Xi's South Korea visit solidifies economic ties

Progress seen on important business issues

Chinese President Xi Jinping's recently concluded two-day visit to South Korea is expected to yield new opportunities for economic cooperation between the two countries. The Global Times interviewed three business experts to ask for their opinions on bilateral trade, yuan clearance and e-commerce cooperation.

Lu Qianjin, associate professor of finance at Fudan University

The currency swap deal between China and South Korea may be expanded after President Xi's visit, which could further facilitate trade between the two countries by reducing costs. And with negotiations between the two countries over the establishment of a free trade zone continuing - some say a deal could be completed by the end of this year - trade could increase further in the future.

Liquidity has become a problem for some of the other currency swap programs opened between China and its East Asian neighbors. This shouldn't have too much of an impact on the economies of either China or South Korea as bilateral investment and trade will continue to expand.

The renminbi's path toward internationalization mainly centers around currency swap agreements and cross-border trade denominated in the Chinese currency. The financial reforms being carried out in Shanghai's free trade zone will also thrust the country's currency to the forefront of the global market.

Li Jian, research fellow at the Chinese Academy of International Trade and Economic Cooperation

Both China and South Korea have maintained steady economic growth since the global financial crisis. Moreover, South Korea has made enormous investments in the Chinese market and has nearly unseated Japan as China's largest trading partner in East Asia.

Though it is still a developing country, China's massive market potential provides a solid foundation for cooperation between itself and South Korea. For evidence of the growing trade relationship between the two countries, one can look to the fact that so many South Korean brands - Samsung being a prime example - have become household names in China.

Since China first proposed the creation of a network of free trade zones in several overseas markets in 2007, trade relations between China and the Association of Southeast Asian Nations (ASEAN) have made remarkable progress. Given that China and South Korea have a strong demand for each other's goods and services, and the policy environments in each country are stable, there is surely an urge to complete a free trade agreement as soon as possible. If China and South Korea can sign a free trade agreement by the end of the year, it would help both countries tap each other's market advantages.

Zhao Ying, research fellow at the Chinese Academy of Social Sciences' Institute of Industrial Economics

Chinese President Xi Jinping's trip to South Korea last week will further deepen the industrial cooperation between the two countries.

Xi was accompanied?by?a?sizable?business?delegation, which reportedly included Jack Ma Yun, founder of China's largest e-commerce platform Alibaba Group, and Robin Li Yanhong, president?of?Baidu,?China's?top?search?engine?operator.

The government brought this delegation of business leaders to South Korea as a way to promote dialogue between entrepreneurs in both countries and to indicate its support for deepening bilateral business ties.

Many Chinese Internet companies are now thinking of expanding into overseas markets such as South Korea, and Chinese officials are likely to be supportive of investments that support such goals. At the same time, China is also ready to welcome South Korean enterprises that want to invest here.

Business ties between the two countries have become quite mature in certain areas, such as the electronic equipment and computing industries. In the future, this cooperation is expected to expand into other fields, such as IT and entertainment. And as many know, South Korea boasts a vibrant and well-developed cultural industry which could expand into China.

As is always the case, companies from both nations might run into obstacles during the course of their overseas development. Generally speaking though, most companies that are capable of expanding abroad have risk controls in place and have prepared for the challenges they will likely encounter.