Date
21 August 2017
Qingdao has deep economic relations with South Korean and Japanese companies. Photo: AFP
Qingdao has deep economic relations with South Korean and Japanese companies. Photo: AFP

POLICY WATCH: Qingdao to gain from free trade deal with S Korea

China is stepping up negotiations with South Korea on the establishment of a free trade zone, which could provide tremendous boost to the growth momentum of Qingdao in Shandong province.

Speaking at a national work conference on Dec. 27,  Commerce Minister Gao Hucheng {高虎城} said both sides aim to wrap up the talks in 2014, although he did not go into details.

Since the establishment of the China (Shanghai) Pilot Free Trade Zone in late September, many other cities and provinces such as Chongqing, Tianjin, Guangdong and Xiamen have revived their free trade zone plans in a bid to lure foreign investment.

Originally, eastern China’s Shandong province was pushing the port city of Qingdao to serve as the financial center of the proposed China-Korea-Japan free trade zone. However, rising tensions between China and Japan over a territorial dispute has hindered plans to establish a three-way deal, making a free trade agreement between China and South Korea more feasible.

Shandong, particularly Qingdao, is in an ideal location to be the center of China’s trade and financial dealings with Japanese and South Korean companies.

In fact, South Korea and Japan are respectively the largest and third largest foreign investors in Qingdao. They are also the city’s third and second largest trading partners.

Qingdao has so far approved 1,848 Japanese-funded projects and 11,000 South Korean projects, and investment from the two countries have reached US$3.4 billion and US$13.24 billion, respectively.

According to its plans, the city will develop its west coast into a Qingdao Economic Area, which will act as an experimental zone for economic cooperation between China and South Korea. Later, Qingdao aims to expand this area into an innovation and cooperation zone between China, South Korea and Japan.

These are all part of plan to transform Qingdao into an international trade center in northeast Asia by 2020.

Located in the Yellow River basin and on the western Pacific Rim, Qingdao became one of the world’s top 10 container terminals in 2007, according to Xinhua news agency. In 2012, the port’s handling capacity reached 400 million tons, while its imports and exports totaled US$148.9 billion.

The Shandong provincial government has also pledged to transform Qingdao into an offshore financial hub for Japanese and Korean enterprises. The city has been wooing global financial giants as well as sovereign and private equity funds to establish their presence in the city as well as pushing for the cross-border renminbi clearing business to facilitate overseas trade.

Qingdao is also encouraging local firms to raise funds directly through the international capital markets.

– Contact the reporter at [email protected]

CG

 

EJ Insight writer

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