Beijing more strategic in approach than Seoul

China is much more “strategic” than Korea in free trade agreement negotiations, so Seoul should make extra efforts to translate the strategic significance Beijing places on the FTA into economic profit, according to one trade expert.

It is difficult to find a shared trait in the countries that have concluded an FTA with China, Jee Man-soo, head of China team at the Korea Institute for International Economic Policy said in a report titled “Korea-China FTA: Strategies and Benefits.”

China places greater emphasis on accompanying effects rather than direct economic benefits, the report says. In trade negotiations, Beijing seeks regional dominance, better relations with energy-rich countries, and a stable economy for Greater China ― including Hong Kong, Macau, Singapore and Taiwan. Beijing also considers complex geopolitics with neighboring countries.

Jee said China takes a strategic approach to negotiating FTAs as well. The duration, scope and framework of negotiations vary depending on strategic goals.

From an economic point of view, an FTA with Korea is seen to bring great benefit to both countries.

Korea is China’s third-largest trading partner behind the U.S. and Japan. Moreover, more than 20,000 Korean companies are investing in China.

The core industries of Korea, including electronics, semiconductors, steel, shipbuilding and petrochemicals are also core industries that China is focusing on for its future. So clashes are almost certain in negotiation over those industries.

Still, Seoul should not limit its negotiations to economic aspects, Jee said. He notes that China has been proactive in its attitude toward an FTA with Korea.

From a non-economic perspective, Beijing’s move to work out a free trade deal with Korea can be seen as a response to the Korea-U.S. FTA, which has been settled amid complex Sino-U.S. relations. Or it could be a way to cement its leadership in East Asia and secure political stability on the Korean peninsula.

The researcher suggests Korea use China’s strategic significance as leverage in negotiations.

By Chun Sung-woo  (swchun@heraldcorp.com)