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(SEJONG=Yonhap News) Trade between South Korea and China fell this year from 2015 due to the global slowdown, but their bilateral free trade pact has contributed to expanding e-commerce and foreign direct investment over the past year, government data showed Monday.
The Seoul-Beijing free trade agreement (FTA) went into effect on Dec. 20, 2015, with tariffs on about 90 percent of goods to be eventually removed over the next two decades.
The free trade pact came as the two countries have seen a remarkable increase in their bilateral trade volume for decades since they established diplomatic ties in 1992.
In 2015, their trade reached US$227.4 billion, with China being the world's single largest importer of South Korean goods.
A year later, however, trade between South Korea and China was hit hard by the global economic downturn and the Beijing government's shift in economic policies. For the first 11 months of 2016, South Korea's exports to China shrank 10.9 percent on-year to $112.4 billion, while its imports fell 4.8 percent to $79 billion.
Exports of South Korean goods that earn tariff favors through the FTA declined 4 percent on-year during the cited period, while those of non-beneficiary products tumbled 12.8 percent on-year, according to the data. South Korea's outbound shipments through e-commerce shot up 127 percent on-year to 1.2 trillion won ($1 billion) on brisk demand for cosmetics and clothing from China over the January-September period.
China's direct investment in South Korea gained 8.5 percent on-year to $1.66 billion through September, with Chinese investors interested in Korean cultural content, entertainment and electric cars.
The FTA also encouraged Seoul and Beijing authorities to ease non-tariff barriers such as electric certification and food quarantine.
"The South Korea-China FTA has contributed to bolstering bilateral economic relations through trade and investment," the Ministry of Trade, Industry and Energy said in a release. "The government will make further efforts to improve the FTA through follow-up talks with China."
The Seoul and Beijing governments will launch follow-up negotiations on the service and investment sectors for the Korea-China FTA next year.
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Source: Yonhap News (Dec. 19, 2016)