Korea reaffirms strong economic ties with ChinaMadeinkoreablog
Before the opening of the financial ministers meeting of the Group of 20 nations in Shanghai on Friday, bilateral relations between Seoul and Beijing seemed to be touch-and-go due to geopolitical risks sparked by North Korea’s nuclear test and rocket launch.
South Korea and the United States started discussions on the deployment of the Terminal High Altitude Area Defense (THAAD) system following North Korea’s provocations. China slammed the plan, insisting that the missile system would target China.
Amid escalating tensions, many investors have raised concerns that the South Korean economy, which largely depends on China’s demand, will face harsh Chinese retaliation in the near future, such as non-tariff barriers.
At the two-day Shanghai meeting on Friday and Saturday, however, South Korea’s Finance Minister Yoo Il-ho sought to shrug off such anxiety in the market, signaling that the Seoul-Beijing economic relationship is not affected by political decisions.
Yoo met with People’s Bank of China Gov. Zhou Xiaochuan on Friday and agreed to open the won-yuan direct trade market in China before June, in a follow-up on a summit meeting last year.
The direct trade market in Seoul opened in December 2014, with its daily turnover reaching an average $2.26 billion as of end-November last year.
The two also reached an agreement to begin official negotiations to extend the Seoul-Beijing currency swap deal, which is scheduled to expire in October 2017.
The deal was first initiated in 2009 with a value of 32 trillion won and expanded to 64 trillion won in 2011.
he next day, Yoo had talks with his Chinese counterpart, Lou Jiwei, on the sidelines of the G-20 conference.
There, the top economic policymakers from the neighboring countries reaffirmed the strong bilateral cooperation in economic policies amid financial turmoil and escalating geopolitical risks.
“The bilateral economic cooperation remains strong and will get stronger in the future,” said Yoo, who also doubles as the deputy prime minister for economic affairs, during the two-way talks.
They agreed to strengthen policy coordination in striking a protracted low growth trend and dealing with the recent financial turbulence.
Yoo said an economic decision has to be made independently, separate from any political actions and tensions.
“We can hear some different words from politics, but politics is politics and economics is economics,” he told South Korean reporters after the G-20 meeting. “The two finance ministers gave the message that the South Korea-China economic cooperation will be stronger in the future.”
Some recalled a past case that China imposed an import ban on South Korea-made mobile phones in 2000 in retaliation for Seoul’s safeguard measures on Chinese garlic.
“During the meeting with the Chinese officials, I didn’t think China would implement such non-tariff barriers as they did in 2000,” he said.
A stabilized relationship with China is critical for the South Korean economy as its exports to China reached $290.5 billion last year, accounting for 26 percent of its total outbound shipments.
As the world’s second-largest economy is slowing down, and imports dropped 11 percent last month, South Korea was hit hard by the Chinese cooldown.
Its January exports plunged nearly 19 percent, and the figure is expected to post a wider drop in February.