(Repeats story that moved at 0000 GMT)
By Nopporn Wong-Anan SINGAPORE, Sept 16 (Reuters) - A cacophony of Mandarin and English echo through the streets of Singapore's Chinatown as crowds of shoppers buy joss sticks and fruit as offerings to the spirits during the Seventh Month Ghost Festival.
English has long united the ethnically diverse island-state but Singapore's leaders now foresee a time when Mandarin will be the country's dominant language and they are aggressively encouraging their people to become fluent in Chinese.
"Both English and Mandarin are important because in different situations you use either language. But Mandarin has become more important," said Chinatown shopkeeper Eng Yee Lay.
Hit hard by the global slowdown, strengthening ties with China has taken on a strategic imperative in Singapore which seeks to leverage the bilingual skills of its ethnic Chinese majority to get a larger slice of China's fast expanding economic pie.
"With the growing importance of China on the world stage, Chinese Singaporeans who are competent in the language and familiar with the culture would have a distinct advantage when working and interacting with Chinese nationals," Lim Sau Hoong, chairwoman of the Promote Mandarin Council, told Reuters.
The government-sponsored campaign to promote Mandarin began in 1979 to unite under one language Singapore's disparate Chinese communities that spoke a multitude of dialects passed on by their ancestors who came from China in the 19th and early 20th century.
Unifying the Chinese majority in a country with sizeable Malay and Indian minorities was a priority and in the early days the Speak Mandarin Campaign discouraged ethnic Chinese from speaking the dialects that prevailed such as Hokkien.
Now, with a majority of Singaporeans speaking Mandarin in their homes, according to government figures, the focus is on improving fluency in spoken and written Mandarin.
"In two generations, Mandarin will become our mother tongue," said Singapore's first prime minister Lee Kuan Yew at the launch of the 2009 Speak Mandarin Campaign earlier this year.
His vision is for Singapore to become China's Southeast Asia hub as it expands its commercial interests in the region, while Singapore firms would entrench their positions in China, giving them a first-mover advantage over foreign firms.
Already, despite its small demographic size, Singapore was China's third largest foreign investor with total foreign direct investment of S$6.5 billion in 2008, a 40 percent rise from 2007, according to the Chinese government.
Trade between the countries has risen 17-fold since 1991 to S$91.4 billion ($63.34 billion) in 2008.
Singapore has come a long way since the 1970s when its Cambridge-educated Lee was suspicious of Maoist China's designs on the region and focused on keeping the country predominantly English speaking and aligned with anti-Communist powers, the United States and UK. As Singapore prepares to mark two decades of ties with China next year, 20,000 Singaporeans are working in China and scores of joint ventures are underway.
Among them is the construction of an "eco-city" in Tianjin, near Beijing, which is being designed to use renewable energy, recycled water and has an extensive public transport system.
Singapore's senior cabinet minister and head of its Monetary Authority, Goh Chok Tong, discussed the project with Chinese Premier Wen Jiabao during a visit to China last week.
Among Singapore investors in China are offshore oil rig builder Keppel Corp (KPLM.SI), bank DBS (DBSM.SI), water treatment firm Hyflux (HYFL.SI), energy services provider Rotary Engineering (ROTE.SI) and Raffles Education (RLSE.SI).
Singapore developer CapitaLand (CATL.SI), which aims to build 58 malls across 40 Chinese cities, said this month it planned to nearly double the value of its assets in China to $8 billion, or 45 percent of its overall assets.
Singapore is proving to be a fertile recruiting ground for Mandarin-speaking middle and senior managers to run multinationals' operations in China where a lack of qualified managers has held back expansion plans by many foreign firms.
The financial crisis took a toll on Singapore's export dependent economy, reducing annual economic growth to just 1.1 percent in 2008, compared to around 8.2 percent between 2004-2007, and creating the highest unemployment rate in five years. Strengthening ties with China is seen as mitigating Singapore's risk.
China is expected to become Singapore's largest single market for non-oil exports this year, overtaking the United States, says economist Irvin Seah at Singapore's top bank DBS Group.
"We use the term 'China-ready,' meaning we will just have to grow with them," IE Singapore CEO Chong Lit Cheong, whose state agency promotes Singapore firms' investment abroad, told Reuters.
"As far as China grows 7 to 8 percent a year in a foreseeable future, we will continue to have a bigger presence there."
Singaporeans were among the first foreign investors in China after Deng Xiaoping adopted a market economy in 1978. Singapore's then prime minister, Lee Kuan Yew, still in the cabinet, has visited China almost every year.
After Deng's 1992 remarks to officials to "learn from the world and, especially Singapore, and do better than Singapore", thousands of Chinese officials started flooding the city-state for trips and university degree programmes in administration.
Around three-quarters of Singapore's population are ethnic Chinese, giving many of its businessmen a cultural advantage versus the West, but the government is also trying to strengthen understanding of the Chinese culture and mindset.
"Although we speak the same language, when we look at issues we are different," said IE Singapore's Chong. "The next step is how we see China in a Chinese perspective."
Business China, an agency under Lee's patronage, is tasked to "groom 20,000 to 30,000 bilingual and bi-cultural Singaporeans with the ability to communicate effectively in the China market".
Eugene Aw, a 22-year-old Singaporean, sees his professional future in China after studying for his degree in the UK and turning down a job with an American multinational firm.
"I realised that Asia wouldn't wait for me. For now I intend to stay local (in Singapore) to gain exposure, contacts, and especially capital. And then if I can, I will spring into China." ($1=1.443 Singapore Dollar) (Additional reporting by Brenda Goh; Editing by Neil Chatterjee and Megan Goldin)