General

Korean media recently reported that at the 17th South Korea-China Economic Ministers' Video Conference, China and South Korea reached an agreement for the first time on deepening supply chain cooperation, and agreed to expand exchanges on carbon neutral policies and promote economic cooperation. The report said that the representatives of the two countries jointly commemorated the 30th anniversary of the establishment of diplomatic relations between South Korea and China, and spoke highly of the achievements of economic exchanges between the two countries.

Over the past 30 years, China and South Korea have established mutually beneficial relations. The two countries have achieved dazzling results in personnel exchanges and economic and trade cooperation. In the process of China's development into an economic power, the technology, investment and development experience from South Korea have played a role, and South Korea can continue to develop and eventually enter the threshold of developed countries, and it is also inseparable from the Chinese market.

According to Japanese media reports, since the establishment of diplomatic relations between China and South Korea 30 years ago, the scale of trade between the two countries has continued to expand. The report pointed out that South Korea has carried out concentrated investment in China's Shandong Province and other places that are geographically close. South Korean companies in the fields of electrical appliances and automobiles are actively entering the Chinese market, and South Korean semiconductors are also mainly exported to China.

According to customs data, in 2021, the bilateral trade volume between China and South Korea will exceed 360 billion US dollars, which is 72 times that of the year when diplomatic relations were established in 1992. China has been South Korea's largest trading partner for 18 consecutive years. According to South Korean statistics, the cumulative direct and indirect mutual investment between South Korea and China has reached 250 billion US dollars; in 2021, South Korea's exports to China will account for more than a quarter of its total exports.

The economic and trade cooperation between China and South Korea has achieved fruitful results, which fully reflects that the two countries are not only permanent neighbors that cannot be moved away, but also inseparable partners. From the perspective of economic complementarity, over the years, China's huge market, cheap labor and preferential tax policies have effectively combined with South Korea's advantages in capital and technology, providing impetus for the rapid increase in trade volume between China and South Korea. From the perspective of institutional dividends, China and South Korea signed a bilateral free trade agreement (FTA) in 2015, and so far, they have implemented tariff reductions eight times, and China has implemented zero tariffs on imported goods originating in South Korea. The China-Korea Free Trade Agreement is a milestone in the history of the development of economic and trade relations between the two countries. It has not only boosted the significant growth of bilateral trade and investment, promoted employment and economic revitalization between the two countries, but also played a positive role in further strengthening the economic and trade relations between the two countries and even bilateral relations in multiple fields. .

On January 1 this year, the Regional Comprehensive Economic Partnership (RCEP) came into effect. Compared with bilateral free trade agreements, RCEP has made new norms in areas such as the principle of regional accumulation of origin, intellectual property rights and e-commerce, and institutional opening has reached a new level, promoting the formation of a closer industrial chain, supply chain and value in Asia. chain. As members of RCEP, China and South Korea have broader space for cooperation in the economic and trade field. In the first half of this year, against the backdrop of repeated COVID-19 outbreaks, persistent geopolitical conflicts, and fragile recovery of the global economy, the bilateral trade volume between China and South Korea rose against the trend, reaching US$184.25 billion, a year-on-year increase of 9.4%, showing resilience and potential.

It is worth noting that in May, June and July of this year, South Korea's trade with China was in deficit for three consecutive months. Before that, South Korea had maintained a trade surplus with China on a monthly basis for nearly 30 years. This reflects some new changes in China-ROK economic and trade relations. In the past, a typical feature of the division of labor between China and South Korea was that South Korea exported parts and other intermediate products to China, and China reprocessed them into finished products and sold them to overseas markets. Today, with the improvement of China's manufacturing level and the adjustment and upgrading of the industrial structure, China has higher requirements for Korean products exported to China. High value-added and high-tech products from South Korea are more favored by the Chinese market. In the trade exchanges between China and South Korea, the cooperation in the field of high-precision and advanced technology has increased relatively, while the processing trade has decreased. Under this circumstance, there are also many voices in South Korea, suggesting that the government should take necessary measures to explore high value-added export products and strengthen export competitiveness to China.

Recently, in accordance with the relevant provisions of the China-Korea Free Trade Agreement, the two countries have launched the second phase of negotiations on the Free Trade Agreement to carry out high-level service trade and investment liberalization consultations in a negative list mode. South Korea also recently revealed that South Korea and China agreed to set up a new high-level consultation body to strengthen cooperation and communication in the supply chain. These new trends have released positive signals, and also showed a new atmosphere of economic and trade cooperation between the two countries. On the one hand, most of the China-ROK FTAs in 2015 focused on trade in goods and commodity circulation. The second phase of negotiations paid more attention to issues such as trade in services and investment liberalization, and the level of bilateral openness and cooperation was higher. On the other hand, at a time when regional and global industrial chains and supply chains are relatively fragile, China and South Korea focus on supply chain security issues to carry out consultations and cooperation, which benefits both parties and is also a counterattack against the so-called "decoupling" and "broken chain" words and deeds.

At present, the world has entered a new period of turbulence and change. Economic globalization is facing adverse currents, and global governance is in trouble. Some countries have built closed and exclusive economic and trade "small circles" in the Asia-Pacific region, which has had a negative impact on the overall situation of Asia-Pacific economic and trade cooperation. However, no matter how the situation changes, the fundamentals of the complementarity and mutual benefit of the economic and trade relations between China and South Korea have never changed. China-ROK economic and trade cooperation has a solid historical foundation and strong endogenous driving force. It has formed a relatively stable system and mechanism, and has the resilience to resist external risks and shocks. There are reasons to believe that China-ROK economic and trade cooperation has broad prospects and a promising future.