Trading Relations Between China, Japan And South Korea: The IPE Perspectives

China, Japan and South Korea are three of the major economies of East Asia.Based on their respective levels and achievements of economic development, thetrading relations between them constitute a unique mix for research. Current studies on the trade relations between China, Japan and South Korea isfar to be mature. Because of the freshness of this topic and the lack of effectivemethods, most of the existing works focused on the general aspects and only a few ofthem discussed the detailed trading structures and their changes. International Political Economy (IPE) studies the interaction between the stateand the market as different actors. Therefore, it provides a new research approach tothe study of international trade. This article tries to apply the IPE perspectives intothe research of the trading relations between China, Japan and South Korea. The first part of this article discusses IPE and its relation with trade. There is no clear definition about IPE. The scholars of the Critical PoliticalEconomy see it as concerning the structure and its changes, while other scholarsprefer a broader and more functional definition of IPE, which as they see should bethe study of the interplay of economics and politics in the world arena. The traditional classification of IPE theories usually includes liberal, realist(also referred to as mercantilist), and radical, or some form of Marxist perspectives.This classification, however, is under challenge. New ideas see IPE as a field of study,not a theoretical perspective. The author believes that these new opinions aretheoretically enlightening, but the old classification still possesses practical value inaddressing policy options, especially the realist as well as the liberal approaches,even though they became academically "obsolete" for some scholars. Under the IPE perspectives, this article thus discusses a variety of mainstreamtrade theories, including traditional trade theories, technology gay theory,intra-industrial trade theory, infant-industry theory, strategic trade theory as well asnational competitiveness theory. According to this comparative study, trade theorieshave become more and more practical. While at the same time, it is still difficult totrace a single theory which is comprehensive enough to explain the complicatedtrading reality. As seen through the prism of IPE perspectives, in which only existtwo actors as state and market, the major trade theories are generally featured bytheir attitude between these two actors. Traditional factor endowment theories,together with the technology gap theory, generally prefer a pure free trade withoutgovernmental intervention, while the infant Industry, the strategic trade theory andthe national competitiveness theory would call for an active government in theshaping of its foreign trade. The second part of this article discusses the merchandise trade between thesethree economies. At a first glance, they differ on the levels of development. China is the world'sbiggest developing country; Japan is the second largest economy; South Korea is oneof the Asia's "Four Dragons." China's structure of economy changed a lot in the last two decades, in whichthe ratio of industry (including manufacturing) and the services grew rapidly. Japan'sstructure of economy did not change much, maintaining a small agriculture and ahigh proportion of services. South Korea's is quite similar to that of Japan. These three economies play important roles in world import and export.Meanwhile, they are also main import origin and export destination of each other.The trade between these three economies has become an important part for each ofthem. The bilateral trade between these three economies all gained their momentumafter the establishment of diplomatic relations, and only went low in some certainperiods. China suffered trade deficit both to Japan and South Korea. Japan obtainedtrade surplus to South Korea. However, there exists tremendous inconsistencebetween the trade statistics of China and that of Japan and South Korea.