The Analysis of Impact of Korean Direct Investment in China on the China-South Korea Trade Deficit

Abstract

With the signing of the China-Korea bilateral free trade agreement in 2015, the relationship between China and South Korea's trading partners has been further clarified. However, China's trade account with South Korea has been in deficit for successive years, and as South Korea's direct investment in China has increased, the deficit has become more apparent. Based on the introduction of the status of South Korea's direct investment in China and China-South Korea trade, this article analyzes the theoretical mechanism and empirical analysis of the impact of South Korea's direct investment in China on the China-South Korea trade deficit, and makes relevant suggestions for reducing the China-South Korea trade deficit.