Singapore is often praised for its economic prosperity, political stability, and financial transparency. Yet, beneath this polished image, the country has become a conduit for the global flow of both licit and illicit Chinese capital. Its political elites play both sides while maintaining the corporate structures and financial institutions that provide cover for Chinese entities – both state-linked enterprises and criminal syndicates – and other bad actors to launder funds, evade sanctions, and obscure financial transactions. The issue is compounded by Singapore’s restrictive academic and press environment, which limits scrutiny of these activities.
Singaporean political elites have carefully positioned the country as independent from Chinese influence, unlike other Southeast Asian nations that are openly aligned with Beijing. Singapore maintains strong security ties with the United States while avoiding direct confrontation with China. This strategy allows Singapore to benefit economically from Chinese capital inflows while accessing Western markets and preserving its strategic autonomy. To navigate this delicate balance, Singaporean leaders employ subtle diplomatic tactics, maintaining robust trade relations with China while keeping its political rhetoric neutral. Singapore remains strategically silent, demonstrating what Malaysian scholar Cheng-Chwee Kuik refers to as “hedging.”
While occasionally expressing concern over China’s actions, Singapore has largely avoided direct criticism of Beijing’s militarization of the South China Sea and human rights abuses in Xinjiang. This raises questions about whether its concerns are more symbolic than substantive. Unlike Western allies that have taken a firm stance against China’s global ambitions, Singapore has maintained a more cautious approach.
At the same time, Singapore’s strict laws on political interference serve as a safeguard against Beijing’s influence in its domestic politics. Unlike Myanmar, Cambodia, or Laos, where Chinese influence has deeply penetrated political institutions, Singapore maintains tight control over foreign political activities, limiting Beijing’s ability to exert direct leverage.
However, this success in managing political ties does not negate the growing economic interdependence between Singapore and China. Singapore’s delicate balancing act and carefully-cultivated economic reputation have exposed vulnerabilities in the global financial system in three ways.
First, for decades, Chinese companies have leveraged Singapore’s business-friendly laws to establish subsidiaries and front companies, using them as a gateway to international financial markets. This tactic, often called “Singapore-washing,” allows firms with direct ties to Beijing to present themselves as independent Singaporean businesses, avoiding regulatory scrutiny in the U.S. and Europe.
Singapore has also reportedly been used to circumvent U.S. trade restrictions, enabling Chinese firms and other bad actors to acquire restricted goods. Cases include SenseTime, whose Singapore subsidiary was able to facilitate workarounds, Shein, which used Singapore to exploit the “de minimis” trade provision, and Corezing International PTE Ltd, which violated U.S. export controls.
The emergence of DeepSeek, a Chinese AI startup rivaling OpenAI, has prompted a U.S. investigation of Singapore’s role in technology transfers. Although Nvidia and Singapore deny that Chinese entities have used Singapore to acquire restricted Nvidia technology, Singaporean authorities charged three individuals in connection with fraudulent sales of Nvidia semiconductor chips, reinforcing concerns about the country’s ability to enforce export controls fully.
Unlike Taiwan, South Korea, and Japan, which have cracked down on Chinese efforts to circumvent U.S. trade restrictions, Singapore has been relatively lenient. Its balancing act between Washington and Beijing may serve its economic interests, but it creates security risks for the U.S. and its allies.
Apart from Chinese firms, Singapore has long been used by Chinese triads, organized crime syndicates with a long history of illicit activity. These groups use Singapore as a safe haven to conduct illegal financial transactions while exploiting corporate secrecy laws. The country’s well-developed banking system provides a convenient cover for money laundering, with lax corporate disclosure requirements making it difficult to trace financial flows.
A recent example is the case of Zhang Jie and Wu Duanren, who were arrested by Singaporean authorities for their involvement in a $3 billion money laundering case. Both are business associates of former Philippine mayor Alice Guo, who has come under scrutiny for building a scam compound in Bamban, a secluded municipality in the Philippines. While it is unclear whether Guo directly acquired these funds from Singapore, most online gambling investments in the Philippines originate from the Cayman Islands and the British Virgin Islands – two of the largest foreign investors in Singapore, often used to mask Chinese money. Despite the scale of the scandal, Singaporean authorities responded in a reactive rather than proactive manner, raising questions about their willingness to address deeper structural issues.
Other wealthy Chinese elites are using Singapore as a safe haven to transfer assets into private banks, luxury real estate, and offshore accounts. While these activities are technically legal, they are routinely exploited to conceal illicit financial operations. This was laid bare in the recent $2.2 billion money laundering case in Singapore, where criminals with direct links to China used the city-state’s lax enforcement to cleanse dirty money through casinos, luxury real estate, and shell companies.
Second, China’s financial presence in Singapore has grown substantially, with the city-state serving as an offshore banking hub for Chinese individuals looking to move their assets beyond Beijing’s regulatory reach. Many transactions involve high-net-worth individuals with links to the Chinese Communist Party, raising concerns about Singapore’s role in shielding Chinese elites, who need to move money outside China or are escaping Beijing’s financial scrutiny. Meanwhile, China’s state-backed enterprises have established a foothold in key sectors such as finance, technology, and infrastructure, using Singapore as a neutral base to conduct transactions that would otherwise face scrutiny if routed directly from China.
Singapore’s government-linked corporations and state-owned enterprises are deeply embedded in China’s economic landscape. Companies such as Temasek Holdings, GIC, CapitaLand, and Keppel Corporation have made substantial investments in China, reinforcing the economic ties between the two nations.
Temasek, Singapore’s sovereign wealth fund, has invested billions in major Chinese firms such as Alibaba and Tencent, as well as state-owned banks. These massive investments make it financially risky for Singapore to take a hardline stance against Chinese corporate influence, as disrupting economic relations could severely impact Singaporean firms and state investment portfolios.
Singapore’s real estate and infrastructure giants have also secured major contracts in China, particularly in urban development, smart city projects, industrial parks, and construction deals. At the same time, Chinese-backed Belt and Road Initiative (BRI) investments have flowed into Singapore, funding critical projects in shipping, logistics, and energy. These financial entanglements deepen the reliance of Singapore’s business elite on continued cooperation with China, even as policymakers attempt to maintain strategic flexibility.
And finally, Singapore’s corporate structures resemble those of offshore jurisdictions such as the Cayman Islands, where anonymous shell companies can be set up with minimal oversight. While Singapore positions itself as a well-regulated financial center, strong banking secrecy laws, low tax rates, and flexible business registration rules make it a prime destination for Chinese investors looking to obscure financial activities. Despite beneficial ownership registration requirements, enforcement remains weaker than in the U.S. or EU, allowing firms to maintain complex, opaque structures.
The lack of transparency surrounding these corporate structures is exacerbated by Singapore’s restrictive approach to academic and journalistic inquiry. In contrast to the U.S., where independent scholars and investigative journalists regularly uncover financial crime networks, Singapore’s legal system and academic environment actively discourages such research. Defamation laws and sedition statutes empower the government to silence critics, while the Protection from Online Falsehoods and Manipulation Act (POFMA) enables authorities to force retractions of research findings deemed politically sensitive.
The Official Secrets Act criminalizes unauthorized disclosures, blocking research into media control, electoral manipulation, and internal political conflicts. The Sedition Act further restricts discussions on race, religion, and politics, while POFMA, defamation, and contempt of court laws prevent investigations into financial crime and governance issues. Other Singaporean laws impose stringent restrictions on speech and press freedoms, actively suppressing politically sensitive research and journalism that could challenge official narratives or reveal inconvenient realities. These draconian measures prevent meaningful scrutiny of how Chinese capital moves through Singapore.
Given the above situation, the U.S. government must take action by issuing diplomatic demarches to Singaporean officials, urging them to tighten financial transparency, enforce export controls, and crack down on shell companies linked to Chinese firms. The recent DeepSeek controversy highlights the country’s reactive stance toward enforcement. To push for meaningful reform, these warnings should be backed by intelligence reports compiled by the Office of the Director of National Intelligence and the State Department’s Bureau of Intelligence and Research, documenting Singapore’s role in enabling illicit Chinese-linked financial flows.
If Singapore fails to meaningfully comply, the U.S. could impose export restrictions, trade measures, and legal sanctions on non-compliant Singaporean entities. This could be accompanied by increased FBI investigations into Singaporean firms and individuals, a public designation by the State Department listing Singapore as a “high-risk jurisdiction for illicit finance and foreign intelligence operations,” and coordinated diplomatic pressure from U.S. allies.
By taking decisive measures, the U.S. can ensure that Singapore does not continue to serve as a backdoor for China’s economic and technological ambitions.
