The Development and Prospect of Two-way Investment between China and Korea

Abstract

It is well known that China and Korea have a long history of close relations. However, this situation was blocked during the cold war. But economic and trade relations have recovered since the 1980s. In 1992, China and Korea established diplomatic relations. By now, a comprehensive partnership of cooperation has been built, and both have forged strong ties in all areas. In economic aspects, China is Korea’s biggest export and investment market and surplus source; Korea is China’s 6th ranking trade partner and 4th  Foreign Direct Investment (FDI) source. In 2007, bilateral trade volume has reached US$158.9 billion. This paper discusses the FDI between the two countries and is structured as follows: Part1 attempts to review the development and characteristics of FDI from Korea to China; Part 2 describes the basic characteristics of China’s current direct investment in Korea; Part 3 and Part4 discuss the basic conditions and challenges for the further development of FDI between the two countries; Part 5 offers several approaches to promote FDI between China and Korea. In this paper Korea refers to the Republic of Korea (South Korea).