Regional Trade Soars In North-East Asia

Financial Times
By Andrew Ward in Seoul

February 6 2004

Trade between Japan, China and South Korea expanded by nearly a third last
year, showing how north-east Asia is becoming an increasingly powerful and
integrated part of the world economy.

Exports between the three countries reached $224.5bn in 2003, up from $171bn
the year before, according to the Korea International Trade Association, a
trade promotion body.

"China, Japan and Korea are becoming more dependent on each other for goods
and to drive each other's economic growth," said Chang Sang-sik, chief
researcher at Kita.

Increased economic integration is helping Japan, China and South Korea
overcome centuries of military and political conflict that has torn
north-east Asia apart.

The three countries agreed at a regional summit last October to increase
economic co-operation, with the long-term goal of creating a free-trade area
to rival the European Union and North America.

Mr Chang said trade between Japan, China and South Korea accounted for 20
per cent of the three countries' total overseas shipments last year, up from
19 per cent in 2002 and 14 per cent five years ago.

"All three countries - especially China - are increasing their exports to
the US and Europe but intra-regional trade is expanding more quickly," he
said.

Mr Chang said China's economic development relied on raw materials,
machinery and technology from its two most advanced neighbours. Meanwhile,
Japan and South Korea were importing more goods from China as the country's
manufacturing sector expands.

China, including Hong Kong, overtook the US as Japan's biggest two-way
trading partner and as South Korea's biggest export destination last year.

However, analysts caution that the region remains dependent on trade with
the rest of the world. They point out that many South Korean and Japanese
exports to China are components for goods that end up in the US or European
market.

According to Kita, Japan, China and South Korea produced 15 per cent of the
world's exports last year and the region accounted for about 20 per cent of
the world's gross domestic product if Taiwan was included.

"North-east Asia is becoming the most dynamic part of the world economy,"
said Mr Chang.