Study On The Development Of Agricultural Trade Of China And South Korea

Since the establishment of diplomatic relations between China and South Korea,the development of bilateral economic and trade relations has attracted much attention.With the signing of China-South Korea FTA in 2015,China-South Korea agricultural trade has once again become the focus of academic attention.At the same time,with the rapid development of China's foreign trade,especially proposal of the Belt and Road Initiative,bilateral trade between China and other countries and China's potential for development also have become one of the research focuses for domestic and foreign scholars.It was found through review of existing literatures that most researchers on trade of agricultural products between South Korea and China focused on some aspects such as the current situation of such trade and existing problems,competitiveness and complementarity of such trade,structure of such trade and the influence of the China-South Korea FTA.Although China and South Korea are important partners in trade of agricultural products,there is no systematic research on trade of agricultural products between the two countries with consideration of some factors such as economic benefits arising from such trade and potential of such trade.However,against the background of signing of the China-South Korea FTA and with terms and conditions in the agreement come into effect gradually,export of agricultural products from China to South Korea will face a new favorable turn and opportunity,so this research is of great importance.In addition,in the small number of existing researches on the potential of trade of agricultural products between China and South Korea,the traditional gravity model was used for measurement on trade potential;however,a result obtained via this model is an average value close to the actual trade volume,which is essentially different from the optimal level of trade expressed by the stochastic frontier gravity model and thus tends to cause “excessive trade”.In view of this,with the development of trade of agricultural products between China and South Korea as the mainline,this paper was written based on comparative advantage theory,factor endowment theory,demand similarity theory,foreign trade & economic growth theory and other relevant theories and reveals the development track of trade of agricultural products between China and South Korea based on existing research results and with consideration of the actual situation of this research at three levels,including the process of sino-south korea agricultural trade as well as the current development situation and friction of agricultural trade between China and South Korea.Then a comprehensive analysis on the structure of trade of agricultural products between China and South Korea was carried out at three levels: with the agricultural products included in the first 24 chapters of the HS coding system as the research objects,a comparative analysis on the structure of trade of agricultural products between China and South Korea was made;based on the agricultural products covered by the four-digit code in the abovementioned coding system,a measurement on the comparative advantages of agricultural products from China and South Korea and their correlation with the structure of export of agricultural products from South Korea was conducted in order to compensate for the insufficiency of previous researches due to the situation that the two-digit code adopted in previous researches couldn't be specific to product category,in addition to which a coordinate diagram was designed to describe the comparative advantages of Chinese agricultural products and the integration of the export structure of South Korea's agricultural products;afterwards,the Spearman rank correlation coefficient was used to analyze the matching between the structure of export of agricultural products from China to South Korea and the structure of South Korea's import of agricultural products,and Structural Return Change Index and Lawrence Index were adopted to analyze the optimization and stability of the structure of export of agricultural products from China to South Korea.Then the co-integration method was used to analyze the influence arising from development of trade of agricultural products between China and South Korea on the economy at two levels: the relation between trade of agricultural products between China and South Korea and economic growth;at the level of product classification,the relation between the four major categories of agricultural products in the HS coding system and farmers' income was analyzed to compensate for the insufficiency of previous researches resulting from the fact that previous researches were conducted at the level of the total quantity and thus failed to be specific to the influence of product category.The stochastic frontier gravity model was then adopted to carry out an empirical analysis on the potential of trade of agricultural products between China and South Korea,in which panel data about China and its 38 trading partners including South Korea from 1992 to 2015 was selected and used,so period and objects of research were expanded to a large extent compared to those of previous researches.The factor analysis method was adopted to analyze those factors influencing the development of trade of agricultural products between China and South Korea in order to compensate for the defect arising from the fact that in previous researches,influencing factors were always analyzed from the qualitative perspective instead of the quantitative perspective.At the end,corresponding countermeasures and suggestions on the development of trade of agricultural products between China and South Korea were put forward from the perspective of China's response to the trade barriers of the Korean side and the cooperation between China and South Korea.The result of this research indicates that: China's agricultural products exported to South Korea have been changing gradually from primary raw materials to partially processed products.Over the past years,major agricultural products exported from China to South Korea have been relatively stable in structure,in which aquatic products accounted for the largest proportion.The structure of major agricultural products exported from South Korea to China has also been relatively stable,in which the proportions of aquatic products and sugar were similar and aquatic products accounted for the largest proportion.It can be seen that the comparative advantage of China's agricultural products is highly matched with export of agricultural products from China to South Korea,and the coefficient of matching between the structure of export of agricultural products from China to South Korea and the structure of South Korea's demand for import of agricultural products was 0.440 from 1992 to 2015,which was far less than “1”,the critical value of correlation;however,China still ranked third among the Top 10 countries in South Korea's import market,which indicated that the degrees of matching between other countries and South Korea weren't high.Result of the co-integration analysis indicates that there is a long-term equilibrium relationship between export of agricultural products from China to South Korea and economic growth;export of agricultural products from China to South Korea is the one way Granger cause for GDP;and there is a long-term equilibrium relationship between the export of four major categories of agricultural products from China to South Korea and income of Chinese farmers,among which export of agricultural products falling into Category I(Animal Products)and Category IV(Food,Tobacco & Beverage)can drive growth of farmers' income.Factor analysis indicates that macroeconomic factors(FDI,fixed asset investment,GDP,savings,monetary supply,value of import of agricultural product,etc.)have a greater influence on export than direct factors(South Korea's GDP growth rate,growth rate of foreign exchange reserve,and growth rate of export tax rebate).The result of analysis conducted with the stochastic front gravity model indicates that the efficiency of trade between China and South Korea fluctuates within the range from 0.21 to 0.54 from 1992 to 2015,and the average efficiencies of trade between China and other partners are within the range from 0.04 to 0.8,which are less than “0.8”.This indicates that such values of efficiency fall into the range indicating a "huge potential" and the development space of potentials of trade between China and South Korea and between China and other partners are considerable.With gradual implementation of terms and conditions in the China-South Korea FTA,China and South Korea's agricultural trade potential is expected to be further released.