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Chinese president's South Korea trip expected to advance FTA talks

Chinese President Xi Jinping's visit to South Korea on Thursday and Friday is expected to greatly advance the negotiations on a bilateral free trade agreement (FTA).

With an eye on a comprehensive, balanced and high-level FTA as soon as possible, China and South Korea launched the negotiations in May 2012 and have conducted more than 10 rounds of talks.

The China-South Korea FTA, when finalized, will help the two countries improve mutual complementarity of markets and strengthen the foundation for regional economic integration, said Lee Hee-Ok, professor at the Seoul-based Sungkyunkwan University.

China and South Korea should speed up negotiations on the free trade pact and reach an agreement at an early date, said Zha Daojiong, a professor with the School of International Studies in Peking University.

Both countries should encourage more enterprises to participate in the FTA and further unleash the huge potential in bilateral economic and trade cooperation, Zha said.

Meanwhile, Xi's South Korea trip, his first since he took office last year, will provide an opportunity for the two sides to further deepen economic and trade cooperation by identifying the converging points in their respective long-term economic strategies and exploring new cooperation potential.

Since China and South Korea forged diplomatic relations in 1992, bilateral economic and trade relations have developed in leaps and bounds.

Two-way trade surpassed 270 billion U.S. dollars in 2013, an increase of 7 percent year on year, equalling South Korea's trade volume with the United States and Japan combined.

China is South Korea's No.1 trading partner, largest export destination and import source, and No.1 destination of overseas investment. South Korea is China's third largest trading partner and fifth largest source of foreign direct investment.

Furthermore, the two countries have expanded their economic cooperation to the financial sector. RMB settlement and investment are poised to become new bright spots in the China-South Korea financial cooperation.

South Korean banks have witnessed a large amount of RMB deposits since the second half of last year, with the total volume reaching 11.3 billion dollars at the end of May, up as much as 70 percent compared with the beginning of the year.

South Korea expressed its intent in April to build up RMB offshore trading markets. With the increasing internationalization of the Chinese currency and the deepening of the bilateral financial cooperation, the RMB fervor in South Korea will continue.

The central bank of South Korea has earned the status as a qualified foreign institutional investor, allowing it to invest in stocks and bonds traded on China's financial markets.

The bank earned an expanded quota for its investment in China's stocks markets. It was permitted to invest an additional 300 million dollars in yuan-denominated assets.

China and South Korea have also been exploring ways to strengthen cooperation in new energy and green industry, which will have a positive influence on the long-term, stable and sustainable development of the two countries' economies.

On another level of cooperation, China and South Korea can learn from each other's development experiences.

Some South Korean experts have advised China to draw experiences from their own country in overcoming the middle income trap, which is a major challenge on the road of China's development.

South Korea successfully escaped the middle income trap by carrying out profound market reforms and developing knowledge economy, the experts said.

During his two-day stay, Xi will meet with South Korean President Park Geun-hye, National Assembly Speaker Chung Ui-hwa and Prime Minister Chung Hong-won. He will also address economic and trade events.

China and South Korea are also expected to release a joint statement and sign a number of cooperation documents covering economy and trade, finance, environment and consular affairs.

[Source: Xinhua, Seoul, 03Jul14]

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