Upgrading the China-Singapore Free Trade Agreement will help develop a modern service sector and increase financial cooperation between the countries.

Even though China and Singapore signed a FTA in 2008, it was heavily focused on accelerating the liberalization of trade. Services and investment were not heavily featured in the deal.

Times have changed since then, according to Zhang Jianping, director of the International Economic Cooperation Institute of the National Development and Reform Commission.

Zhang said compared with the China-South Korea and China-Australia FTAs signed earlier this year, the China-Singapore FTA lacks "advanced articles" on services and investment.

Limited by land size and natural resources, Singapore is proficient in operating service industry trade and related sectors such as logistics, tourism, shipping, healthcare, education, finance and smart city development.

"Eager to enhance growth, Singaporean companies believe the China-Singapore FTA can be enriched and diversified through an investment-fueled economic development model," Zhang said.

China is now Singapore's top trading partner, while the city-state is China's largest source of investment. Last year, bilateral trade amounted to $95.85 billion, up 4.1 percent compared to the same period in 2013.

Singaporean companies invested $5.8 billion in China, according to International Enterprise Singapore.

Moreover, Singapore is a major offshore hub for the yuan, and will play a key role in helping to globalize China's currency.

The city-state is also one of the founding members of the Asian Infrastructure Investment Bank and an important hub in the Belt and Road Initiative.

China proposed the Belt and Road Initiative in 2013 as a trade and infrastructure network that includes the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

The network connect Asia, Europe and Africa and pass through more than 60 countries and regions with a population of about 4.4 billion.

Liu Chenyang, a researcher at the APEC Study Center at Nankai University in Tianjin, said Singapore has always served as a bridgehead between China and fellow Association of Southeast Asian Nations members.

"As Chinese companies carry out a "going global" strategy along the countries involved in the Belt and Road Initiative, they can certainly take advantage of Singapore's status as a regional financial center to gain financing and risk management services," Liu said.

"Therefore, upgrading the China-Singapore FTA will offer tangible impetus to optimize the two countries industrial and trading structure in the long-term run."

[email protected]