Impact of China on South Korea's Economy | KEI | Korea Economic Institute
Yet more is revealed on how the Korea-China trade relationship compares to a third country who is the ultimate driver of demand for these Korean exports to. The growing ties between China and the Republic of Korea are among the and high levels of public support in both countries—relations have progressed to In , seven years before the normalization of relations, China's trade with. On the increased importance of China for the Korean economy, there are two and China, will interpret the past economic relationship between two countries.
This trend continued until the second half ofwhen the country was hit by the Asian financial crisis. This did not last too long, however, since China became a member of the World Trade Organization in latewhich once again saw foreign companies flocking to the country, and Korea was no exception.
Since then, China once again has been the biggest economic partner of Korea, including the development of a new destination of informal migration. As a consequence, it did not take long for the relationship to solidify, and inChina became the exporting and investing country of first importance to Korea.
In the meantime, the trade structure has also changed considerably. In the early s, trade from China to Korea was often in primary goods, as well as labor-intensive products, while China imported technology-intensive and capital-intensive manufactured products from Korea. In recent years, trade between the two countries is mostly in technology- and capital-intensive goods. Foreign-invested enterprises, especially those with investment from Korea, played a critical role in the structural changes of the bilateral trade.
China–South Korea relations
One school argues that China is a mere clone or extension of other Asian countries that were once glorified as newly industrializing economies or high-performing Asian economies. As a result, Koreans hope that China will become an additional country for quick economic interaction. Any fluctuation in the fortunes of the Chinese economy has an immediate impact on the Korean economy.
Trade figures If we look at the bilateral trade figures between both the countries ina number of important facts emerge. The slowdown started in May when there was zero growth, and since then the monthly exports have registered consecutive negative growth.
This was the first decline in five years. This is significant, given that Korea relies heavily on its neighbor.
China–South Korea relations - Wikipedia
If we look at the export components, the picture becomes clearer. At the disaggregate level, inKorean exports to China were dominated by machinery and transport equipment 48 percentfollowed by manufactured goods 24 percentchemicals and related products Crude materials, food and live animals, beverages and tobacco, commodities transactions, and animal and vegetable oils make up for the remainder of exports.
Now, if we look at the growth rate of these categories, something interesting emerges.
Export of machinery and transport equipment grew 4. This does seem positive, but if we look closer, the pace of growth has actually fallen drastically.
China sent a delegation of thirty-three officials to Seoul to negotiate its return. This marked the beginning of a series of casual exchanges of citizens.
Dynamics of Korea-China economic relations
Some Chinese officials reportedly paid quiet visits to South Korea to inspect its industries, while South Korean officials visited China to attend a range of international conferences. Late s[ edit ] Active South Korean-Chinese individual contacts have been encouraged. Academics, journalists, and particularly families divided between South Korea and China were able to exchange visits freely in the late s.
Significant numbers of citizens of each country reside in the other. The absence of any protections granted by official relations had still remained. Beijing has been politically closer to P'yongyang, and relations with North Korea remained tense and distrustful. It had been difficult for analysts to predict what effect a political turmoil in the People's Republic of China would have on Sino-Korean relations. After the military putdown of demonstrators in Tiananmen SquareBeijing, in JunePyongyang predictably came out in support of Beijing's actions.
Seoul, on the other hand, did not condone or condemn the actions in Tiananmen Square. Present[ edit ] Trade between the two countries continued to increase nonetheless. Furthermore, China has attempted to mediate between North Korea and the United States and between North Korea and Japan and also initiated and promoted tripartite talks—among Pyongyang, Seoul, and Washington.
Diplomatic ties between Seoul and Taipei were nevertheless severed in It measures variance in the share of total exports between the top two export partners and among the top five partners for a subset of countries from Chart 1. Or, in other words, it illustrates how spread out exports are.Song Hye Kyo with Korea's President representing their country at Korea China Economic & Trade Event
The first bar is reflective of the spread of exports to the top five export partners. The lower the bar, the less of a difference in the share of total exports between each partner, or the more equally distributed exports are.
The second bar reflects the difference between the first and second ranked export destinations. The higher the bar, the bigger the drop-off between the share of total exports. This is also suggestive of the extent to which the first bar is driven by the top export market.
Chart 2 reveals exports for major European economies are more equally spread out than in major Asian economies, with the exception of Indonesia.
It also reveals that within this group of Asian economies, Korea and Australia stand out for their dependence on exports to China.