Economic ties fuel relationship between nations


Oct 16,2006
After a bitter animosity that developed during the Korean War, Seoul and Beijing have edged closer to a relationship that both sides now call a “comprehensive cooperative partnership.” Rather than defining their relationship with the Cold War ideology that separated the two countries for decades, economic growth now dictates the pace of their relationship. The roots of the reconciliation were in China’s decision in the late 1970s to build up its economy, and the former enemies officially shook hands in August 1992 and established formal ties. Few would have predicted then that China would become South Korea’s leading market for manufactured exports, much less the explosive popularity of South Korean television dramas and “K-pop” singers in China today. In this decade, ties between the two countries encompass every aspect of life and diplomacy - economics, culture and national security. Trade volume, which stood at $5 billion 14 years ago, surpassed the $100-billion mark last year, while accumulated investment by South Korean companies in China was estimated at $30 billion. More than 20,000 South Korean companies are doing business in China, and the Middle Kingdom has become the leading tourist destination for South Koreans. About 3.5 million Koreans traveled to China last year, surpassing Japan as a tourist destination. About 3.3 million South Koreans visited there. At the beginning of the year, Kim Ha-jung, Seoul’s ambassador to China, credited the burgeoning relationship to Beijing’s pragmatic approach to issues across the board, and told reporters more was to come. Some observers here have questioned Seoul’s growing economic dependence on Beijing, but the prevailing opinion is that to miss the opportunities in China would let Korea’s competitors march on this country. “If we don’t do it, someone else is going to take that place. This is a relationship that is viewed as mutually beneficial to the two sides and that is why it’s flourishing,” said Shin Sang-jin, a professor at Kwangoon University. “We are using China as much it is using us.” There have been incidents that show a bit of the downside to all this economic frenzy. Last year, the National Intelligence Service caught seven former Hynix researchers trying to smuggle sensitive semiconductor technology into China. The service said that since 2003, industrial espionage cases have been increasing, mainly from this country’s high-tech electronics and information technology sectors. But the problem is hardly confined to China alone. Despite such concerns on the economic front, nobody doubts that there are opportunities in China, which has become the global engine for the world’s manufacturing economy. Some also point out the stiffer competition from Chinese companies, which are still armed with cheap labor and are threatening to take over technology-driven sectors that South Korean companies are trying desperately to hold onto. “In the aftermath of the financial crisis in the region, South Korea was able to make lots of profit from its China trade, which helped it to overcome the crisis quickly,” said Lee Moon-hyung, a researcher at the Korea Institute for Industrial Economics and Trade. He contended that the Chinese labor market helped South Korea relocate industries such as textiles and low-end electronics to China and maintain competitiveness on the international market. But like a double-edged sword, the Chinese learning curve is making business for South Korean companies harder every day. Regardless of who ends up with the more bulging pockets, it is certain that more businessmen will shuttle back and forth between Seoul and Beijing. At a meeting of presidents of China and Korea in November on the sidelines of the Asia Pacific Economic Corporation forum meeting, both nations called for a trade volume target of $200 billion by 2012. The 2008 Beijing Summer Olympics and Shanghai Expo 2010 are expected to help Beijing increase its business ties with the world, and Seoul will try to seize the opportunity. On the political side things are more complicated, as demonstrated by events of recent years. The nations are at odds over the history of ancient kingdoms in the Manchurian region, a controversy that may sound silly to outsiders but stirs passions here and shows hints of having some modern territorial consequences. In question are the history of the Goguryeo Kingdom, which ruled in the area from 698 to 926, and the kingdom of Balhae, which rose from Goguryeo’s ashes. South Korean scholars argue that both kingdoms were founded by people with no ethnic relationship to China, were independent and were not politically subordinate to China. For Chinese scholars, that’s hard to swallow. China was the region’s hegemon with vassal states all around its periphery, and Goguryeo and Balhae were no exceptions, they believe. Beijing’s interest in these Manchuria questions is driven partly by the possibility of a North Korean collapse and reunification with South Korea, which could, the Chinese government fears, stir nationalistic sentiment among Korean minorities on the Chinese side of the border. And South Korean scholars also view large parts of Manchuria as part of Korea back in the mists of time, fueling Beijing’s suspicions about a land grab by Korea some time in the future. A war of words broke out over what Koreans called a “hijacking” of their history, and in August 2004, Seoul and Beijing struck a verbal agreement to settle disputes over China’s assertions about the Goguryeo Kingdom through scholarly exchanges and not allow them to become a political issue. That seemed to work for a while, but this summer, the Center for China’s Borderland History and Geography Research posted on the Internet summaries of research papers that repeated China’s historical claims, causing the issue to rise all over again. How serious is it? Few people seem willing to hazard a guess quite yet, but Yoon Hwy-tak, a researcher at Seoul’s Northeast Asia History Foundation, gave it a well-hedged try. “The study projects ordered by the central government will probably go ahead as scheduled,” he said, “but Beijing is aware that this issue has the potential to damage ties with Seoul. So I think they will gauge the situation and make changes as they see necessary so the issue does not cast a negative light on the overall pretty picture.” The foundation was set up by the South Korean government this year to head off any further historical claims by China. While Seoul has maintained for more than 50 years a military alliance with the United States that began in the Korean War, North Korean nuclear negotiations have put Seoul into a new position in its security policy. By playing host to the six-party talks, Beijing has quietly increased its prominence in regional affairs, and dialogue between Seoul and Beijing has been intense as they discuss common goals in the nuclear talks. In fear of agitating the incendiary North, both nations have resisted Washington’s desire to take a tougher stance with Pyongyang, although the North’s recent apparent nuclear test may cause a rethinking of those policies. Even if the North Korean nuclear crisis is settled, several analysts say, Beijing will continue to cooperate with Seoul on questions regarding the security of the Korean Peninsula. “China realizes the benefit of having a unified Korean Peninsula because the economic potential and benefits that could come are something that can’t be ignored,” said Yun Duk-min of the Institute of Foreign Affairs and National Security. Much of the world has concentrated on following, wondering about and trying to capitalize on China’s economic growth. A revaluation of its currency has been a topic of great interest in global financial markets because of its potential impact on the world’s economy. One question often raised by analysts is whether Beijing will be able to maintain its economic growth over a long period of time even while its political system is steeped in Chinese-style communist values. A crucial point often cited is that political stability in China could be shaken as demands for democracy increase and, with the increasing economic wealth there, disparities in income distribution in society widen. Others argue that the spread of the Internet is another catalyst for political change through imported and home-grown democratic sentiment. The China Internet Network Information Center put the number of Internet users in China at 123 million as of June. Foreign policy analysts like Zbigniew Brzezinski have long argued that rising internal political and social tensions could eventually lead to unrest in China. “At some point, the politically and the socially disaffected in China are likely to join forces in demanding more democracy, freedom of expression and respect for human rights,” he said in his 2004 book, “The Choice: Global Domination or Global Leadership.” The former U.S. national security advisor continued, “That did not happen in Tiananmen Square in 1989, but it might well happen the next time.” But scholars like Chung Jae-ho of Seoul National University argue that China might be an exception to existing general rules about democracy. “The Chinese experienced the Cultural Revolution that ravaged society for a decade. They have long memories and they don’t want a repetition,” he said. “The fact that Tiananmen Square is about the only incident related to a desire for more democracy over which authorities briefly lost control tells one that China has its own course.” Mr. Chung contended that Beijing has been infusing democratic changes slowly into domestic politics. He suggested that China would pace its political reforms and was likely to be successful in heading off the political unrest so many people see as likely. South Korea-China relations are now based mostly on common economic interests, but they may become increasingly influenced by international relations issues. That all depends on how strong China becomes regionally and whether the relationship turns to one more evocative of historical big brother-little brother links of centuries past. But for the time being, economics is probably the key concern, and Seoul has little choice but to stay on its present path of expanding trade and investment links. As many experts see it, Korea has no real alternatives to doing so. Seoul has shown its desire to nurture good relations with Beijing, for example by refusing to allow the Dalai Lama to visit here. The Buddhist leader is also a symbol of freedom for Tibetans and as such anathema to Beijing. And when Seoul and Washington agreed in January that U.S. troops here could be used in other parts of the region, Seoul was careful to insert the following language into the joint announcement: “In the implementation of strategic flexibility, the U.S. respects the ROK position that it shall not be involved in a regional conflict in Northeast Asia against the will of the Korean people.” Ning Fukui, China’s ambassador to Seoul, warned in March that the agreement would be of concern to China if it were used for a U.S. intervention in the Taiwan Straits. When asked by the JoongAng Ilbo recently whether Seoul was getting closer to China while moving away from the United States, Ban Ki-moon, Korea’s foreign minister, said Seoul’s relations with the two countries were not a zero-sum game. This country has a desire - some critics say an overoptimistic desire - to be a regional “balancer,” but has shown little in the way of making good on that goal. As it is, China’s growing influence and Seoul’s increasing economic dependence are likely to dictate how little or how much room for maneuver Seoul has in regional affairs. by Brian Lee

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