Chinese companies’ direct investment in South Korea surged 240 percent in 2018, boosting foreign direct investment in Korea to a new annual high, according to data released by the Korean government on Jan. 3.
According to the "Foreign Direct Investment (FDI) Trends in 2018" released by the Ministry of Trade, Industry and Energy, China invested US$2.74 billion in South Korea last year, up 238.9% from 2017 when China cut its investment in South Korea by 60 percent.
Chinese companies scaled up their investment in South Korea as the controversy over the deployment of the terminal high altitude area defense (THAAD) system in South Korea subdued.
Investment from the United States and the European Union (EU) also increased by more than 20 percent, increasing foreign investment in South Korea to a new record high of US$26.9 billion.
FDI from all major countries swelled except for Japan. The EU accounted for 33.2 percent of the total FDI in South Korea with US$8.92 billion, the highest figure ever which represented a 26.9 percent rise from the previous year.
The United States also expanded its investment by 24.8% to US$5.88 billion, mostly in South Korea’s manufacturing and service industries as well as high-tech industries
In contrast, investment from Japan sank 29.4 percent year on year.
As a result, last year's FDI totaled US$26.9 billion, an increase of 17.2 percent over the previous year. In terms of arrival, it rose 20.9% to US$16.39 billion.
"Annual FDI in South Korea exceeded US$20 billion for four consecutive years," said an official of the Ministry of Trade, Industry and Energy. “The upward trend was maintained last year.”
“Foreign companies have been steadily investing in Korea in order to take part in the value chains of South Korea’s main industries such as semiconductors, machinery, and petrochemicals,” the official said. "Foreign countries have been expanding investment in new industrial sectors related to the Fourth Industrial Revolution such as bio, autonomous car sensors, electronic commerce and sharing economy."
By industry, investment in machinery, precision medical instruments and transportation equipment grew 38.9 percent to US$10.05 billion. The service sector posted US$15.58 billion, up 1.4% from the previous year.