Economic relations between South Korea and China Essay

Economic relations between South Korea and China - Essay Example 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 the year 2000, output had quadrupled. The relations between Korea and China had ceased during The Cold War, but the reestablishment in 1992 of formal diplomatic relations between the two countries, the same led spurred a surprisingly rapid growth of bilateral economic exchanges. Before the establishment of official diplomatic relations, the bilateral trade volume between the two countries was not significant. However, since official diplomatic relations were established, trade relations between the two countries have changed dramatically. Trade volumes have increased explosively, except for a temporary lag in the year 1998 when the Korean economy faced serious problems in the aftermath of the Asian financial crisis. Since then, the two countries have maintained relations of significant economic interdependence. From this data, it appears that Korea’s trade with China has increased since the year 1992. In the 1992-2003 time frame, exports of Korean goods to China increased at an annual rate of 26.5 percent, while Korea’s imports of Chinese goods increased at an annual rate of 17.5 percent. 1 The share of exports to China out of Korea’s total exports rose from 3.46 percent in 1992 to 18.11 percent by 2003; the share of imports of China rose from 4.56 percent of Korea’s total imports to 12.25 percent by 2003.2 In 2001, China became Korea’s second-largest export destination, overtaking Japan. The reasons for such successful bilateral economic exchanges are economically complementary structures, geographic proximity and cultural familiarity. 3 The recent brisk exports from Korea to China are due, at least partially, to the fact that the Chinese economy, because of China’s entry into the World Trade Organization (WTO), is