China Eyes Investment Opportunities in South Korea

SEOUL, July 5 (Korea Bizwire) – China’s renewed interest in investment opportunities in South Korea is driving surging investment growth in the east Asian neighboring country. 

The world’s second-largest economy especially has keen interest in Korea’s major projects largely located in western areas which include Saemangeum reclamation project, Incheon Free Economic Zone and Gyeonggi Province, much closer to China in terms of real distance. 

Xi Jinping’s recent first visit to the Korean Peninsula as China’s president to Seoul, not Pyongyang, has especially rekindled a growing interest in the business cooperation and investment opportunities between the two nations. 

Chinese investment into Korea during the first half this year recorded around US$766 million, a whopping 670 percent up over the same period of the previous year and nearly doubled over South Korea’s total investment volume in China last year. 

South Korea’s Saemangeum Seawall Project

The Saemangeum lay at the mouths of the Dongjin and Mangyeong Rivers, on the coast of Jeollabuk-do. It is just south of the estuary of the Geum River. Neighboring districts include Gunsan City, Buan County, and Gimje City. The project of filling in the estuary began in 1991, but was slowed by a series of court actions by environmentalists. The completed seawall is some 33 kilometers long, and replaces a coastline that was once more than 100 kilometers long. (Wikipedia)

The Chinese investors are, in particular, eyeing China valley in Saemangeum area — a designated China-themed commercial land in the artificially created economic area, along with Gyeonggi Province and Incheon free economic zone, according to Korea Trade-Investment Promotion Agency (KOTRA), a state-funded trade and investment promotion organization. 

Last year, the two countries agreed to designate the China-Korea Common Economic Space in the Saemangeum project, a first such inter-national economic cooperation between China and Republic of Korea. The Korean government plans to transform around 400 square kilometers of newly reclaimed land into a multi-purpose mega city equipped with high-tech industries, educational facilities, research facilities, coupled with residence and commercial accommodation areas by 2030. 

Breaking down Chinese investment into Korea sees the G2 economy invested largely in Korea’s service sector: US$708 million, or 93% of investment in Korea in the first half this year, was centered on the nation’s service sector; Real estate, food and lodging industry accounted for 96 percent of China’s investment in Korean service industry. On the manufacturing sector, the Chinese invested US$51 million in various businesses including transportation machinery ($30 million) and electronics and electric business ($13 million). 

China money especially focused on South Korea’s “non-capital areas.” While the investment in the metropolitan area decreased 51.9 percent, their investment in Jeju ($497 million) and Gangwon Province $150 million) surged, in testament to their investment diversifying strategy which increasingly focuses on Korea’s non-metropolitan areas. 

The rush from Chinese investors has been prompted by China’s investment policy change: With only “notification” process, Chinese investors can place their money in the overseas investment opportunities; they had to acquire the government’s approval to be eligible for the overseas investment before the policy shift.  

Riding on the changing trend, KOTRA has recently held a road show event on July 3 aimed at the special audience of 123 Chinese business leaders who were accompanied by their President Xi Jinping, who visited Korea from July 3 to 5.

An official at KOTRA said, “With the meeting like this, we expect much increase in trade and investment between the two countries.”

Written by M. H. Lee (mhlee@koreabizwire.com) 

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