Global Strategy
The economic revival strategies of China are getting into shape as it changes the current economic paradigm of the Asia-Pacific region through a Free Trade Agreement (FTA) with Korea and attracts investment from Western European countries for major development projects in Western China. The ultimate goal of China is to restructure the regional economic dynamics centered on the U.S. and Japan.
On July 7, Chinese press showed great interest on the fact that the Korea-China FTA negotiations are to be settled within this year, which was decided during Xi’s visit to Korea, and that Chancellor Merkel of Germany visited the Volkswagen factory at Chengdu, Sichuan Sheng, center of the major infrastructure developments of Western China. According to the press, this could the trigger for a new economic paradigm.
First of all, the Korea-China FTA will be a great influence on not only the economic cooperation of the two countries but also the bigger picture of the Asian economy. Sina.com of China quoted a report by the Japan External Trade Organization (JETRO) that said that exports from Japan to China including batteries, liquid-crystal displays (LCDs), and relevant equipment, totally worth US$5.3 billion (5.36 trillion won), will be substituted by exports from Korea, once the Korea-China FTA becomes effective. In short, the Korea-China FTA will definitely hurt Japanese exports to China.
Furthermore, China considers the Trans-Pacific Partnership (TPP), in which the US is inviting major Southeast Asian countries such as Japan and Korea as well as the Transatlantic Trade and Investment Partnership (TTIP) between the US and EU a containment strategy of the US against China.
China is therefore preparing to comprehensively restructure the Asia-Pacific economy. China aims to reactivate the Asia-Pacific Economic Cooperation free trade zones which have been neglected for a long time to connect 16 countries including India, Australia, and New Zealand with Korea, China and Japan under the Regional Comprehensive Economic Partnership (RCEP) system.
The Korea-China FTA will be a very important milestone for the Korea-China-Japan FTA and RCEP system. Sina.com said by quoting professionals, “90 percent o the items of the Korea-China FTA have been settled. The remaining 10 percent are related to tariffs. The Korea-China FTA negotiations will be helpful for Korea-China-Japan FTA negotiations as well.”
At the first negotiation meeting of the Korea-China FTA last September, it was mutually agreed that 90 percent of traded goods would be duty-free. However, there has been a strong disagreement on the remaining 10 percent of products subject to taxation. A Korean Embassy staff member in China said, “After the General Secretary Xi’s visit to Korea, there will be the twelfth Korea-China FTA negotiation in Korea during 14-18 July. Various changes over the negotiations are expected as leaders of two countries agreed to settle the final negotiations within this year.”
In addition, Chancellor Merkel of Germany is currently visiting China with CEOs of major German corporations including Siemens, Volkswagen, Airbus, and Deutsche Bank. Chancellor Merkel made her first appearance at Chengdu, Sichuan Sheng, center of the largest development in Western China. Some interpret this as a trigger for Germany to enter the Western Chinese market.
According to the relevant statistics, there are over 8,200 German companies in China, and 150 of them are based in Chengdu, Sichuan Sheng. This number grows be 10 percent on average every year.