(Yicai) Jan. 19 -- The economic relationship between China and South Korea shifted to a multi-layered horizontal cooperation from a vertical division of labor during the last Five Year Plan, which concluded last year, as trade between the two East Asian neighbors continues to climb steadily.

South Korean think tanks believe there is strong potential for industrial complementarity between the two countries, according to several surveys. South Korea can tap Chinese technology to cut costs, while Chinese companies can use the South Korean market to test their products.

Bilateral trade between China and South Korea climbed 1.7 percent last year from the year before to CNY2.37 trillion (USD340 billion), according to the latest core data on goods trade between major economies. China’s exports to South Korea came to CNY1.03 trillion (USD147.9 billion), while its imports from South Korea amounted to CNY1.34 trillion.

South Korean President Lee Jae-myung and his wife visited Shanghai on a state visit earlier this month and attended a forum on innovation and entrepreneurship.

Major think tanks in South Korea all highlight and are optimistic about the fact that South Korea has been China’s second-largest trading partner for two years running, the author learned by participating in the preparation of bilateral think tanks and media exchanges.

If measured by South Korea’s own standards, which look at trade on a country-by-country basis, its trade with China is of higher quality than that between the United States and China, and its trade volume with China is greater than that of any single member country of the Association of Southeast Asian Nations. The economic and trade ties between China and South Korea are now deeply intertwined. Last year, trade with South Korea accounted for 5.2 percent of China’s total foreign trade, and there is still room for growth.

China has become more competitive than South Korea in areas such as robotics, autonomous driving, electric vehicles, and even its pillar industry of semiconductors, according to a recent report from a research institute that focuses on South Korean policies.

In an assessment of the semiconductor value chain, China now leads South Korea in chip research and development, finished-product manufacturing, product services and domestic demand. South Korea, however, still has the edge in the supply chain of materials, components and equipment, as well as overseas demand.

President Lee shook hands with a smart robot made by Chinese firm AgiBot at the China–ROK Innovation and Entrepreneurship Forum held at the Shanghai International Convention Center on Jan. 7. The robot told him, “Our company’s latest strategic shareholders are South Korea’s LG Electronics and Mirae Asset Management.”

Speaking at the forum, Lee called on the two countries to create an environment that encourages entrepreneurship and which supports young entrepreneurs and professionals to boldly explore and collaborate on innovation. Innovation should never be the preserve of a single country, but instead requires cross-border cooperation and technology sharing, he said. Lee expressed hope that youth-led science and technological cooperation and exchanges during China’s 15th Five-Year Plan, which runs from 2026 to 2030, will become the new normal and the catalyst for productivity growth.

(The author is a researcher at the Shanghai Center for International Economic Exchange of the Shanghai Academy of Social Sciences.)

Editor: Kim Taylor