Research On China's Export Of Agricultural Products To South Korea

China has a very long-standing political, economic and cultural and historical origin with the neighboring country of South Korea. Since the establishment of diplomatic relations, the economic and trade relations between the two countries have grown rapidly. By now, South Korea has become the sixth trade partner, the third export market and the second import source land of China; while China ranks first in these fields, beyond Japan's trade status in South Korea. However, with the rapid development of bilateral trade, China's trade deficit to South Korea has increased substantially, which also shows the important role that China's economic development plays on South Korea's economy should not be underestimated. However, it should be noted that in the agricultural trade of the two countries, China has maintained a favorable balance with South Korea all the time. As more and more China's agricultural products are exported to South Korea, the agricultural trade frictions have occurred frequently, which restrains China's agricultural exports to South Korea and affects the normal development of bilateral agricultural trade.As a pure importing country of agricultural products, due to the vulnerability and fundamental position of agriculture in the national economy, South Korea attaches a great importance to the development of its agriculture and takes high protection measures on its agriculture, especially in recent years more and more non-tariff measures have been used to restrict China's agricultural export. The increasingly high import barrier makes it difficult for China's agricultural products to enter South Korean market. Given the new situations occurring in the agricultural trade, in order to reduce trade frictions and export obstacles as much as possible and promote the healthy development of agricultural trade between China and South Korea, it is necessary to study the overall situations and development potential of China's agricultural exports to South Korea. Under the guidance of comparative advantage theory and competitive advantage theory, this paper analyzes the current situation of agricultural trade between China and South Korea, and reveals the competitive advantages of China's agricultural products in South Korea and complementarities in their bilateral agricultural trade through the index analysis. The paper also discusses the constraint factors for China's agricultural exports to South Korea based on the six factors of diamond model, as well as predicts the development prospect of the agricultural trade between the two countries.The introduction part demonstrates the research background, significance of the paper, former research production and research direction, research area and the structure of the paper. The current researches on the agricultural trade between China and South Korea are scattered. Most scholars focus on studying competitive advantages of individual agricultural product, such as vegetables, fruits, and aquatic products, or studying the complementarities of China and South Korea's agricultural trade. The research on agricultural trade disputes and agricultural cooperation in future of the two countries can also be found. The systematic research integrates comparative advantages, competitiveness analysis and trade disputes of agricultural product trade between China and South Korea needs to be further discussed. Therefore, this paper based on an overall summary of current situations of agriculture in both countries, gives a detailed analysis of agricultural trade status, trade frictions, the competitive advantage of China's agricultural products in South Korea, as well as points out restraining factors of China's agricultural exports and put forwards corresponding policy recommendations, in the hope that the research could play not only a theoretical guidance for relative studies in the future but also a practical reference for governmental policies. The main research results of this paper are as follows:As for the agricultural trade status of China and South Korea, the analysis is conducted in terms of agricultural status, overview of bilateral agricultural trade, export structure of each structure, product similarity in the world market and trade frictions. China has abundant natural resources and rich labor force, and South Korea has advanced technology and sufficient capitals. There are differences in agricultural production conditions, material input level, agricultural production structure and productivities. But both countries have scarce land resource, similar food consumption and similar culture. Therefore, there are both differences and similarities in the agriculture of the two countries, which makes competition and complementarities both exist in the agricultural trade of China and South Korea.The export structure of China's agricultural exports to South Korea is relatively stable and concentrated on several main categories of agricultural products which mainly include categories of cereals, fish category, oil seeds, edible vegetables, preparations of meat and fish and preparations of vegetables and fruits. This shows China mainly exports labor-intensive agricultural products to South Korea and the proportion of processed products has been increasing. While South Korea mainly exports categories of fish, sugar confectionery, oil seeds, edible fruits, miscellaneous edible preparations, beverages and preparations of cereals and milk, and most are high processed products or products with technology content. Besides, through the product similarity analysis, it can be seen that there is relatively high similarity in the agricultural products exported to the world market, and China and South Korea would face a fierce competition in the word market, especially for processed products. But in the agricultural import market of South Korea, the Unites States, Australia and Brazil are China's major competitors. As more and more China's agricultural products are exported to South Korea, the agricultural trade frictions have occurred frequently in recent year, which causes a severe impact on China's agricultural products.Based on the export structure of agricultural products, the paper focuses on analyzing the competitive advantage of China's agricultural products in South Korea through several index analysis of the market share, revealed comparative advantage index and trade specialization index, and arrives at the conclusions that China's agricultural products take up a high market share in South Korea's market and have maintained a high competitive advantage as a whole, but have been gradually weakening. At an average level, except for only 2 categories of live trees and other plants and edible fruit and nuts with a lower comparative advantage, and only one category of sugars and sugar confectionery with a comparative disadvantage, the majority of China's agricultural products show high comparative advantages in South Korea. This also indicates that China's labor-intensive products exported to South Korea all have comparative advantages in South Korea. In addition, the comparative advantage of finished products has increased, showing that the finished products among China's agricultural exports to South Korea have developed rapidly in recent years and China's export structure has gradually updated.China mainly exports labor-intensive agricultural products like aquatic products, vegetable and fruit products to South Korea, and South Korea mainly exports semi-processed or high processed products like food, beverages and miscellaneous edible preparations. Through the trade complementarities index analysis, it is shown that there are complementarities in the agricultural trade between China and South Korea, but not very high. Though keeping declining, the agricultural trade complementarities of China exporting to South Korea are higher than that of South Korea exporting to China. Therefore the agricultural trade between the two countries will keep growing continually; especially the export scale of China's agricultural products to South Korea would expand in a certain period.Though the trade volume in the bilateral agricultural trade increases rapidly, there are still some factors restricting China's agricultural exports to South Korea. The paper analyzes the restraining factors mainly from six aspects introduced in the diamond model. First, from the perspective of element conditions, the rich and cheap labor force makes China's agricultural products have the comparative advantage of low prices and low costs, which promotes a large number of China's agricultural exports to South Korea. But the low degree of standardization and low standards of quality and safety of China's agricultural products are serious problems impeding its export. The substantial export with low prices can easily cause trade frictions and the low product quality makes the agricultural products difficult to meet the high inspection and quarantine standards in South Korea. Second, the low level of consumer demands is unfavorable to improve the competitiveness of China's agricultural products. Third, the lack of related and supporting industries could not provide strong domestic supports for China's agricultural exports. Fourth, the disordered competitive behavior of export enterprises with an export strategy of low prices could easily cause agricultural trade frictions. Fifth, considering from external factors, China has to accept the restraint of WTO rules when entering WTO. In the short term related WTO agreements like the Agreement on Agriculture, Agreement on the Application of Sanitary and Phytosanitary Measures, and Ag reement on Safeguards may bring negative influences on China's agricultural exports to South Korea. At last, the two governments conduct different agricultural policies which have great impacts on the agricultural trade between the two countries. The high domestic agricultural support and trade protection measures create a big barrier for China's agricultural products to export to South Korea; on the contrary, the insufficient agricultural support policy in China has not provided enough inputs to develop the agriculture in China. Generally speaking, there are restraint factors existing in different aspects which impeded China's agricultural products to South Korea. Therefore, in order to realize the continuous development of bilateral agricultural trade, effective measures shall be taken to prevent the negative influences of these constraint factors.On the basis of overall analysis of the agricultural trade between China and South Korea, it can be seen that the two countries have different comparative advantages in agricultural products. China mainly exports labor-intensive agricultural products like aquatic products, vegetable and fruit products to South Korea and the export of processed products is increasing. The agricultural exports have maintained relatively high comparative advantages in South Korea. The complementarities in agriculture of both countries help to further increase the cooperative opportunities in agriculture and agricultural trade. From the trade structure point of view, the current agricultural trade pattern between China and South Korea will maintain in a long term that is, based on comparative advantages China will continue to export aquatic products, horticultural products and related processed products to South Korea. Given the relative high similarities of the agricultural products in the world market, the competition of agricultural trade between China and South Korea will be fiercer, especially for processed products.With the further opening of market under multilateral and bilateral framework, the export scale of China's agricultural products can be predicted to expand, which will provide some opportunities for China. However, it is difficult for China to change this potential import demand into real export for China has to confront with many obstacles. On the hand, the vulnerability and the important position of agriculture in national economy, South Korea implements high protection policy on its agriculture and agricultural trade. On the other hand, there are not enough agricultural inputs in China. The Chinese government has not established efficient industry chain of agricultural products that is appropriate to participate in the international competition, and effective quality supervision and management system. As a result, China still would face a lot of pressure to expand South Korea's market of agricultural products.From the competitiveness point of view, China's agricultural products have maintained a strong comparative advantage in South Korean market, but weakening continually. But in order to keep a long-term competitive advantage, China has to update its export structure and develop high processed agricultural exports. At the same time, given South Korea's high protections of agricultural trade, China will provide sufficient supports to its domestic agriculture, as well as strengthen the bilateral negotiation and cooperation in the agricultural field in the future.In order to improve the competitiveness of China's agricultural product in South Korea, it is necessary for the Chinese government to carry out some effective measures. First, actively promote agricultural standardized construction and improve quality and safety levels. Second, promote agricultural large-scale operation, and develop processing industry of agricultural products. Third, increase financial support for agriculture, and establish a flexible system of agricultural subsidies. Fourth, complete agricultural service support mechanism, and develop agricultural industry associations. Last, strengthen exchanges and cooperation in agricultural field, and establish China-ROK free trade area. Therefore, it is believed that through the positive and efficient efforts of the Chinese government, China could maintain a high competitive advantage of agricultural products in South Korea in the long-term and promote the healthy development of agricultural trade with South Korea.