China and South Korea agreed to complete negotiations for a comprehensive free-trade agreement (FTA) by the end of 2014 and also pledged to introduce direct trading of their currencies in a bid to boost bilateral economic ties.
Chinese President Xi Jinping, who is on a visit to South Korea, on Thursday signed a memorandum of understanding (MoU) with his South Korean counterpart Park Geun-hye to enhance cooperation in several fields.
A joint statement said the Asian powerhouses “agreed to strengthen efforts to conclude the (FTA) negotiations by the end of the year” and take measures to spur offshore use of the yuan and investment in Chinese capital markets.
According to the MoU, South Korea will build a market for exchange between renminbi and the Korean won and will establish a renminbi settlement system, Hong Kong Economic Journal reported. In addition, yuan-denominated bond sales will be conducted in Seoul.
Data showed renminbi has become the second most favored foreign currency of deposit next only to US dollar in South Korea. The balance of renminibi deposits as of end-May rose 70 percent in the first five months of the year to equal about US$11.33 billion.
Bank of Korea received approval to join the qualified foreign institutional investor (QFII) scheme and was awarded investment quota of US$300 million that will be fully invested in China’s A shares. The bank was also approved by the People’s Bank of China to participate in the Chinese interbank bond market with awarded quota of 20 billion yuan (US$3.22 billion).
On corporate level, a number of South Korean companies announced Thursday their expansion and cooperation plans in China. On Friday, the last day of his Korean visit, Xi is scheduled to give a speech at a commerce forum in Seoul. The Chinese leader will meet the presidents of Samsung Electronics and LG Electronics in private.
Leaders of major Chinese companies who joined Xi in the visit, including Alibaba Group chairman Jack Ma and Baidu’s Robin Li, will discuss cooperation with their South Korean counterparts. Several deals are expected to be signed among companies of both sides.
Meanwhile, Seoul National University has denied media reports that it will award Xi an honorary doctorate degree. It said it is not proper to award the honorary degree now as it may look like a reward to Xi after his scheduled speech at the university.
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