China, South Korea should deepen third-country cooperation under Belt and Road Initiative: expert

Xi Jinping welcomes his South Korean counterpart Moon Jae-in to the Great Hall of the People on December 14, 2017. Photo: EPA-EFE

A researcher from a South Korean government-backed think thank has cast an envious eye at Japan, which is expanding economic cooperation with China in third countries under the Beijing-led Belt and Road Initiative.

At a China-South Korea economic and trade cooperation forum held last week in Beijing, Lee Hyun Tai, associate research fellow at the Chinese Economy Department of the Korea Institute for International Economic Policy, a think tank affiliated to the South Korean government, marveled at the "great achievements" made by China and Japan in launching cooperation in third countries.

"We have never thought of China and Japan making advance in launching cooperation in third countries. South Korea feels very envious about it ... So, China and South Korea should positively tap the cooperation potential at state and corporate levels," said Lee at the forum organized by the Chinese Ministry of Commerce and the South Korean Ministry of Trade, Industry and Energy, according to Caixin. The forum focused on discussion about the prospects and challenges in China-South Korea cooperation in third countries.

The forum came two months after China and Japan successfully held their first Third-Party Market Cooperation Forum in Beijing, where 52 agreements, which allow the two countries to launch economic operation in third countries under the Belt and Road Initiative, were inked. The agreements involve areas including infrastructure, finance, logistics and information technology.

The third-country cooperation between China and Japan is seen by experts as a new pillar for the two countries, with Tokyo previously considering the Belt and Road Initiative as a threat to its political and economic influence in Asia. The two neighboring countries are reportedly poised to launch their first big Belt and Road infrastructure project, which is related to extending the Bangkok Mass Transit System, which currently connects the Phaya Thai Station in central Bangkok with the Suvarnabhumi International Airport, by 50 kilometers to the suburban airports.

The Belt and Road Initiative, which was proposed by Chinese President Xi Jinping in 2013, is a massive development strategy that focuses on infrastructure connectivity and economic collaboration among Eurasian countries.

Actually, South Korea is even more suitable compared to Japan, which has maritime disputes and a war-time legacy, in taking part in China's Belt and Road Initiative, thanks to the robust trade exchanges between the two countries and Seoul's international development policies that are complementary with the Chinese strategy.

In 2017, the trade volume between China and South Korea amounted to $280 billion, a 10.9 percent growth from a year earlier. And the China-South Korea free trade agreement, which is under negotiation, is expected to expand the two countries' cooperation in the service and investment fields.

Since he took power last year, South Korean President Moon Jae-in has put forward the New Northern Policy and the New Southern Policy, which share common goals with China's Belt and Road Initiative. The New Northern Policy aims to connect South Korea with Northeast China, Russia and even the whole Eurasian continent, with a focus on cooperation in infrastructure construction and energy, while the New Southern Policy sees Southeast Asian countries including India as top priority, which Seoul depends on to expand its economic and diplomatic clout in the region. The countries that South Korea wants to cooperate with are also covered by the Belt and Road Initiative.

During his first state visit to China after his inauguration as president, Moon stressed at a forum that his New Northern and Southern Policies shared the same value with the Belt and Road Initiative and called for win-win cooperation in third countries.

In the past several decades, South Korea has deepened economic and trade ties with Southeast Asia, as the role of Southeast Asian countries in the global industrial chain has enhanced.

At last week's forum, Lee said that Southeast Asian countries such as Vietnam and Malaysia could be the first countries where South Korea and China could launch third-country cooperation in areas of culture, education, tourism, logistics and service, with projects being funded by the Asian Infrastructure Investment Bank and other government-backed lenders.

"South Korea and China could learn from the China-Japan third-country cooperation," said Lee.

Some experts said that in such third-country cooperation China could provide "hardware" like capital and infrastructure while South Korea could offer "software" like technology, market experience and legal service.

However, there are also some uncertainties in the third-country cooperation.

Economically, South Korean companies remain anxious about possible theft of their advanced technologies during the cooperation with China in third countries, especially in the field of international engineering construction, which South Korean companies are good at.

Politically, potential disagreements between the two countries over security issues could cast shadow on third-country cooperation. For instance, in the past two years, the deployment of the US Terminal High Altitude Area Defense system in South Korea soured the relationship between China and South Korea. The anti-missile system led to the boycotts against South Korean businesses in China, with retail group Lotte Group even reluctantly withdrawing its supermarket business from China.

"Indeed, politics and business are interactive. But the THAAD issue would not have a negative impact on the two countries' economic and trade cooperation in the long term as businessmen always seek profit," said Lee.

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