South Korea fears rise of China, citing trade rivalry
Reuters in Seoul 14 April 2009
South Korea expressed concern yesterday about China’s rise as a global economic power, saying its own economic growth could be harmed.
The Ministry of Strategy and Finance said in “reference material” that China’s growing clout was likely to intensify competition between the countries, especially in export markets and energy diplomacy.
That contrasted with Seoul’s past description of China’s economic growth as both an opportunity for South Korea to keep producing goods for other markets using cheap labour and a threat to its own exports.
“Competition with China is expected to intensify in such export markets as Latin America and Asia because China’s recent currency-swap arrangements will enable yuan to be used in trade settlements,” the ministry said in the eight-page note.
China has grabbed media headlines around the world for its rapid emergence as a driver of global economic growth. More recently it has been seen as the potential saviour of the global economy, which is mired in the worst recession in decades.
“In response to the spreading ‘Beijing consensus’, our country also needs to adopt pre-emptive external economic policy,” the finance ministry said, referring to a phrase used to describe China’s growing influence.
Analysts in Seoul said South Korea lacked the economic scale or resources to compete with its giant neighbour in global markets and should focus its diplomatic and economic capabilities in select areas where it excelled. “China would pay much higher prices than the market value when acquiring energy projects abroad, so [South Korea] can’t compete with it,” Samsung Economic Research Institute senior fellow Park Bun-soon said.
South Korea’s efforts to secure more offshore energy supplies hit a snag early this year after Nigeria cancelled exploration rights at oilfields first awarded in 2005.
“If China has ‘hard power’, we have to think about using ‘soft power’,” Dr Park said, referring to South Korea’s non-governmental organisations and corporate networks.
South Korea, which lacks natural resources, has relied heavily on exports to power its rise from the rubble of the 1950-53 Korean war to become the world’s 13th-largest economy.
But Chinese industry, with its abundance of cheap labour and strong government backing, has emerged as a strong rival in key export markets for products ranging from clothes to electronics, sparking concerns it could jeopardise South Korea’s efforts to catch up with the world’s most developed economies.
Seoul established diplomatic ties with Beijing in 1992 and China is now South Korea’s biggest trade partner and main investment destination.
China’s average income per person is about one-eighth of South Korea’s, but the most populous nation is the world’s third-largest economy, with output three times as big as Korea’s, the World Bank says.
South Korea’s two-way trade volume with China amounted to US$168 billion last year, accounting for a fifth of its total trade volume, and nearly 20,000 South Korean companies were operating in China, South Korean government figures show.
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South Korea fears rise of China, citing trade rivalry
Reuters in Seoul
14 April 2009
South Korea expressed concern yesterday about China’s rise as a global economic power, saying its own economic growth could be harmed.
The Ministry of Strategy and Finance said in “reference material” that China’s growing clout was likely to intensify competition between the countries, especially in export markets and energy diplomacy.
That contrasted with Seoul’s past description of China’s economic growth as both an opportunity for South Korea to keep producing goods for other markets using cheap labour and a threat to its own exports.
“Competition with China is expected to intensify in such export markets as Latin America and Asia because China’s recent currency-swap arrangements will enable yuan to be used in trade settlements,” the ministry said in the eight-page note.
China has grabbed media headlines around the world for its rapid emergence as a driver of global economic growth. More recently it has been seen as the potential saviour of the global economy, which is mired in the worst recession in decades.
“In response to the spreading ‘Beijing consensus’, our country also needs to adopt pre-emptive external economic policy,” the finance ministry said, referring to a phrase used to describe China’s growing influence.
Analysts in Seoul said South Korea lacked the economic scale or resources to compete with its giant neighbour in global markets and should focus its diplomatic and economic capabilities in select areas where it excelled. “China would pay much higher prices than the market value when acquiring energy projects abroad, so [South Korea] can’t compete with it,” Samsung Economic Research Institute senior fellow Park Bun-soon said.
South Korea’s efforts to secure more offshore energy supplies hit a snag early this year after Nigeria cancelled exploration rights at oilfields first awarded in 2005.
“If China has ‘hard power’, we have to think about using ‘soft power’,” Dr Park said, referring to South Korea’s non-governmental organisations and corporate networks.
South Korea, which lacks natural resources, has relied heavily on exports to power its rise from the rubble of the 1950-53 Korean war to become the world’s 13th-largest economy.
But Chinese industry, with its abundance of cheap labour and strong government backing, has emerged as a strong rival in key export markets for products ranging from clothes to electronics, sparking concerns it could jeopardise South Korea’s efforts to catch up with the world’s most developed economies.
Seoul established diplomatic ties with Beijing in 1992 and China is now South Korea’s biggest trade partner and main investment destination.
China’s average income per person is about one-eighth of South Korea’s, but the most populous nation is the world’s third-largest economy, with output three times as big as Korea’s, the World Bank says.
South Korea’s two-way trade volume with China amounted to US$168 billion last year, accounting for a fifth of its total trade volume, and nearly 20,000 South Korean companies were operating in China, South Korean government figures show.
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