A Shifting Asian Power Dynamic

Chinese President Xi Jinping’s Republic Day message to Indian President Droupadi Murmu on January 26, 2026, signals more than diplomatic courtesy. His characterization of the two Asian giants as “good neighbours, friends and partners” engaged in a “dragon and the elephant dancing together” marks a potential inflection point in Asian geopolitics—one with profound implications for Singapore’s strategic positioning, economic interests, and regional security calculus.

Main Message: Xi described China and India as “good neighbours, friends and partners,” using the phrase “dragon and the elephant dancing together” to characterize the relationship.

Current State of Relations: According to Xi, China-India relations have improved over the past year and are significant for maintaining world peace and prosperity. He expressed hope for expanded exchanges, cooperation, and addressing mutual concerns.

Historical Context:

• The two nuclear-armed nations share a 3,800-km poorly demarcated border that has been disputed since the 1950s
• Relations were severely damaged by a 2020 border clash that killed 20 Indian and 4 Chinese soldiers
• The border became heavily militarized after that incident

Recent Improvements:

• Both countries began improving ties in 2024 through high-level bilateral visits
• Direct flights resumed in 2025
• Trade and investment flows have increased, partly against the backdrop of US President Trump’s foreign policy approach

The message appears to be part of ongoing efforts by both countries to normalize and strengthen their relationship after years of tension following the deadly 2020 border confrontation.

The Geopolitical Earthquake Singapore Must Navigate

For Singapore, the thawing of China-India relations represents both opportunity and challenge. As a small city-state that has long prospered by maintaining equidistance from major powers, Singapore now faces a reconfigured Asian landscape where its two largest trading partners are moving from confrontation toward cooperation.

The timing is particularly significant. The rapprochement accelerated in 2024-2025 against the backdrop of US President Donald Trump’s combative foreign policy approach, suggesting that Asian powers are increasingly willing to chart their own course independent of Washington’s preferences. For Singapore, which has carefully balanced its security partnership with the United States against its deep economic ties with China, this shift demands a recalibration of diplomatic strategy.

Economic Recalculation: Trade Flows and Investment Patterns

Singapore’s economy stands to benefit substantially from improved China-India relations. The resumption of direct flights between the two countries in 2025 and increased trade and investment flows create new opportunities for Singapore’s role as a regional hub.

As a premier logistics and financial center, Singapore has historically profited from facilitating trade between major economies. A normalized China-India relationship could channel increased cargo, financial services, and business travel through Changi Airport and Singapore’s ports. Singapore-based companies with operations in both markets—particularly in sectors like technology, pharmaceuticals, and professional services—may find it easier to operate across both jurisdictions without navigating the political sensitivities that characterized the post-2020 period.

The real estate and hospitality sectors could see increased activity. With bilateral exchanges expanding, Singapore’s position as neutral ground for China-India business dealings becomes more valuable. The city-state’s well-established legal framework, intellectual property protections, and reputation for political stability make it an ideal location for joint ventures and regional headquarters serving both markets.

However, this dividend is not guaranteed. If China and India develop more direct economic corridors, Singapore could face disintermediation. The challenge for Singapore’s policymakers and business community will be ensuring the city-state remains indispensable rather than merely convenient.

Security Calculus: ASEAN Cohesion and Regional Stability

From a security perspective, improved China-India relations could reduce tensions in Singapore’s broader neighborhood, but also raises questions about regional power dynamics.

The deadly 2020 border clash that killed 24 soldiers and the subsequent militarization of the 3,800-kilometer Himalayan border created ripple effects throughout Asia. ASEAN member states, including Singapore, watched nervously as two nuclear-armed neighbors edged toward potential conflict. The de-escalation removes one major flashpoint from Asia’s security landscape.

Yet Singapore must consider how a China-India alignment might affect ASEAN cohesion and influence. If the two most populous nations find common cause, particularly on issues related to Western influence or economic governance, smaller Southeast Asian states could find their diplomatic leverage diminished. Singapore has long punched above its weight through ASEAN, using the bloc’s consensus-based approach to amplify its voice. A more coordinated Beijing-New Delhi axis could complicate this strategy.

The maritime domain presents particular concerns. While China-India tensions have primarily focused on their land border, both nations have expanding naval ambitions in the Indian Ocean and South China Sea. Cooperation between Chinese and Indian maritime forces—however unlikely in the near term—would fundamentally alter the regional security architecture that Singapore relies upon for its sea lines of communication.

The QUAD Conundrum: Walking the Tightrope

Singapore’s balancing act becomes even more delicate when considering India’s membership in the Quadrilateral Security Dialogue (QUAD) alongside the United States, Japan, and Australia. This grouping, widely viewed as a counterweight to Chinese influence in the Indo-Pacific, appears increasingly awkward as India pursues rapprochement with Beijing.

For Singapore, which has resisted taking sides in great power competition while maintaining strong ties with all QUAD members and China, India’s hedging strategy offers both validation and complication. If New Delhi can successfully maintain partnerships with both Washington and Beijing, it provides a model for Singapore’s own multi-alignment approach. However, it also raises questions about the durability and coherence of regional security architectures.

Singapore’s military and security cooperation with the United States remains robust, including hosting US naval vessels and participating in joint exercises. Simultaneously, Singapore maintains substantial economic ties with China and has been careful to avoid rhetoric that Beijing might interpret as containment. An India that tilts more decisively toward China could force Singapore to make harder choices about its own positioning.

Technology and Innovation: A New Competitive Landscape

The technology sector represents both opportunity and challenge. China and India are both pushing aggressively into artificial intelligence, semiconductor manufacturing, and digital infrastructure. Singapore has positioned itself as a regional technology hub with strengths in fintech, biotech, and smart city solutions.

Improved China-India relations could facilitate technology transfer and collaboration between the two nations, potentially creating a formidable Asian technology bloc. Singapore’s research institutions and technology companies might find new partnership opportunities, but could also face intensified competition. The city-state’s significant investments in AI research, quantum computing, and biotechnology position it well to participate in a more integrated Asian technology ecosystem, provided it can offer unique value propositions.

The semiconductor industry deserves particular attention. With the United States threatening 100% tariffs on semiconductor imports and both China and India investing heavily in domestic chip production, Singapore’s own semiconductor manufacturing and design capabilities become increasingly strategic. The city-state hosts major fabrication plants and is a critical node in global chip supply chains. A collaborative China-India approach to technology development could either strengthen or bypass Singapore’s role, depending on how effectively the city-state integrates itself into emerging partnerships.

Financial Services: Yuan, Rupee, and Regional Currency Dynamics

Singapore’s status as Asia’s premier financial center gives it a front-row seat to shifting currency and capital flows. Increased China-India economic cooperation could accelerate efforts to reduce dependence on the US dollar for bilateral trade, potentially boosting the role of the Chinese yuan and Indian rupee in regional transactions.

Singapore has already established itself as a major offshore yuan trading center. If China-India trade increasingly settles in local currencies, Singapore’s expertise in currency exchange, hedging, and trade finance positions it to facilitate and profit from these flows. The Monetary Authority of Singapore’s sophisticated regulatory framework and deep liquidity pools make the city-state an ideal location for developing yuan-rupee trading infrastructure.

However, Singapore must also prepare for scenarios where direct currency arrangements between Beijing and New Delhi reduce the need for intermediation. The city-state’s financial institutions should focus on providing value-added services—sophisticated derivatives, risk management, and structured finance—that cannot be easily replicated elsewhere.

Supply Chain Reconfiguration: Singapore’s Role as a Hub

The global supply chain restructuring accelerated by US-China tensions and the COVID-19 pandemic continues to reshape trade patterns. Many multinational corporations have adopted “China Plus One” strategies, diversifying manufacturing beyond China while maintaining presence in the Chinese market. India has emerged as a major beneficiary of this trend.

Singapore serves as regional headquarters for countless multinationals navigating these complex supply chains. Improved China-India relations could either accelerate or slow the “China Plus One” trend. If companies perceive reduced geopolitical risk from operating in both markets simultaneously, investment in both countries might increase. Conversely, if China-India cooperation reduces the urgency of diversification, some companies might consolidate rather than expand their Asian footprints.

Singapore’s port and logistics infrastructure positions it to benefit regardless. As goods move between China, India, and the rest of the world, they frequently transit through Singapore. The key question is whether Singapore can maintain its edge as automation, digital logistics platforms, and competing ports in the region vie for market share.

Energy Security and Climate Cooperation

Energy represents another dimension where Singapore must closely monitor China-India dynamics. Both nations are massive energy consumers and increasingly important players in renewable energy technology and infrastructure. Cooperation on clean energy standards, grid connectivity, or technology development could create opportunities for Singapore’s growing green finance and clean technology sectors.

Singapore has positioned itself as a regional hub for sustainable finance, with the Singapore Exchange launching various green bond and sustainability-linked loan frameworks. If China and India pursue joint clean energy initiatives, Singapore-based financial institutions and project developers could play coordinating roles. The city-state’s expertise in urban sustainability and green building could also find expanded markets.

However, energy security concerns persist. Singapore remains heavily dependent on imported natural gas and is working to diversify its energy sources. Any China-India cooperation that affects regional energy markets—whether in oil, gas, or renewables—directly impacts Singapore’s energy security and costs.

Diplomatic Strategy: Preserving Autonomy and Influence

For Singapore’s Ministry of Foreign Affairs, the China-India rapprochement demands subtle but significant diplomatic adjustment. The city-state has traditionally benefited from playing honest broker and providing neutral ground for regional dialogue. This role becomes more valuable if China and India seek to institutionalize their improving relationship through regular summits, working groups, or track-two dialogues.

Singapore should position itself as a natural venue for such engagements, leveraging its reputation for discretion, efficiency, and world-class infrastructure. Hosting high-profile China-India meetings would reinforce Singapore’s relevance and provide valuable intelligence on the trajectory of this crucial relationship.

Yet Singapore must avoid being perceived as favoring the China-India axis over other regional relationships. The city-state’s ties with Japan, South Korea, Australia, and ASEAN partners remain vital. Singapore’s diplomatic challenge is to welcome improved China-India relations while ensuring this development strengthens rather than weakens the broader regional architecture of multilateral cooperation.

The ASEAN Dimension: Solidarity and Fragmentation Risks

Within ASEAN, Singapore must consider how other member states view China-India rapprochement. Vietnam, with its own territorial disputes with China, might view closer Beijing-New Delhi ties with concern. The Philippines, navigating its own complex relationship with China, could see India’s hedging as either encouraging or worrying. Myanmar, facing internal turmoil and Chinese influence, adds another layer of complexity.

Singapore’s traditional role as ASEAN’s consensus-builder becomes more challenging if member states diverge in their reactions to shifting great power dynamics. The city-state must work to maintain ASEAN unity while acknowledging legitimate differences in how member states assess their interests.

The ASEAN-India relationship, which Singapore has actively promoted, could either benefit from or be complicated by improved China-India ties. If India sees less need to court Southeast Asian partners as a counterweight to China, New Delhi’s engagement with ASEAN might weaken. Conversely, a more confident India with improved relations across its borders might become a more valuable ASEAN dialogue partner.

Preparing for Multiple Scenarios

Prudent planning requires Singapore to prepare for various scenarios. The current thaw in China-India relations, while significant, remains fragile. The 3,800-kilometer border dispute that has persisted since the 1950s will not disappear quickly. Incidents could reverse progress, returning Asia to a more confrontational China-India dynamic.

Singapore must therefore maintain strategic flexibility. This means:

Diversifying economic partnerships to avoid overdependence on any single bilateral relationship, however promising it appears.

Strengthening multilateral institutions like ASEAN, the Regional Comprehensive Economic Partnership, and various regional forums that can provide stability regardless of bilateral power dynamics.

Investing in unique capabilities that make Singapore indispensable rather than merely convenient—whether in financial services, technology, logistics, or diplomatic facilitation.

Maintaining defense preparedness while avoiding provocative postures, ensuring that Singapore can protect its interests without alarming partners.

Building people-to-people ties across the region through education, cultural exchange, and professional networks that create resilience beyond government-to-government relations.

The Path Forward: Pragmatism and Principle

As Xi Jinping speaks of the “dragon and the elephant dancing together,” Singapore must ensure it remains part of the choreography rather than a spectator. The city-state’s success has always depended on making itself valuable to major powers while preserving its autonomy and principles.

The current moment presents genuine opportunities. A more stable Asia with reduced China-India tensions benefits Singapore’s core interests in regional peace and economic openness. The challenge lies in capturing the economic benefits of rapprochement while managing the strategic uncertainties it creates.

Singapore’s response should combine pragmatic adaptation with principled consistency. The city-state should welcome reduced tensions, facilitate increased cooperation where it can add value, and maintain the relationships and capabilities that preserve its options regardless of how great power dynamics evolve.

In an Asia where the dragon and elephant are attempting a delicate dance, Singapore’s role is neither to lead nor to choose partners, but to ensure the dance floor remains stable, the music keeps playing, and all participants—large and small—have space to move. That has always been Singapore’s greatest contribution to regional stability, and it remains so today.