DESPITE signs of slowing growth, Senior Minister Goh Chok Tong remains optimistic about the Singapore economy, at least over the next two quarters.

Mr Goh, also chairman of the Monetary Authority of Singapore, was speaking to reporters in Tianjin yesterday after officiating, along with Chinese Premier Wen Jiabao, at a groundbreaking ceremony for the Sino-Singapore eco-city project.

He was in China on a five-day working visit and has returned to Singapore.

'Next year, we've got to see what is happening in the US. It is still grappling with financial problems and more big banks may run into trouble,' he said.

'The problem for all of us now is this: You can't at this stage know how broad and deep the sub-prime mortgages have spread . . . So next two quarters we are alright, but next year I think it's better to be a little cautious.'

Mr Goh reiterated that for some time now, the government's strategy has been to build up 'external wings' in China and India to support the economy when local growth founders.

'Without having spent time and energy in building these two wings over the past 15 to 20 years, India more recently, and China longer, had we just depended on Asean alone, can you imagine how our economy would be today?'

The Senior Minister said that these external investments should keep Singapore ticking even as financial turmoil in the US threatens global growth as well as individual Singaporeans. 'I know that Singaporeans have been hurt, on an individual basis they have been hurt, and more have been hurt by investing in equities . . . In the nature of capitalism you have booms and busts, now is the bust period but if you do the governance well in Singapore, then we will not go bust.'

Yesterday, Mr Goh also said that he had a 'good discussion' with the Chinese Premier prior to the groundbreaking ceremony for the Tianjin eco-city project.

He said that he briefed Mr Wen on two outcomes secured in earlier meetings with other Chinese leaders in Beijing.

Mr Goh said that he spoke to State Councillor Liu Yandong last week about a partnership with a Chinese university for Singapore's recently announced fourth university, adding that both Ms Liu and Mr Wen were 'supportive' of the proposal.

Mr Wen also endorsed a suggestion that a seminar between Singapore's Public Service Division and China's Communist Party's Central Organization Department be held, Mr Goh said.

The Senior Minister added that he had suggested to Mr Wen that the Tianjin eco-city project be exempted from China's present restrictions on offshore financing.

Mr Goh said that this was important as Singapore was partnering the Qatar Investment Authority in the project.

'We are also thinking of Islamic banking, Islamic financing for certain parts of the project. I think the project is ideal for some Islamic funding,' Mr Goh said.

Yesterday, the Chinese and Singapore consortiums behind the Tianjin eco-city project said that bids have been selected to develop commercial and residential plots in an initial 110 hectare area of the eventual 30 square kilometre eco-city.

Tenders for business park land will be open soon and Chinese and Singaporean developers are said to be interested. Infrastructure for a four sq km start-up area is expected to be completed by the end of next year.

National Development Minister Mah Bow Tan, who gave a speech at the groundbreaking ceremony, said that the parties involved expect to see visible results within three to five years. The whole project is expected to take 15 to 20 years to complete.