Economic Relations between Korea and China Essay

Economic Relations between Korea and China - Essay Example For centuries, China stood as a leading country, easily outpacing other countries in the arts and sciences. In the 19th century and early 20th centuries, however, China was overwhelmed by civil unrest, major famines, military defeats, and foreign occupation. It seemed like China would never catch up with the Western developed countries economically, but after the 1978 reform period, Deng Xiaoping, a hero of China, focused on market-oriented economic development and by 2000 output had quadrupled.There is no doubt that China has had tremendous effect on Korea economically, politically and culturally since early days of Korea due to proximity and Korean speaking ethic minorities living in China. We must not fail to indicate here that Korea here refers to both North and South Korea. Both of these republics have trade relations with China. South Korea and China normalized diplomatic and economic relations in 1992 and North Korea did so round about the same time.Although the relationship b etween Korea and China had ceased during the Cold War, the reestablishment of diplomatic relations had led to a surprisingly rapid growth of bilateral exchanges. Statistics show that Korean Foreign Direct Investment (FDI) to China has increased at very fast rate and continuous to increase as China has become the second most viable destination for investment after the United States. The development of economic relations between South Korea and China over the past decade has been dramatic... numbers, direct bilateral trade between Korea and the PRC has gone from $4.4 billion in 1991, the year before the normalization of relations, to $41.1 billion in 2002 and has already reached $39.8 billion in just the first three quarters of 2003."2China's entry into the WTO had caused them to grow quite rapidly. The recent brisk exports from Korea to China have also been a key factor in the economic growth of China. This growth had caused demand for electrical equipment, semi-conductors and communication equipments which are the main exports of Korea. For an example, North Korea's trade volume hit a new record in 2004, approaching $1.38 billion. North Korea's exports to China topped $582 million, up 47.2 percent compared with 2003. Imports totaled $795 million, up 26.5 percent from the preceding year. North Korea's total trade volume for 2005 reached nearly $2.9 billion. 3 This increase in North Korea's exports to China can be attributed to the increase in exports of crabs, fish, and shellfish; metal products; and textile goods. It is also interesting to note that the North's increase in imports from China is mainly attributed to the increase in the import of energy elements such as crude oil and foods such as frozen pork. Imports of different types of grains like rice and wheat are also noticeable.According to L. Gordon Flake, Executive Director, Mike and Maureen Mansfield foundation, "Korea's imports from China are currently undergoing a structural transformation. China has begun to manufacture electronic components because China is undergoing rapid industrialization. It means that both Korea and China are entering into a highly a competitive market with regard to electrical equipments. This bilateral economic exchange between China and Korea can create