Trade Resources Policy & Opinion Gao Hucheng: To Cooperate for the Prosperity of Regional Development with the Help of the China-Korea Free Trade Agreement

Gao Hucheng: To Cooperate for the Prosperity of Regional Development with the Help of the China-Korea Free Trade Agreement

People’s Daily published the signed paper of Minister of Commerce Gao Hucheng’s To Cooperate for the Prosperity of Regional Development with the Help of the China-Korea Free Trade Agreement on June 2. The full text follows:

The Free Trade Agreement between the Government of the People’s Republic of China and the Government of the Republic was officially signed in Seoul, the capital of Korea, on June 1, marking that the construction of the China-Korea Free Trade Area has officially completed the system design and will make sail soon.

The signing of the China-Korea Free Trade Agreement is a major event in the relationship of the two countries. Just as the President Xi Jinping and the President Park Geun-hye consistently pointed out in the exchanged congratulation letters that this is a landmark event which will not only inject strong power into the economic growth of the two countries, bring more tangible benefits to the peoples of the two countries, promote the bilateral trade and economic relationship to realize a new leap, and construct the institutional framework to improve the cooperative relationship of the two countries, but also make a greater contribution to the economic integration process of the East Asia regions even to the global economic development, and promote the regional economic integration of the Asian-Pacific region to made an important step.

New Engine of Promoting the Economic Growth of the Two Countries

Chinese economy and Korean economy are highly complementary and enjoy a favorable cooperative foundation. The degree of the bilateral trade and economic integration is steadily on the increase. The feasibility research of the China-Korea Free Trade Area jointly carried out by the two countries reaches a consistent conclusion, that is, the establishment of the China-Korea Free Trade Area will made a greater contribution to the economic growth of the two countries. Based on this consensus, China and Korea officially launched the free trade negotiations in 2012 and the two countries only use 3 years to reach a high-level free trade agreement. This is the significant embodiment of the high complementarity of the economy, the objective requirement of the high integration of the bilateral trade and economy and the inevitable result of the profound development of the relationship between the two countries.

Leaders of the two countries proceed from the whole situation of the relationship of the two countries, jointly promote the construction of the China-Korea Free Trade Area, and politically as well as powerfully motivated the earlier ending of the negotiations. . In July 2014, when visiting Korea, the President Xi Jinping jointly proposed the goal of completing the negotiations by the end of the year with President Park Geun-hye . In October 2014, when the Premier Li Keqiang held the meeting with President Park Geun-hye in Italy, both sides reconfirmed this goal. By joint efforts of both sides, this dream finally comes true.

In recent years, China and Korea have enjoyed the favorable climatic, geographical and human conditions and jointly created the overall direction of the future, and the trade and economic relationship has realized a great-leap-forward development. When both sides launched the feasible research in 2004, the trade volume between China and Korea was only US$90 billion, but this number jumped to almost US$300 billion in 2014, with an annual growth of 22.3%. At present, China is the biggest trade partner of Korea, the largest export market, the biggest source of imports, the largest overseas investment destination, the biggest source of overseas students and the largest overseas tourism destination. Korea is one of the most important trade and investment cooperation partners of China too. The bilateral trade volume of the two countries exceeds one fifth of the total foreign trade volume of Korea and the sum of the trade volume between Korea and the United States and Korea and the EU. Every Korean can use Chinese products in their daily life and every Chinese can also use the Korean products. The investment from the Korean enterprises to China accumulates to more than US$70 billion and the direct investment from the Chinese enterprises to Korea also reaches US1.8 billion. The two countries continuously deepen the practical cooperation in all fields and the bilateral trade and economy enjoy a high complementarity and integration, which inject unstoppable power into the economic growth of the two countries.

At present, the world economy is still in the deep phase of adjustment with mixed risks such as low growth, low inflation, low requirement and high unemployment, high debts and high foam. All countries are faced with bigger economic downward pressure. History and practice prove that the continuously extending trade and investment is the antidote to the declining economy and the engine to promote the economic growth. Both Chinese and Korean governments believe that the China-Korea FTA will become the new growth power of the economy of the two countries. According to the measurement of China’s Development Research Center of the State Council, the China-Korea FTA will drive the actual GDP of China to increase 0.34 percentage points and that of Korea 0.97 percentage points. Under such circumstance, China and Korea, as the second and the fourteenth largest economies in the world, reach this high-level free trade agreement which will release a strong signal to promote the economic growth by opening up and cooperation. This will not only have a significant meaning for the economic development of the two countries, but also play a positive role in promoting the economic prosperity and stability of the Asian-Pacific region and even the whole world.

A Good Deed Benefiting the Industries and Peoples of the Two Countries

“Neighbors wish each other well, just as loved ones do to each other.” The China-Korea FTA enjoys great popularity because it is deeply rooted in the great complementarity of the economic structures of the two countries widely embodying the common interests of the economic circles and the peoples of the two countries. Both China and Korea have made high-level commitment to each other in such fields as trade in goods, service trade, bilateral investment and relevant rules and have realized the high-level, comprehensive goal with generally balanced interests proposed by the leaders of the two countries.

Enterprises of the two countries will obtain greater development opportunities. The China-Korea Free Trade Area is the China’s biggest free trade area so far with regard to trade volume of countries and the fields covered.. In terms of trade in good, China will finally eliminate tariffs of 91% products to Korea, covering 35% of the import volume of Korea. At the same time, Korea will finally eliminate tariffs of 92% products to China, covering 91% of the import volume of China. After the implementation of the China-Korea FTA, Chinese industries and enterprises such as textile and garment, nonferrous metals and steels can further reduce the export cost to Korea and improve the shares in the Korean market. The Korean industries and enterprises such as mechanical equipment and liquid crystal display will also strut themselves in the Chinese market and better share the vast business opportunities of 1.3 billion Chinese people.

The peoples of the two countries will have more good-quality goods. After the implementation of the China-Korea FTA, Chinese consumers will enjoy more home appliances and fashionable products produced by Korea such as electric cooker, microwave oven, household chemicals and dress as well as Korea featured food. Korean consumers can also buy Chinese products such as fruits, vegetables, clothing and shoes with more tangible benefits. By developing the free trade area, the ordinary people can enjoy the actual benefits of the economic growth.

The industries of the two countries will expand more cooperative fields. The signing of the China-Korea FTA is conducive to giving play to the comparative advantages of the two countries. In the trade of the two countries, parts and intermediate products account for a larger share. The elimination of the trade barriers of the two countries is conducive to expanding the trade of intermediate products, promoting the profound integration of the industrial chains of the two countries, improving the status of the division of labor in the global value chain and jointly expanding the shares of the global market. With regard to the service trade and investment, China resolves the concern of Korea on such aspects as law, construction and environment and Korea meets the core charge of China on such aspects as courier and construction.

Booster to promote Asia-Pacific regional economic integration

Since the international financial crisis, the international balance of power has gone through profound changes. Trade and economic rules faced reconstruction. Multilateral trading system had a hard time while and the regional economic cooperation has been ascending. As a hotspot region of global FTA construction, the Asia-Pacific region has new emerging FTAs of higher level constantly.

China and South Korea are important economies in Asia-Pacific regions, with their combined economic volume taking up 25% of that of the total members and value of trade in goods taking up 29% of the total. A high-level FTA is of great significance to promote Asia-Pacific regional economic integration procession. The signing of China-South Korea FTA reflects that the two countries have the ability to play a bigger role in contributing to trade and economic arrangement in Asia-Pacific region.

China-South Korea FTA contains widespread contents including “new topics in the 21th century” like e-commerce, competition policies and environment, and has introduced the content of local economic cooperation for the first time. The two countries will launch the second stage of negotiation on trade in service and investment by the mode of pre-access national treatment together with a negative list within two years after the FTA’s coming into effect. With deep oriental wisdom, the two sides boldly explored and sought common ground while reserving differences, and reached consensus on the systematic arrangement concerning further strengthening cooperation and regulating integration in the premise of balanced interest. That will play an extensive and exemplary role in Asia-Pacific regional rules integration.

As an important FTA in Northeast Asia, the China-South Korea marks an important step of Asia-Pacific FTA construction and will greatly advance the China-Japan-South Korea FTA, the Regional Comprehensive Economic Partnership ( RCEP )and the Free Trade Area of the Asia-Pacific (FTAAP) and also contribute to the multilateral trade negotiations. The China-South Korea FTA is an important joint of China’s “Belt and Road” initiative and South Korea’s Eurasian initiative, and will exert profound and positive influence on jointly promoting “Belt and Road” construction and Eurasian economic integration.

The China-South Korea FTA is an important reflection of “building new open economic system” proposed in the third plenary meeting of the 18th CPC Central Committee and is an important link of “accelerating FTA strategy from the neighborhood and forming high-standard FTA network facing the globe”, displaying China’s confidence and resolution of being positively engaged in economic globalization and regional economic integration as well as that of comprehensively deepening reform and expanding opening-up. China will unswervingly adhere to the mutually beneficial opening strategy, insist in the righteous idea of morality and benefit, comprehensively develop open economic system, strengthen and expand win-win cooperation with countries in Asia and the world, and strive to better benefit the neighboring countries.

Today, the China-South Korea relations climb to a higher point, so we should open our horizon for great goals. The signing of China-South Korea FTA is a perfect ending and a hopeful starting for further innovation, development and potentiality. We should take this opportunity to promote countries in Asia to raise opening level, build an open and integrated development landscape, make the great land and wide sea become a large stage of China-South Korea cooperation, integrate the good dream of both countries into a greater Asian dream and make more contribution to the prosperous development of Asia and even of the world.

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