Abstract
The trend of globalization since the early 1990s has had a profound impact on trade relations between China and South Korea. It affected these two countries in positive ways, and brought Sino-Korean trade to its highest level since the establishment of diplomatic relations on August 24, 1992. Sino-Korean trade, as the scale of its growth and development accelerated, was also exposed to and encountered various problems. Among those problems, the most important and urgent problem to be solved was that in Sino-Korea trade, the deficit on the China side has continued to increase. This paper focuses on analyzing the causes of this problem.
Highlights
Among these problems, the most important and urgent problem to be solved was that in Sino-Korean trade, the loss of the Chinese side has continued to increase since 1993
All of that made the domestic economy of South Korea threw in a state of disarray
The result was that exportation from China to South Korea decreased at a large scale
Summary
The Asian financial crisis in South Korea broke out in August 1997, with the country’s currency greatly depreciating. Korean enterprises couldn’t do export/import business as usual. China’s “no depreciation” policy increased export costs relatively. Korean enterprises began to cut orders for Chinese down. The result was that exportation from China to South Korea decreased at a large scale. In order to raise foreign exchange reserve, the Korean government increased exportation taking advantage of Korean currency’s depreciation. The biggest export market for South Korea, was sure to be influenced by the wave of Korea’s enlarging exportation. It brought the disequilibrium in Sino-Korea trade into a tense situation
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