Beijing means business

Besides his counterpart Park Geun-hye, the person who enjoyed the company of visiting Chinese President Xi Jinping the most must have been Jay Y. Lee, vice chairman of Samsung Electronics. Lee accompanied Xi during his lecture at Seoul National University on Thursday and had tea with the Chinese president during his hectic two-day itinerary. He attended the Korea-China business forum along with hundreds of top executives from both countries at Shilla Hotel, owned by Samsung Group, and took Xi to the Samsung Electronics showroom there. Including the state banquet, Lee joined the Chinese president four times during his stay in Seoul.

That highlights the main purpose behind Xi’s visit to South Korea: a stronger business relationship with South Korea.

The latest Korea-China summit, the fifth between the two leaders since they took office last year, focused on economic and business cooperation. The two presidents agreed to wrap up bilateral negotiations for a free trade agreement within the year, run a direct won-yuan exchange market, reopen talks for an exclusive economic zone and increase China’s corporate investment in Korea.

We should welcome renewed Chinese investment, but we must be wary of the downside. We must use the economic, political and diplomatic momentum in our favor.

The direct two-way foreign exchange market is a double-edged sword. It can save Korean businessmen and traders a lot of trouble and Korea will also be able to ease excessive reliance on the U.S. dollar through diversification in trade settlements. Domestic financial institutions will be able to create and market yuan-based savings, bonds, insurance, and derivatives investments.
But the move also can irk Washington as it suspects Beijing is trying to challenge the dollar’s dominance with its currency. Washington may not be happy that Seoul is cozying up with Beijing in the sensitive foreign exchange field. Korea must keep a balance between the United States and China.

Since the two countries have agreed to work toward an FTA, cheap Chinese imports may be unavoidable. The government should raise the competitiveness of local farmers so that they are well prepared for the competition. We must not expect a China windfall from Xi’s visit. The world’s largest consumer market has proved to be much pickier than many expected. New opportunities are also new challenges. We must make ourselves competitive and nimble enough to ride the momentum.

JoongAng Ilbo, July 5, Page 30