Interdependent Economy
The Hyundai Research Institute announced on March 10 that China has become South Korea’s largest trade partner and South Korea has become the fourth-largest trade partner for China with the size of their bilateral trade on a rapid increase.
According to its report, South Korea’s exports to China increased approximately 54.8-fold from US$2.65 billion to US$145.33 billion between 1992 and 2014 and South Korea’s imports from China showed an increase of about 2,420% from US$3.72 billion to US$90.07 billion during the same period. In addition, the ratios of South Korea’s exports and imports to and from China to its total exports and imports jumped from 3.5% to 25.4% and from 3.5% to 17.1%, respectively. The two countries established diplomatic relations in 1992.
During the 22-year period, China’s exports to South Korea skyrocketed from US$2.4 billion to US$100.33 billion and China’s imports from South Korea soared from US$2.62 billion to US$190.11 billion. Likewise, the ratios of its exports and imports to and from South Korea rose from 2.8% to 4.3% and from 3.3% to 9.7%, respectively.
They are showing an increasing level of interdependence in terms of added value in the manufacturing sector as well. Specifically, South Korea’s reliance on China jumped from 1.8% to 10.3% between 1995 and 2011 while the ratio of the added value created in its domestic manufacturing sector fell from 62.8% to 56.6% during the period. In the meantime, China’s reliance on South Korea in the field of electrical and optical equipment rose from 3.0% to 6.7% between 1995 and 2011, when the ratio of the added value created in China’s domestic manufacturing sector edged up from 76.1% to 76.8%.
The two countries are working more and more closely with each other in direct investment, finance and the like, too. For example, China is the second-largest direct investment destination for South Korea and they are continuing to cooperate in the field of finance by means of the extension of their currency swap agreement and participation in the Asian Infrastructure Investment Bank (AIIB). South Korea’s investment in China increased from US$3.86 billion to US$61.85 billion, equivalent to 13.7% of South Korea’s total overseas investment, between 2002 and 2014. In that period, China’s investment in South Korea jumped by 14.8-fold to US$38.12 billion, equivalent to 4.7% of the total foreign investment in South Korea.
The size of their bilateral technology trade increased approximately 190% to US$3.63 billion between 2001 and 2013. The number of Chinese tourists visiting South Korea showed a rapid increase from about 178,000 to 5.984 million between 1995 and last year, when that of South Korean tourists visiting China rose from around 0.53 million to more than 4.44 million.