Bloomberg News

South Korea Inc. Joins Park on China Visit to Reshape Ties (1)

June 27, 2013

Park Joined by South Korea Inc. on Visit to China Seeking Trade

Park Guen Hye, South Korea's president, waves from an airplane as she embarks on a 4-day state visit to China in Seongnam, South Korea. Source: Yonhap News via Bloomberg

President Park Geun Hye arrived in Beijing today with the biggest-ever business delegation to join a South Korean leader’s state visit, signaling the importance she puts on China in boosting her nation’s economic fortunes.

Park will be joined by 71 executives, including Hyundai Motor Co. Chairman Chung Mong Koo, as her nation turns to its biggest trading partner and the world’s second biggest economy to spur growth that fell in 2012 to the slowest pace since 2009.

The four-day visit is a chance for Park, elected to a single five-year term in December, to pin down a free-trade deal as conglomerates such as Hyundai and Samsung Group (005930) look to tap China’s growing consumer class. Expanding trade ties may be crucial for Park to deliver on promises to boost employment to 70 percent by 2017 from 64.2 percent.

“South Korea’s future is increasingly the China relationship in terms of trade and investment,” said John Delury, assistant professor of East Asian Studies at Yonsei University in Seoul. “For a new South Korean president this is the top priority -- to get China right.”

Park’s interest in China -- she taught herself Mandarin and reads Chinese philosophy -- may help her as she tries to enlist the country’s support in pressing North Korea to abandon its nuclear program.

China, the North’s main ally, tightened enforcement of United Nations sanctions on the totalitarian regime and Communist leaders stressed the need for a nuclear-free peninsula during visits by two North Korean diplomats since late May. While Park campaigned on re-engagement with the North, she has taken a tougher line since becoming president.

Common Ground

China and South Korea are “really trying to design their approach to North Korea,” Delury said. “Both of them are groping a bit but they do have a good deal of common ground.”

The nuclear issue will come up when Park meets President Xi Jinping and other leaders, China Foreign Ministry spokeswoman Hua Chunying said yesterday. China sees Park “as an old friend,” Hua said June 18.

Park’s office has said a focus of the trip will be economic ties. Annual trade has grown at an average rate of 19 percent since 1992. More than 300 business leaders and government officials will attend a business forum in Beijing tomorrow. She will also push for progress on a free-trade agreement first announced in May 2012.

Trade Deal

China and South Korea still haven’t worked out details, making a deal unlikely for now, said Fang Xiuyu, a professor of Korean Studies at Fudan University in Shanghai.

Park will visit Xi’an, the location of a factory that Samsung Electronics Co. started building in 2012 to build memory chips. Construction is expected to be finished in 2014.

South Korea’s current-account surplus hit a record $8.6 billion in May, compared with $3.9 billion in April, as exports rose on mobile phones, semiconductor chips, and cars while imports dropped on a lower oil purchase price and weaker demand for imported consumer goods, the Bank of Korea said today.

Park comes to China as it grapples with its own troubles. A cash squeeze increases the chance that China will miss its economic growth goal of 7.5 percent this year. Park’s economy -- about six times smaller than China’s -- can’t compete on issues such as cheap labor and cheap exports, said Han Jae Jin, a research fellow at Hyundai Research Institute in Seoul.

Accept Reality

“We need to accept reality and work together with China, and pick our battles,” Han said.

Park’s visit reflects the shifting power balance in Asia. Like past leaders, she visited the U.S. in her first trip abroad, though she is breaking with precedent that saw South Korean leaders go to Japan next.

“This breaks the order established by her predecessors,” said a commentary in the state-run China Daily newspaper by Woo Jin Hoon, a guest professor at Renmin University in Beijing. “Park is visiting China ahead of Japan as it is more of a priority” in her foreign policy.

Eighty-three percent of South Koreans believe relations with China are more important than with Japan, a June 14-15 survey by Seoul-based Realmeter said. Sixty percent of 1,000 respondents said they see China staying neutral in any military clash between the two Koreas, Realmeter said. The poll had a 3.1 percentage-point margin of error.

China fought on the North’s side in the Korean War that ended with a 1953 armistice separating the two countries at the 38th parallel. The South was backed by the United Nations forces led by the U.S.

Park taught herself Chinese in her 30’s by watching language programs on public television, according to her 2007 autobiography. She recommends people read Chinese philosopher Feng Youlan’s “A History of Chinese Philosophy,” which guided her through “times of difficulty,” she said in May.

“Park likes reading Chinese books and understands Chinese,” Fang said. “Her vision is very similar to Xi’s. They have lots of shared ideas about cooperation in East Asia.”

To contact the reporters on this story: Henry Sanderson in Beijing at hsanderson@bloomberg.net; Sangwon Yoon in Seoul at syoon32@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net


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