Korea and China Agree to a US$ 2.7 Bln Investment MOU

The governments of Korea and China Wednesday released a Joint Communiqué in which both stated their intention to enhance the bilateral relationship and extend trade and economic cooperation between the two nations.

President Lee Myung-bak held a summit talk with his Chinese counterpart Hu Jintao Tuesday and agreed to issue the statement aimed at upgrading South Korea-China relations from the previous comprehensive cooperative partnership to a strategic and cooperative partnership, opening the door to negotiations on the prospect of a Korea-China Free Trade Agreement (FTA), extending youth exchanges between the two countries, and strengthening cooperation for peace and stability on the Korean Peninsula and in the Northeast Asian region. Lee also agreed to sign a Memorandum of Understanding (MOU) on the basis of the principles of mutual respect for scholarly achievement between the two countries, and extend exchanges on the presidential level down the road.

The Joint Communiqué was issued after Lee held talks with Chinese Premier Wen Jiabao and Jia Qinglin, chairman of the National Committee of the Chinese People`s Political Consultative Conference, on Tuesday shortly after his summit talks with the Chinese president.

In the statement, the two countries agreed to make joint efforts to promote a better trade balance between China and Korea and increase Korea’s active participation in Trade and Investment Exhibitions organized by the Chinese government and firms, and send official delegates with purchasing and investment missions to each country.

The two countries also conceded that cooperation among Korea, China, and Japan is crucial to establishing peace, security and prosperity in Asia, and agreed to endeavor to increase talks and exchanges on the presidential and foreign ministerial levels.

On the Korea-China FTA, the governments reached an agreement to positively review the prospects of the FTA on the basis of the results of a joint study carried out by the industries, governments and academic institutes of both countries.

In addition, the government of China reiterated its one-China policy, saying that Taiwan is an inalienable part of the territory of the People`s Republic of China. In return, Korea expressed understanding and respect, recognized the government of the People`s Republic of China as the sole legal governing body of China, and agreed to maintain the one-China policy.

In the meantime, a total of eight MOUs have been signed or are expected to be signed including the one produced during this official visit by President Lee to China, in which SK Energy Co., South Korea`s biggest oil refiner, would enter into a tie-up with China Petroleum and Chemical Corp (SINOPEC) to build a 2.4 billion-dollar-worth joint venture in China. The presidential office of Cheong Wa Dae announced that the size of investment would reach about 2.7 billion dollars.

swpark@donga.com