The Korean economy has been significantly impacted by the emergence of China. It is now the largest market for Korean exports and a major supplier of its low-cost imports but has at the same time become a serious challenger of Korea in the global markets for manufacturing exports. This paper investigates changes in China's export structure and its effect on Korea and bilateral trade between the two. It also examines the motives for Korean investment in China and its effect on bilateral trade and cross-border production networks. Korean FDI in China has contributed to the growth of parts exports from Korea to China, and we provide evidence for this effect with regression analysis.

Summary

Chapter 1. Introduction

Chapter 2. Competition or Complementary?
1. Changes in the export structure
2. Expanding bilateral trade
3. Growing production networks and trade in parts

Chapter 3. Korea's Investment in China and Bilateral Trade between the Two
1. Motives for Korean investment in China
2. Trade patterns of Korean affiliates in China
3. Regression analysis of the relationship between Korean FDI in China and Korea's parts exports to China

Chapter 4. Concluding Remarks

References