Cooperation with China crucial to Korean economy

06-Aug-2020 Intellasia | GlobalTimes | 6:02 AM Print This Post

A South Korean industry research institute recently released a report suggesting the country should “reduce China dependence” in trade amid escalating containment efforts from the US. But economic ties with China have proven a much needed stabiliser for the South Korean economy, particularly in its post-COVID-19 recovery, rather than a potential risk.

The US is set to intensify its “America First” approach to China’s containment, no matter who wins the upcoming election. Against such a backdrop, it’s necessary for South Korea to reduce its trade dependence on China and diversify its export destinations, according to a recent report issued by the Korea Institute for Industrial Economics and Trade, the Yonhap News Agency reported.

From the perspective of industry security, it is reasonable for a research institution to raise concerns about the US’ rising protectionism and increasing efforts to decouple from China. But its conclusion to reduce dependence on China has obviously missed the point. It seems more like it is pandering to the US.

There is no doubt that expanding its export destinations will put South Korea in a safer position. Yet China and South Korea have been making progress in deepening economic and trade ties that support both sides as they endure supply chain interruptions caused by the US trade war and the severe blow from the coronavirus.

As the majority of South Korea’s exports to China are intermediate productsmany of which are reprocessed by China and sold to the USthe US’ trade bullying brought certain collateral damage to South Korea. But efforts from China and South Korea to deepen economic cooperation have effectively buffered that impact.

China remains South Korea’s largest trading partner, import source and export destination amid mounting pressure. In 2019, bilateral trade between China and South Korea hit $284.54 billion. China’s exports to South Korea totalled $110.97 billion, and imports from South Korea were at $173.57 billion. South Korea invested in 2,108 projects in China, up 12 percent year-on-year.

Cooperation with China has served as a stabliser and safety net for South Korea’s economy, especially during the country’s recovery from the virus impact. Exports to China grew 2.5 percent in July from a year earlier, after expanding 6.9 percent in June, providing important support for the country’s recovery from the COVID-19 pandemic.

At annual economic cooperation talks on Saturday in Qingdao, East China’s Shandong Province, China and South Korea agreed to push forward second-phase free trade agreement negotiations.

Trade officials at the meeting noted that China and South Korea have been cooperating during the pandemic, in stark contrast to rising tensions. A fast-track entry system for key business personnel first established by China and South Korea has effectively promoted the resumption of work and production, and has stabilised supply and industrial chains.

Given this positive momentum and the promotion of cooperation to cushion uncertainty, there is no reason that South Korea should reduce its trade dependence on China, even when the situation is viewed exclusively from a South Korean perspective. The report’s misleading conclusion could potentially hinder the momentum both sides are now experiencing.

South Korea should further promote trade ties with China despite concerns over US pressure. China-South Korea trade still has broad potential for further cooperation. Cooperation in the industrial chain continues to deepen, and that is set to spread to more industries. Once the two countries have established cooperation across the entire industrial chain, they will have greater common interests and will gain a stronger position to deal with uncertainties and challenges.

https://www.globaltimes.cn/content/1196686.shtml

 


Category: Korea

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