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S. Korean biz spotlight shines on China

Editor: Li Kun 丨CCTV.com

10-29-2015 17:37 BJT

By Tom McGregor, CNTV Commentator

Chinese Premier Li Keqiang will arrive in Seoul this weekend for the 6th trilateral summit between China, Japan and South Korea to accelerate negotiations on a three-way FTA (Free Trade Agreement) pact. But stronger Sino-Korean diplomatic, economic and cultural ties could be the bigger story.

 

China is South Korea's largest trading partner with total trade volume in 2014 valued at $US235.4bn. Nevertheless, bilateral trade for the first eight months of this year has dropped 5 percent compared to the same period last year. Yet brighter prospects are ahead, since the two countries signed an FTA last June.

Whereas China's industrial strength relies on iron & steel, petrochemical engineering and auto production; South Korean manufacturing is vibrant in the large machinery and nonferrous metals sectors. Hence, the economies do complement each other.

Manufacturing slowdown challenges

The global economic slowdown continues to curtail South Korea's Gross Domestic Product (GDP) growth rates. The South Korean Won currency is soaring higher against the US dollar and the Japanese Yen.

For the first time since compiling statistics in 1961, the nation's manufacturing sector saw sales fall last year. The Bank of Korea's corporate analysis report disclosed that electro-mechanics and electronics were the hardest hit with a 5.5 percent slide.

Non-metallic minerals producers saw sales plunge 3.1 percent; petrochemicals and chemicals - down 1.6 percent; metallic products - down 1.2 percent and shipbuilding sank 0.4 percent.

The nation is also witnessing a dramatic rise of zombie firms, companies that do not generate sufficient revenues to pay taxes and interest on debt payments.

Chinese looking for Seoul Culture

South Koreans are facing numerous obstacles to jumpstart the economy. Yet the country still holds some advantages as well. Seoul is welcoming new waves of Chinese tourists who come here for shopping, sightseeing and medical tourism.

Korean pop culture (Kpop) has captured the hearts of millions of Chinese. A number of South Korean TV shows have been adapted into Chinese broadcast programming with Korean-style dramas and reality/comedy TV shows enjoying high viewer ratings.

The Kpop entertainment industry is setting the stage to elevate China's home-grown pop culture. Chinese entertainers can learn from their South Korean counterparts about how to grab fame and fortune.

Nonetheless, South Korean Kpop diplomacy is only a part of improved Sino-Korean relations. Seoul-based conglomerates remain a powerhouse at introducing innovations to the global manufacturing sector.

LG goes big in Nanjing

South Korea-based LG Group is a major player in the electric vehicles (EV) industry. The corporation produces EV batteries and had completed construction on a plant in Nanjing, China that can produce 50,000 EV batteries annually.

"Completing the Nanjing plant, the company made another meaningful step in China, which has the world's largest EV market," Kwon Young-soo, president of LG's battery division, told the Joong Ang Daily. "We will focus on making the Nanjing plant, the world's core EV battery production base in the future."

The new battery can be equipped for high-performance EV that can run 320 km on a single charge. LG has already won contracts to produce 1 million units for China's top two auto manufacturers - Shanghai Automotive and Dongfeng Commercial Vehicles.

Relaxing FDI rules in China

Meanwhile, the Municipality of Beijing has launched a pilot project to relax restrictions on foreign direct investments (FDI). Foreign investors could gain controlling stakes in certain companies that are operated within Beijing city limits.

The program covers six mature services areas: science & technology; IT (information technology); culture & education; business & travel; financial services; and health & medical services. South Korean investors have a golden opportunity to invest in Beijing.

If the pilot project succeeds, China plans to make it go nationwide in the near future. Accordingly, the stage is set and the spotlight is shining on Sino-Korean business ties.

Tmcgregorchina@yahoo.com

 

( The opinions expressed here do not necessarily reflect the opinions of Panview or CCTV.com. )

 

 

Panview offers a new window of understanding the world as well as China through the views, opinions, and analysis of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

Panview offers an alternative angle on China and the rest of the world through the analyses and opinions of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

 

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