China, Japan, and South Korea held the long-awaited sixth trilateral summit this weekend; this was the first three-way summit since 2012. The summit held a lot of significance as this summit used to be a regular annual feature but the regularity had dried up after 2012 until this year, as efforts were made on the part of the three countries to revive this feature. During the summit various challenging issues were pondered upon, discussions were held related to trade, WWII wartime history and also the important issue of North Korea's nuclear program. Premier Li Keqiang of China, Japanese Prime Minister Shinzo Abe and South Korean President Park Geun-hye all came out strong after the summit as the summit has been a success in restoring ties between the three Asian economic giants. President Park said that "All sides shared the view that trilateral cooperation has been completely restored in this meeting," and the three leaders also pledged that this summit will be "held on a regular basis in the three countries," with Japan hosting the next one in 2016.
When we talk about trade between China, Japan and South Korea, one has to bear in mind that the stakes are pretty high and the three economies are very much intertwined. If we look at China's trade with Japan and South Korea we find that China is the largest trading partner of both South Korea and Japan and if we flip to the other side when it comes to single-country trade shares in the Chinese economy; we see that Japan is China's second largest single-country trading partner and close on its heels at third place is South Korea. Even though the economies of China, South Korea and Japan when combined amounts to 20% of the world's economy but there is a lot of room for improvement and that is why a Free Trade Agreement among the three nations is being heightened which will have a compounding effect on trade and the next round of talks on the matter will take place by the end of this year. Now the onus lies on the business community with in the respective countries to pump life in this endeavor and that is why Premier Li expressed his desire to bring vigor and improvement in this trilateral agreement and the other leaders followed suit. President Park said, "As a memorandum of understanding for invigorating trade and investment was signed between the economic organizations of the three countries, I hope that the business community will give active support and cooperate for the progress of discussions on the South Korea-Japan-China free trade agreement. The governments of the three countries will lead the negotiations in a way that is beneficial to the economies of all three countries." Japanese Prime Minister Shinzo Abe's words also resonated with the other two leaders, "While the foundation for growth in the Asia-Pacific area is now being made through the Trans-Pacific Partnership agreement, cooperation among three countries, and also leadership, is strongly demanded in this situation to bring about a comprehensive and high-quality agreement like the Free Trade Agreement among three countries, and the Regional Comprehensive Economic Partnership."
Following the summit a joint declaration was issued which highlighted that the three nations have agreed to amplify collaboration and will focus on healthcare, e-commerce and software, information sharing and will boost policy synchronization among their respective financial authorities.
Premier Li Keqiang made full use of his trip as he not only attended the trilateral summit but with in the midst of this trip, Li was able to meet South Korean President Park Geun-hye, Prime Minister Hwang Kyo-ahn and Speaker of the National Assembly Chung Ui-hwa. And an important achievement was that after the trilateral summit, Li held a separate bilateral meeting with Japanese Prime Minister Shinzo Abe at the request of the Japanese side. Li was able to build upon last November's four-point principled agreement and bring relations forward and Li expressed hopes for further improvement and at the same time urged Japan to meet with China half way on many issues. Abe also expressed his willingness to further improve relations and develop his country's ties with China based on the four political documents signed earlier by the two countries.
This trip also marked Premier Li's first trip to South Korea. As expected Premier Li focused a lot on economic and financial ties. The big highlight of the trip was Premier Li's successful promotion of the country's currency bonds, now the People's Bank of China (PBC), the country's central bank, has allowed South Korea to issue yuan-denominated sovereign bonds in China's debt market as part of financial cooperation between two countries. China and South Korea have also reached an agreement which will lead to direct trading between the Korean won and Chinese yuan via the China Foreign Exchange Trade System (CFETS).
Li has promised mechanisms for South Korea to export its traditional dishes of kimchi and ginseng chicken soup, to China. Li also agreed upon working towards ratifying the bilateral free trade agreement with South Korea which was signed earlier this year. Li emphasized stronger cultural and social ties but most importantly he stressed economic ties in which plans to link China and South Korea through China's "One Belt One Road initiative" thus linking South Korea with Europe, linking China's "mass entrepreneurship and innovation" with South Korea's "Creative Economy" and bridging "Made in China 2025″ with Seoul's "Manufacturing Innovation 3.0." this three pronged approach to building a win-win scenario promise dividends colossal magnitude for the two countries.
All in all Premier Li's trip created and crafted deals and exchanges worth billions of dollars and during Li's three-day visit to South Korea from Saturday October 31 to Monday November 2, has been able to achieve many things, steer relations with Japan back on course, revive the annual tradition of the annual trilateral summit, expanded cooperation, has helped move the countries come closer to a signed tri-lateral FTA and provided confidence to businesses, and has laid the foundations for mechanisms which will reduce the financing costs as well as exchange risks for Chinese enterprises investing in South Korea.
The Author: Shafei Moiz Hali has a master's degree from George Mason University, Virginia, USA in the field of International Commerce and Public Policy. Mr. Hali has been working as an Assistant Professor at the National Defence University (NDU), Islamabad, Pakistan with the department of Government and Public Policy Since 2009. Currently he is pursuing his PhD from the College of Public Administration at the Huazhong University of Science and Technology (HUST), China.