New ways to thrive togetherChinese President Xi Jinping visits Korea today with a big economic delegation, which includes Jack Ma, executive chairman of Alibaba Group, China’s largest e-commerce business, and Robin Li, co-founder and chairman of Baidu, China’s largest web services company. The business leaders will discuss ways to foster Korea-China economic cooperation with their Korean counterparts at a business forum hosted by the Korea Chamber of Commerce. President Park Geun-hye and Xi will participate in the forum after their summit meeting. That reflects both countries’ growing concerns about economic cooperation on top of political and diplomatic issues.
Despite a remarkable increase in economic exchanges since the establishment of diplomatic relations in 1992, the way we cooperate on the economic front has not changed much: While Korea invests in China mostly to take advantage of its lower labor costs and materials for its industrial production, China exports low-price manufactured goods and agricultural products.
But this type of cooperation can hardly go on forever. China is not going to be the “factory of the world” forever. As the world’s second largest economy in terms of GDP, China has emerged as an industrial powerhouse that fiercely competes with Korea in many areas, as seen in its countless hi-tech companies trying to build world-class competitiveness. Simply put, the economic structures of the past have changed.
Without accommodating such significant shifts, neither side can expand their economic ties. They must find ways to achieve win-win cooperation by taking advantage of each side’s competitive merits. China has an advantage in its huge market, manpower and capital, while Korea has the upper hand in manufacturing technology, IT, retail and so-called Hallyu cultural products. They can find breakthroughs by focusing on these factors. Both sides’ companies are already looking for various ways to promote mutual cooperation. The governments must cooperate to establish a new framework for economic cooperation. We hope Xi’s visit will ratchet-up these efforts.
As an important step, both sides should accelerate the ongoing Free Trade Agreement negotiations. Even before striking a deal, both governments must proactively cooperate to curtail trade barriers. Also, they need to open a direct won-yuan trading market. Furthermore, both countries need to find ways to make Seoul an international hub for yuan trading. Aside from Korean companies’ investments in China, attracting its labor and capital to Korea can be a new model for economic cooperation.
JoongAng Ilbo, July 3, Page 30