Research On The Influence Of South Korea’s Investment In China On China-South Korea Bilateral Trade In Goods

Nowadays,the world is changing from old globalization to new globalization,and the scale of global capital flow is constantly expanding.Foreign direct investment is the main force to promote the development of a region’s foreign trade and an important way to affect the development of a region’s foreign trade.Therefore,under the background of China and South Korea FTA,China and South Korea as the two countries promote the important force of the economic development,regional economic cooperation in northeast Asia,a detailed study of Korean investment in China on the development of the bilateral trade in goods is of great significance,will help us further understand the interaction mechanism between the two,in order to promote further development of China and the economic and trade cooperation,The further improvement of china-South Korea free trade Agreement provides empirical basis,thus promoting the realization of the win-win pattern of China and South Korea,and promoting the further development of the two countries’ economy and trade.This paper summarizes the general situation of South Korea’s direct investment in China and bilateral trade in goods,and analyzes the intensity of Trade between China and South Korea,and then studies the effect of South Korea’s direct investment in China on bilateral trade in goods from two aspects of trade scale and trade structure.Granger causality test is used to empirically analyze the impact of South Korea-China direct investment on china-South Korea trade in goods.The empirical results show that,on the one hand,FDI from Korea in China has a positive effect on the scale of bilateral trade in goods,but the long-term and short-term effects are different.There is only a long-term equilibrium relationship between FDI exports to Korea and China,and there is a one-way causal relationship between them,but the long-term and short-term effects are different.In the short term,Korea’s direct investment in China has a stronger export substitution effect;In the long run,as South Korea’s investment in China is more cost-oriented or policy-oriented,production activities are transferred to China for better trade terms,so the export transfer effect is the most important.In terms of FDI in China and South Korea bilateral trade in goods structure,the increase of FDI between China and South Korea will further accelerate the speed of capital and technology intensive into exports of manufactured goods increase,decrease of primary products exports to South Korea accounted in China,South Korea to China’s labor-intensive manufactured goods exports accounted for more than less,to a certain extent,to China’s export commodity structure optimization effect.Therefore,direct investment between China and South Korea can strengthen bilateral economic and trade cooperation,accelerate the upgrading of industrial structure of both sides and accelerate the process of economic integration in Northeast Asia.Finally,this paper discusses the creative effect of South Korea’s direct investment in China on Bilateral trade and its ability to promote the optimization of export trade structure,and proposes to optimize the investment environment and expand the scale of investment under the background of the signing of FTA between China and South Korea.Make effective use of Korean capital and guide the flow of Korean capital;Optimize the industrial level,adjust the trade structure;Deepen win-win cooperation and expand trade;Suggestions on enhancing political mutual trust and reducing trade frictions will provide reference for future development.