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Sino South Korea Bilateral Economic And Trade Growth Has Reached A "Critical State".

2014/7/7 12:04:00 67

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"P" recently, Chinese President Xi Jinping was invited to pay a state visit to South Korea. The two countries and international public opinion generally agreed that the visit reflected the new progress in the relations between China and South Korea, which will help the two countries to further dig out economic and trade cooperation agreements and promote negotiations on the FTA between China and South Korea.

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In 1992, China and South Korea formally established diplomatic relations. The total trade volume of the two countries was only 5 billion 30 million US dollars. But in the next 22 years, trade between the two countries continued to grow rapidly, with an annual average growth rate of 20.97%, creating the highest average annual growth rate for China in terms of single country trade in the past 22 years.

according to data from Korea Institute of industry and Trade Association, in 2013, bilateral trade between China and South Korea amounted to US $228 billion 920 million (statistics from Korea customs), and China's data showed that bilateral trade volume was US $274 billion 250 million over the same period. China has become Korea's largest trading partner, largest export market and largest source of imports, while Korea has become China's third largest trading partner and largest source of imports.

The bilateral trade volume accounts for 7% of China's foreign trade and 20% of its foreign trade.

At the beginning of the establishment of diplomatic relations, < a href= "http://sjfzxm.com/news/index_z.asp" > China South Korea < /a > mutual investment is very small. In the past 22 years, Korea's investment in China has been growing rapidly. As of the end of April 2014, Korea has accumulated 56657 investment projects in China, and the actual investment amount is 57 billion 736 million US dollars. It has become the fourth largest source of foreign direct investment in China, and is turning from "two out of the way" investment in processing trade and other capital saving to the allocation of resource-based investment to expand China's domestic demand market or to co-ordinate the global market. The key areas of investment also extend from the traditional coastal areas to the central and western regions gradually. P

Relatively speaking, China's investment in South Korea is late and small, but in recent years, investment growth has maintained a high level.

Since the establishment of diplomatic relations between China and South Korea, the level of cooperation between the two countries has been rising, which is closely related to the unremitting efforts between the two governments and the frequent interaction between the levels.

Since the establishment of diplomatic relations, a total of six presidents in Korea have been in office and have visited China.

In 1998, President Kim Dae-jung visited China, China and South Korea announced the establishment of a "partnership"; in 2003, President Roh Moo-hyun visited China, the two sides established a "comprehensive partnership"; in 2008, President Lee Myung-bak visited China, and the two sides announced the establishment of a "strategic partnership of cooperation".

President Xi Jinping's visit to South Korea is a return visit to China last June by President Park Geun hye. Both sides look forward to cooperation at a higher level and a broader level, and jointly plan the "new era of China and South Korea".

For a long time, the characteristics of bilateral trade between China and South Korea are mainly inter industry trade and intra industry trade, while intra industry trade is dominated by vertical intra industry trade, while horizontal intra industry trade is supplemented by P.

The main products of China's exports to Korea are labor intensive raw materials, intermediate products, spare parts and other production links. The main products exported by South Korea to China are products of technology, capital intensive production, manufactured goods and so on. P

China has a comparative advantage in raw materials, agricultural products (000061 shares), base metals and their finished products, mineral products and their finished products, raw material products, primary products, natural resources intensive and labor-intensive products with low technology content and low added value. South Korea has a comparative advantage in terms of chemical products, semiconductors and other electronic products and components, information and communication products, automotive and electromechanical products, machinery and equipment, shipbuilding, industrial textile fibers and other technology intensive products and industrial manufactured goods. Sino Korean bilateral trade has been flourishing for a long time on the basis of this complementary advantage.

In recent years, with the adjustment of China's industrial structure and the improvement of technological level, the level of technology between China and South Korea has begun to shrink in many fields. Although bilateral trade has not been reflected in the data for a time because of the huge difference in market openness between China and Korea, but as the two largest export led economies in the world, the overlap of exports between the two countries in the international market is increasing. According to statistics, in 2012, there were 5 overlapping items (ship, semiconductor, flat panel display, wireless communication equipment and electronic equipment) in the ten major export projects of China and South Korea, and the data of the United Nations commodity trade statistics database also showed that in 2011, South Korea had lost the "world first" of 26 export products markets, 12 of which were snatched first by China.

Korea's investment in China has experienced changes from small to large, mainly from small and medium-sized enterprises to large chaebol, from individual areas to wider areas.

for a long time, South Korea's investment in China was mainly concentrated on labor-intensive industries. At the beginning of the establishment of diplomatic relations, 56% of South Korea's investment in China was concentrated in the three eastern provinces and Shandong province.

This investment pattern was severely affected by the financial crisis in South Korea in 2007~2008. Since then, with the rapid growth of the two countries' economy, Korea's investment in China has rapidly pformed into a big investment, big project and big money. The replacement of trade, clothing and food processing by electronic products, automobiles, steel and other projects has become the leading role of Korean investment projects in China. Korean famous chaebol, such as Samsung, Hyundai Heavy Industries, Daewoo and SK, have expanded their investment in China. The East China has replaced the three eastern provinces, becoming a new hot spot for South Korea's investment in China.

bottlenecks and obstacles

despite the rapid development, there are still many bottlenecks and obstacles in the development of bilateral trade and economic relations between China and ROK.

In the 22 years since the establishment of diplomatic relations, China has been in a weak trade surplus only in 1992 and 1997. The rest of the year has been in a trade deficit and has been expanding in recent years.

according to the statistics of the Korean customs, in 2013, South Korea exported $145 billion 870 million to China, accounting for 26.1% of its total exports, up 8.6% from the same period last year. South Korea imported from China $83 billion 50 million, accounting for 16.1% of its total imports, an increase of 2.8% over the same period last year. The trade deficit between China and South Korea was $62 billion 820 million, an increase of 17.3% over the same period last year.

Apart from China's Taiwan, Korea has become the biggest source of China's foreign trade deficit.

as a big manufacturing country and a large trade surplus in recent years, why is China in a deficit position in the trade with Korea?

first, the two sides overlap in many export industries, while South Korea is in a relatively high-end position with the industry, and Chinese products lack competitiveness in Korea.

While the products imported from China by South Korea, China still lacks the advantage of cost performance in the international market.

secondly, the mutual investment between China and South Korea is in an extremely unbalanced state. South Korea's investment in China started earlier and its scale was large, and a large number of China's "two way out" business models, together with a large number of key components exported to China, and so on, export volume grew rapidly, while the export of products from downstream enterprises in China did not take South Korea as the destination, which would naturally lead to an increase in trade deficit.

In recent years, China's industrial structure has been upgraded and its technological level has improved. However, with the colder political and economic relations between China and Japan, some of the key equipment and materials imported from Japan have been imported from South Korea, resulting in a bilateral trade deficit.

Third, Korea's domestic market is relatively narrow, the government has set up various tariff or non-tariff trade barriers, and the market opening degree is very limited.

the division of trade will be challenged at present .

Korea Modern Economic Research Institute released the competitiveness report of China and South Korea parts industry recently. The report shows that on the surface, South Korea is still expanding its market share in the 7 major parts and components industries, such as electronics and metals, but in fact, 63% of the parts competitiveness is going downhill.

as mentioned before, in the field of capital and technology intensive industries, China is constantly upgrading its technological level and competitiveness, and is approaching or even catching up with Korea in more and more fields. Once the two countries' industrial structure and technology level tend to be "flat", the current "vertical division of labor", China's acceptance of huge bilateral trade deficit and the exchange of "complementary advantages" and "joint promotion" in the international export market will be severely tested.

in fact, the economic and trade relations between China and South Korea are in a "critical state": the serious trade imbalance between the two countries is hard to maintain for a long time. With the constant technological level of China and Korea, chaebol will not be able to continue to use the technological gap between the two sides to maintain "two out of the way" investment pattern in China.

To break through this critical state, the key mission of the two sides is to complete the negotiation and implementation of the bilateral free trade agreement (FTA) as soon as possible, in addition to developing and strengthening cooperation in addition to establishing RMB clearing arrangements in Seoul.

Since P entered the formal negotiation stage in May 2012, China and South Korea have made 11 rounds of negotiations on the FTA issue and reached consensus or compromise on many issues. If the agreement can be reached, the tariffs of most products in bilateral trade will be abolished or cut down, and the market will further open to each other, and trade and investment will be further facilitated, which will open up bottlenecks and remove obstacles to bilateral trade and investment development, thereby breaking through the current critical state.

although on the eve of President Xi Jinping's visit, many observers expected that the FTA negotiation process between China and South Korea would be promoted and speeded up, but the two sides were still very cautious about this, saying that there was no timetable for the FTA issue.

Both China and South Korea are big exporters, and the competitive relationship in the international export market is becoming increasingly obvious and intense. It is impossible to achieve a comprehensive agreement and compromise on the FTA issue and implement it in the agreement.

if the two sides can conclude the FTA agreement before the end of this year, if the two sides can generally expect as before, they can play a key and decisive role in breaking the critical state of bilateral economic and trade relations.