China Opening Door to S. Korean Investment

The Chinese government took a major step Friday toward furthering its rapidly expanding but politically sensitive contacts with South Korea, announcing that it welcomes investment from its traditionally anti-Communist neighbor.

“As far as Chinese policy is concerned, businessmen from South Korea enjoy equal treatment with other foreign business people,” Chu Baotai, an official of the Ministry of Foreign Economic Relations and Trade, was quoted as saying.

According to the official New China News Agency, Chu made the statement at a conference of Japanese and Chinese business executives.

No Official Ties

Chinese troops fought alongside North Koreans against South Korean and U.N. forces in the 1950-53 Korean War. Since then, China and North Korea have been staunch allies, while the Beijing government has had no official relations with South Korea.

China now realizes that it could gain economically from friendship with capitalist South Korea, which is far more prosperous than North Korea. Officials in South Korea hope that improved economic and political ties with China will benefit South Korea’s economy and its security.

Fear of alienating North Korea--and perhaps driving it into a closer relationship with the Soviet Union, or provoking it to take rash action against South Korea--places limits on how fast China is willing to move in expanding its links with South Korea.

Chu’s comments Friday--and the official news agency’s decision to report them--were among the clearest indications yet that China is prepared to develop a more open relationship with South Korea.

Chu implied that if South Korean businesses are willing to make major investments in China’s economic modernization, this could contribute to the gradual development of political links along with the economic ties.

“They are encouraged to invest in the development of badly needed Chinese industries such as energy, transportation, raw materials, high technology and exports,” Chu said.

“So long as the two sides intend to develop economic and trade ties, it is necessary and natural for them to set up representative offices. But that depends on the scale of trade and investment involved.”

The state-run Korea Trade Promotion Corp. said last month that it was close to signing an agreement on opening trade offices in Beijing and Shandong province, which lies across the Yellow Sea from South Korea. It said China in turn would open a trade office in Seoul.

Although trade between China and South Korea has grown rapidly in the past few years, the lack of any official relationship between the two countries has meant that most trade has had to be conducted either indirectly or secretly.

Much of the indirect trade is carried out through Hong Kong. Statistics show that more than $1 billion in such trade passed through the British colony last year. Discreet trading also takes place directly across the Yellow Sea, which can be crossed by ship in a day.

In South Korean business circles, it is estimated that trade between the two countries in 1987 amounted to $2 billion or more, and according to South Korean press reports, it could reach $3 billion this year.

Chu gave no figures, but he acknowledged that “the trade volume between the two sides has reached a certain scale.”