Trade between China and South Korea is expected to reach US$200
billion in five years if it keeps growing at 15 percent a year, a
leading expert said yesterday, a day before Premier Wen Jiabao
begins his two-day visit to South Korea.
The target is highly achievable, given the strengthening of
trade and economic relations between the two countries, and the
26.2 percent annual growth between 2001 and 2006, said Xu Changwen,
a researcher with the Chinese Academy of International Trade and
Economic Cooperation, under the commerce ministry.
Xu attributes the fast growth to the complementary characters of
the two economies.
The economic minister in South Korean embassy in Beijing Shin
Bong-kil corroborated Xu, and said imports and exports in high and
new technology would increase remarkably and industrial exchanges
would intensify.
Last year, the trade volume between the two countries was
US$134.3 billion, according to China customs' statistics, with the
country having a trade deficit of US$45.3 billion.
Shin expects the trade gap to narrow down as South Korean
enterprises in China increase sourcing locally. South Korea is the
fourth largest foreign investor in China. The first three are the
United States, Japan and Singapore. Also, China is the top
destination for South Korean investors.
Xu said China, particularly its eastern and southern parts, is
attracting South Korean businesses because of its economic growth,
domestic demand as well as the good profit margin it offers.
"So far, South Korean investors have focused on small and
medium-sized projects, some of who don't even understand the
Chinese market fully," Xu said.
South Korean enterprises will seek a strategic change in China,
Shin said, because of the changes in the Chinese government's
policies on foreign investment.
South Korean investors are expected to shift from
labor-intensive, low-cost small manufactures to large enterprises
using higher technologies, he said. They could change their
investment destinations, too, by moving to the central, western and
northeastern parts of China.
"Progress is also expected in the logistics, design and
financing sectors," Shin said.
Both the countries are keen on free trade agreements (FTAs) but
want to jointly study the possibility of setting up a Sino-South
Korean free-trade zone before deciding when to launch their FTA
negotiations.
China has FTAs with more than two dozen economies, while South
Korea just inked its first with the United States. It is trying to
hold talks with India, Canada and Japan in the hope of signing
FTAs.
Experts from China and South Korea have agreed that an FTA would
promote bilateral trade and investment further, boost their
economies and create more jobs.
(China Daily April 10, 2007)
