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Friday, July 4, 2014, 10:01

Ties that bind

By KRISTINE YANG in Hong Kong / Asia Weekly

Ties that bind

One year after South Korean President Park Geun-hye visited China, Chinese President Xi Jinping is reciprocating with his first presidential state visit to South Korea.

China attached great importance to the relationship with South Korea and would like to work together to improve the strategic cooperative partnership, Xi said in a speech upon arrival.

He hailed the South Korean people’s pursuit of a “Second Miracle on the Han River” and a new era of national happiness, saying it is a society full of vitality and energy as well as a country with an increasing international influence. “Second Miracle on the Han River” is a nod to the “economic miracle” Park’s father set in motion more than three decades ago. Park is the daughter of Park Chung-hee, who ruled South Korea for 18 years until his assassination in 1979.

South Korea is the only country Xi is visiting on this two-day trip ending July 4. Observers say the trip could mark the beginning of a honeymoon period in the relationship between two of Asia’s largest economies.

He is accompanied by a delegation of more than 250 businessmen, the largest ever from China to South Korea, including several tycoons such as Jack Ma, founder of Alibaba, and Robin Li, founder and CEO of Nasdaq-listed Baidu.

Daniel R Russel, the US assistant secretary of state for East Asian and Pacific affairs, called Xi’s visit an “extraordinary milestone” which should help with much-needed cooperation. This is said to be the first time a senior US official has commented to the media on a planned trip by a Chinese leader.

Expectations are high that during Xi’s visit the two countries will ramp up negotiations for a free trade agreement (FTA) that could generate billions of dollars in spin-off benefits, but one that has been in negotiation for many years.

“The FTA between China and Korea would be very significant. Currently, Korea is dealing more with big economies like the US and Europe while China may have more FTAs with smaller countries,” says Cho Chul, director of the Center for Industry and Globalization under the Korea Institute for Industrial Economics and Trade, the country’s only government-funded research institute specializing in industrial research.

“China would be the biggest partner for Korea, and Korea would be the biggest for China as well. The ties between the two countries should be increasingly close,” says Cho.

Negotiations for the proposed FTA have been neither smooth nor fast. There have already been 11 rounds of talks but a consensus remains elusive.

“As China’s manufacturing is stronger, they might not be willing to open much in this area and Korea also has its concerns. The difference in the two countries is quite big,” says Cho.

He says that although the meeting of the two presidents might not see the FTA signed immediately, “they have to show some friendly gestures, there must be some progress. It will still take some time to finally make the deal, but it (might) be a shorter time.”

As its biggest neighbor, China has become increasingly important for South Korea.

Exports to China from South Korea have grown 10 times in value since 2000 and now represent more than a quarter of the country’s total exports. Trade between China and South Korea topped $256 billion in 2012.

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