The Characteristics and Countermeasures of Direct Investment and Trade of South Korea in China

Abstract

Purpose - This research is based on South Korea’s direct investment and trade status with China from 1992 to recent years, meaningful in establishing future strategies for China, which entered the New Normal era. Design/methodology/approach - This research used various economic statistics released in South Korea and China to identify the current situation and trends, and to present policy implications for South Korea’s direct investment in China and ways to expand trade. Findings - South Korea’s accumulated direct investment in China is continuing with steady investment, with the total accumulated amount of direct investment in China excluding tax havens and Hong Kong leading to its ranking in fourth place after Japan, Singapore and the U.S. in 2018. Meanwhile, the trade volume between South Korea and China at the time of the normalization of diplomatic ties has increased by 42 times to $268.6 billion as of 2018, with China being South Korea’s largest exporter since 2003 and Korea continuing its status as China’s largest importer since 2013. Research implications - The policy implications of this paper are thus: first, it is necessary to enhance efficiency in accordance with China’s push for “supply side reform”. Second, innovative manufacturing industries are urgently needed to establish industrial strategies in accordance with the implementation of new industrial policies, such as “Chinese Manufacturing 2025”, which is currently being promoted with the trend of the times. Third, it is necessary to find new models that conform to the ‘One-Belt and One-Road’ strategy and which expand cooperation using ‘AIIB’.