The restructuring of China-ROK economic and trade cooperation

Editor's note: Liu Chunsheng, a special commentator on current affairs for CGTN, is an associate professor at the Beijing-based Central University of Finance and Economics. The article reflects the author's opinions and not necessarily the views of CGTN.

President of the Republic of Korea (ROK) Lee Jae Myung's state visit to China from Jan. 4 to 7 was accompanied by senior officials and a major business delegation of over 200 enterprises led by the heads of the country's four major conglomerates: Samsung, SK, Hyundai, and LG. This marks the highest-level visit from the ROK business community since 2019, reflecting ROK's urgent need to consolidate economic and trade ties with China amid global economic restructuring and supply chain volatility. It signals a transformation in bilateral cooperation – from a traditional vertical division of labor toward high-level collaborative development. In key sectors such as semiconductors, batteries, and new energy vehicles, complementary strengths and deeper collaboration will inject new momentum into both economies and bolster regional industrial chain stability.

The closeness of China-ROK economic relations is undeniable. China has been the ROK's largest trading partner for 21 consecutive years, with bilateral trade reaching $328.08 billion in 2024. ROK semiconductor exports are highly reliant on the Chinese market, while key mineral supplies like rare earths largely come from China. Conversely, China's manufacturing upgrade benefits from ROK expertise in high-end chips and precision manufacturing. The high proportion of intermediate goods trade has created a deeply intertwined industrial ecosystem. The presence of the conglomerate leaders reaffirms this "symbiotic" relationship. Against rising global protectionism and supply chain realignment, the stability and inclusiveness of the Chinese market have become a crucial hedge for ROK against external risks.

The delegation's focus aligns precisely with the core areas of industrial complementarity. In semiconductors, ROK holds world-leading manufacturing technology. Samsung's Xi'an plant, in China's Shaanxi Province, accounts for 40 percent of its global NAND flash production, while SK Hynix's Wuxi plant, in Jiangsu Province, has fully adopted domestically produced hydrogen fluoride in China. Cooperation has evolved beyond simple investment into technical co-development. Samsung now aims to upgrade processes in Xi'an, and SK Hynix explores packaging and testing collaboration with Yangtze Memory Technologies. Such moves are driven by China's vast market and improved industrial support, helping ROK firms mitigate the impact of US technical controls. For China, this cooperation aids in filling gaps and upgrading its semiconductor supply chain, creating mutual benefits.

New energy vehicles and batteries have emerged as new growth areas. China is the world's largest new energy vehicle (NEV) market with a complete industrial chain, while ROK possesses deep expertise in power batteries and hydrogen fuel cells. LG Energy Solution and SK On consistently rank among the top globally in battery installation capacity. Hyundai's earlier capital increase cooperation with China's BAIC to promote electrification is a successful example of complementary partnership. This visit may see Hyundai deepening cooperation in intelligent driving and LG advancing joint R&D in solid-state batteries with Chinese partners. This "Chinese market + South Korean technology" model can help South Korean automakers regain footing in China while accelerating global NEV technological iteration and green economy development.

Notably, China-ROK economic cooperation is restructuring from "vertical division" to "horizontal collaboration." While past cooperation often combined South Korean technology and capital with Chinese labor, China has achieved technological breakthroughs in many fields. Both sides now find new common ground in cutting-edge areas like AI and the digital economy. The ROK government aims to be among the world's top three AI powers by 2030, while China holds advantages in AI applications and infrastructure. Samsung and SK are likely to seek cooperation in AI chip applications and large-scale model development during this visit. This shift can enhance both sides' global competitiveness, foster new economic growth points, and inject lasting vitality into bilateral relations.

Of course, challenges remain. Intensifying US-China strategic competition has pressured ROK to "decouple" from China in semiconductors and new energy. Yet reality dictates that the ROK's semiconductor industry cannot leave the Chinese market, and its battery sector relies on Chinese supplies. "Decoupling" would be self-harming. Additionally, growing competition in some industries requires both sides to pursue win-win outcomes through deeper cooperation, not confrontation. This calls for improved cooperation mechanisms, strengthened policy coordination, and enhanced intellectual property protection.

Long-term prospects for bilateral economic and trade cooperation are broad. Advancing the second phase of the China-ROK free trade agreement negotiations will further liberalize trade and investment. The institutional benefits of the Regional Comprehensive Economic Partnership open cooperation opportunities in third-party markets like Southeast Asia. Amid a sluggish global recovery and geopolitical tensions, as major East Asian economies, deepening China-ROK cooperation serves both countries' interests and contributes significantly to regional economic stability. The delegation led by ROK's conglomerates brings not only potential deals but also confidence and expectation for the future of bilateral relations.

Lee's visit and the accompanying business delegation mark an important milestone. They indicate the ROK business community's recalibrated understanding of the Chinese market and underscore the irreplaceability of bilateral cooperation. Going forward, by adhering to mutual benefit, focusing on industrial innovation and supply chain collaboration, and deepening cooperation in semiconductors, new energy, AI, and other key fields, both sides can build a more stable and efficient economic partnership. This will strongly support high-quality economic development in both nations and contribute East Asian wisdom to the stability and prosperity of global industrial and supply chains.