Trade between China and the Republic of Korea (ROK) is expected to reach $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 the
ROK.
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 ROK's 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 $134.3 billion,
according to China customs' statistics, with the country having a trade deficit
of $45.3 billion.
Shin expects the trade gap to narrow down as ROK enterprises in China
increase sourcing locally. ROK 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 ROK investors.
Xu said China, particularly its eastern and southern parts, is attracting ROK
businesses because of its economic growth, domestic demand as well as the good
profit margin it offers.
"So far, ROK investors have focused on small and medium-sized projects, some
of who don't even understand the Chinese market fully," Xu said.
ROK enterprises will seek a strategic change in China, Shin said, because of
the changes in the Chinese government's policies on foreign investment.
ROK 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 the ROK 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 the ROK have agreed that an FTA would promote
bilateral trade and investment further, boost their economies and create more
jobs.