7%).

Let's calculate the individual economic impacts if we were to isolate China and the US with simplified examples.

GDP calculation:

GDP = Government spendings (G) + Investments (I) + Consumption (C) + Net Exports (X-M)

X = Exports
M= Imports

For simplicity's sake, we will assume the 4 GDP components to be equitable in the following manner:
G = $1T
I = $1T
C = $1T
Net Ex = $1T

Therefore, GDP = 1+1+1+1 = $4T

Since the SG economic structure is such that the exports figure is 3 times its GDP, we will need to extrapolate this (4*3=12) into the GDP.

GDP ($4T) = 1+1+1+ (12-11)
GDP ($4T) = 1+1+1+1=4

If SG were to decouple from China and lose 26.2% of China trades (exports & imports), the economic impact could be illustrated below.

GDP = 1+1+1+ [(12*73.8%)-(11*73.8*)]
GDP = 3+ (8.856-8.118)
GDP = 3+0.738=3.738

Thus, SG would shrink from $4T to $3.738T ($0.262T loss) and experience 6.55% (0.262/4) negative economic (GDP) growth.

If SG were to decouple from the US and lose 10.7% of the US trades (exports & imports), the economic impact could be illustrated below.

GDP = 1+1+1+ [(12*89.3%)-(11*89.3%)]
GDP = 3+ (10.716-9.823)
GDP = 3+0.893=3.893

Thus, SG would shrink from $4T to $3.893T ($0.107T loss) and experience 2.675% (0.107/4) negative economic (GDP) growth.

As we can see from the 2 simplified examples, SG will experience 2.45x (6.55/2.675) more economic losses if it loses China trades.  Furthermore, there will be the multiplier effects such as the declines in investments and consumption when the net exports are falling which we have excluded in this simplified illustration.  Thus, the true economic impacts will be greater than this simplified illustration.

Any wise government will know how to choose between -6.55% and -2.675% because no citizens will vote for a government that will impoverish them.

SG will have no choice but to approve Sinovac because it cannot afford to isolate China since it needs China to support SG's economic growth.

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