South Korea-China Trade Growing

The breakthrough that came last year in sports exchanges between China and South Korea is spreading, and this time the beneficiaries are South Korean businessmen.

“Our trade with China is growing rapidly,” Kim Ki Hwan, a vice minister in the Economic Planning Board, said in a recent interview, “and some of our businessmen have been to China.”

Many of the new contacts, Kim said, have been at the provincial level, where Chinese economic managers have been given authority to make their own decisions.

According to other sources here, executives from all the South Korean chaebol (conglomerate groups) have been traveling to China. Some have made repeated trips.

Kim said South Korean firms are wary of investing in China because of the absence of diplomatic relations between Seoul and Peking, but at least one South Korean firm has invested in a factory in China, it was learned. That firm is now negotiating another joint venture in China, one that would involve a large American company as a third partner.

Chinese officials have forced their new business associates here to keep quiet to avoid exacerbating China’s relations with North Korea, which is opposed to any Communist Bloc dealings with South Korea.

No one, Kim said, knows the extent of the trade between China and South Korea.

Kim, who heads a team of South Korean officials talking with North Korea in the hope of restoring the North-South economic ties that were severed by the 1950-53 Korean War, said: “Until last year, there was a considerable amount of ambiguity on the part of the Chinese toward us. In 1982 and 1983, the Chinese applied restraints on shipments we were making to China before that. Later, we discovered it was because of protests from North Korea.”

The breakthrough with China appears to have been spurred by the negotiations China was forced to enter into with South Korea after five Chinese hijacked a Chinese airliner in 1983 and took it to South Korea. Although South Korea refused to turn over the hijackers, who were jailed and later allowed to go to Taiwan, the plane was returned.

Those negotiations were the first to bring officials of Seoul and Peking together since the Communist takeover of China in 1949.

Last year, China started allowing the exchange of sports teams between the two countries, and it has made it clear that it intends to participate in the 1988 Olympic Games in Seoul.

Now, Kim said, “there is much evidence that the Chinese are telling the North Koreans that ‘you, too, have to change your economic policies.’ ”

South Koreans are hoping that China will put aside its concern over North Korean sensitivities and open up full-fledged economic exchanges with them. They say this could help make their country a base for manufacturing American-designed products for sale to China.