China And South Korea Establish Diplomatic Relations 20Th Anniversary Economic Trade Enters Deep Cooperation

August 24th marks the 20th anniversary anniversary of the establishment of diplomatic relations between China and ROK.

Over the past 20 years, due to the complementarity of resources such as capital, market and labour force, the economic and trade cooperation between the two countries has developed rapidly, and China has also become the largest trading partner of South Korea.

But in recent years, as China's economic pformation and human cost rise and other factors, as well as the continuous growth of Chinese enterprises, the economic level of the two countries is becoming increasingly fierce.

Experts believe that with the deepening of the Sino Korean FTA negotiations, as well as the two countries at a broader level

The two countries will gradually usher in a coexistence of competition and deep cooperation in the future.

20 years from complementarity to competition

South Korea is located in the southern half of Asia's Korean Peninsula, facing the Yellow Sea on the west, and across the sea from our province of Shandong. The shortest distance is about 190 km.

After more than 40 years of development, South Korea has leaped from a poor agricultural country to GDP and the largest foreign trade in the world. It has advanced shipbuilding, automobile, chemical, electronic, communication and network infrastructures.

In August 24, 1992, the formal establishment of diplomatic relations between China and South Korea changed the situation of indirect trade through China's Hongkong and other places before the establishment of diplomatic relations, and the volume of trade between the two countries increased rapidly.

Data show that the trade volume between China and South Korea in 1992 was 5 billion 30 million dollars, and in 1996 it reached US $20 billion.

In 2004, China replaced the United States as Korea's largest trading partner, and the trade volume between China and South Korea reached 245 billion 630 million US dollars in 2011.

Experts predict that trade volume between China and South Korea will exceed US $300 billion in 2015.

Liu Jiangyong, a professor at the Institute of international studies, Tsinghua University, believes that the rapid development of economic exchanges and cooperation between China and South Korea is due to their strong complementarity in terms of resources, capital, technology and market.

At the same time, the geographical proximity of China and South Korea, as well as the level of economic development and the difference of industrial structure provide favorable conditions for economic cooperation between the two countries.

Trade between China and South Korea is promoting our country

Growth and meet the needs of domestic economic and social development, but also exposed the trade imbalance between the two countries.

Statistics show that China's trade with Korea has always been deficit, and the reverse balance has been expanding year by year.

According to the Ministry of commerce data, China's trade deficit with Korea was 210 million US dollars in 1992, and US $11 billion 920 million in 2000. It has reached US $69 billion 630 million in 2010, which is 330 times the beginning of the establishment of diplomatic relations.

At the same time, the trade structure of the two countries is shifting from complementarity to competition in the same field.

In terms of trade structure, South Korea mainly exports machinery, electrical appliances, chemicals and steel products to China.

With the development of industrialization in recent years, China's export structure to Korea has shifted from agricultural products and mineral products to iron and steel.

Products, electronics, chemicals and other products, and the competitiveness of enterprises in both countries has been increasing. With the improvement of R & D level and market expansion ability of enterprises in China, the enterprises of the two countries are becoming more competitive in order to undertake orders at home and abroad and occupy the market in automobile, steel, electronics, shipbuilding, IT and other industries.

In addition, South Korea's trade frictions, such as anti dumping and embargo on China's export products, have also occurred.

According to incomplete statistics, since 2009, South Korea has initiated anti-dumping investigations and levied anti-dumping duties ranging from 2.93% to 36.18% on choline chloride, polyester stretch textured silk, float glass, even two sodium sulfite, anatase titanium dioxide, ceramic tile, ethyl acetate and ethyl acetate. Since then, the Republic of Korea has banned the export of ginger, potato and other plants in Guangdong, Guangxi and Hainan provinces in the name of the banana boring nematode epidemic area.

Korean investment in China: from rapid growth to rapid decline

Since the establishment of diplomatic relations, South Korea's investment in China has shown a continuous and rapid upward trend due to its close geographical location and abundant cheap labor force, huge market potential and abundant natural resources.

But in recent years, by the impact of the international economic environment and the rising labor costs in China, the growth rate of investment in Korean enterprises has declined significantly.

China's business development research report, completed by the international trade and Economic Cooperation Research Institute of the Ministry of Commerce, showed that by the end of 2005, China had approved 38 thousand and 900 investments by South Korea in China and 31 billion 100 million yuan in real terms, but the data released by the Ministry of Foreign Affairs and trade of Korea in 2010 showed that the number of Korean enterprises that had invested or visited in China from 2007 to 2007 showed a downward trend, from 4 billion 530 million dollars in 2006 to 2 billion 620 million dollars in 2009, in 2010.

The growth and influence of South Korea's investment in China also declined significantly. The international financial center of Korea said that the proportion of direct investment from Korea to China to the world's investment in China has dropped from 5.4% (2006) to 2.2% (2011).

Shandong is one of the earliest provinces in China to import and export trade with South Korea, and South Korea is also the largest source of foreign investment in Shandong.

According to the Shandong Provincial Department of Commerce, during the 3 years from 2009 to 2011, South Korea's investment in Shandong showed a continuous downward trend. The actual investment in Korea accounted for 4.7%, 21.2% and 10.1% respectively, compared with the actual investment in Shandong.

Experts believe that there have been two changes in the investment of Korean enterprises since the establishment of diplomatic relations.

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Labor intensive industries such as fur, food and so on have gradually shifted to electronics, handwork, cement, automobiles, steel and so on. The two is gradually changing investment from Korean SMEs to Samsung, Hyundai Heavy Industries and other large enterprises.

Niu Linjie, President of the Korean College of Shandong University, believes that the relative economic downturn in recent years is an important reason for the decrease in South Korea's investment in China, but the main reason is the rise in labor costs and the cancellation of preferential tax policies for foreign enterprises.

China Korea cooperation and deep cooperation will coexist.

Experts believe that as China's economic strength continues to grow, its economic structure is constantly optimized and optimized, as well as the development and growth of domestic enterprises, the complementarity of trade and economic cooperation between China and South Korea will gradually weaken, and competitiveness will continue to grow. The economic exchanges between the two countries will have a coexistence of competition and deep cooperation.

Experts believe that China's industrial structure and South Korea are complementary at the beginning of the establishment of diplomatic relations. With the development of China's economy, the two sides have been competing. The advantages of the two countries' economic structure and resource complementation are slowly decreasing, and the competition pattern has emerged. The cooperation between the two sides in finance, telecommunications, new energy and technology is still at an initial stage, and has not yet been able to replace the traditional investment and economic and trade status of the two countries.

At the same time, as China's economic pformation and domestic enterprises continue to go out, the economic exchanges between the two countries will gradually deepen their cooperation from the initial resource complementarity.

Niu Linjie said that because the world economic situation will remain in a downturn in the short term, the demand of Korean enterprises to our country will no longer be confined to resources, but will be more valued in China's market prospects.

Some enterprises will pay more attention to invest in our country and digest products in our country.

Experts believe that China's enterprises will continue to increase investment in Korea, as well as cooperation with South Korean enterprises in technology, product design and so on.

"This cooperation will be more in-depth, and it is also a new economic cooperation situation after 20 years of diplomatic relations between the two countries."

Niu Linjie said.