Government to Focus on New Northern and Southern Policies... Accelerating Korea-China Economic Cooperation

Ministerial Meeting on External Economic Affairs Held on the 20th
Confirmation of This Year's External Economic Policy Direction

[Asia Economy Reporter Kim Hyunjung] The government is promoting the 'New Northern Policy' this year to expand the exchange base with northern countries such as Russia, and accelerating cooperation projects with ASEAN countries including Indonesia, Vietnam, and Thailand. In addition, through the Korea-China Economic Ministers' Meeting scheduled for March, it plans to focus on strengthening economic cooperation with China by expanding mutually beneficial cooperation in service and industrial sectors, as well as joint advancement into third countries.

On the 20th, the government announced that it held the Foreign Economic Ministers' Meeting chaired by Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki, and finalized this year's foreign economic policy direction with these contents.

The government identified the 'New Northern Policy' as a major task. With Russia, one of the key partner countries, it aims to expand the comprehensive exchange base on the occasion of the 30th anniversary of Korea-Russia diplomatic relations this year, and to achieve early results by adding promising cooperation areas such as finance, culture, and innovation to the existing cooperation system (9 Bridges Action Plan 2.0).

It also plans to establish a developer consultative body to explore ways to expand entry into the northern infrastructure market including financial support, and to advance the economic cooperation system with related countries by preparing a free trade agreement (FTA) promotion strategy considering the development level and cooperative relations of these countries.

Furthermore, as visible achievement goals, the government proposed establishing a joint investment fund for materials, parts, and equipment with Russia, early conclusion of the Korea-Russia Service and Investment FTA, and strengthening cooperation in innovation, energy, and healthcare. With Central Asian countries, it plans to build a comprehensive cooperation system to expand industrial cooperation in infrastructure, industry, culture, and logistics.

Strengthening economic cooperation with China was also identified as a key task in this year's foreign economic policy. The plan is to restore economic cooperation between the two countries and expand mutually beneficial cooperation in services, new industries, and joint advancement into third countries. First, through the Korea-China Economic Ministers' Meeting to be held in March with the participation of Korea's Ministry of Strategy and Finance and China's National Development and Reform Commission, the related cooperation contents will be concretized.

At the same time, the government plans to strengthen the 'New Southern Policy' by promoting cooperation projects with ASEAN countries such as Indonesia, Vietnam, Thailand, and India. In the case of Indonesia, high-level cooperation will be carried out to support the capital relocation project worth a total of 40 trillion won, and Korea's differentiated experience will be shared. With Vietnam, the Korea-Vietnam Deputy Prime Ministers' Economic Meeting scheduled for the first half of this year will discuss support for infrastructure orders such as Long Thanh New Airport and metro, as well as smart city sectors. With Thailand, which will hold the 2nd Economic Cooperation Committee in the first half of this year, cooperation projects will be explored in new industries such as energy and bio, and water management projects. In addition, the government plans to push for the conclusion within this year of the Regional Comprehensive Economic Partnership (RCEP), Korea-Philippines FTA, and Korea-Mercosur Trade Agreement (TA).

The government will also accelerate overseas orders and foreign investment attraction to support the domestic economic rebound. It will prepare supplementary measures tailored to each stage of overseas infrastructure order projects within the first half of this year, and support the establishment of networks for Korean companies to enter international organization procurement projects in conjunction with the ADB Annual Meeting scheduled to be held in Songdo in May.

Efforts to expand foreign investment attraction will also be intensified. To attract more than 20 billion dollars for six consecutive years, one-on-one customized investment briefings (IR) and incentives such as cash support will be expanded. Advanced industries will be included in the cash support targets for foreign-invested companies starting in July, and since last December, a cash support system has been implemented to induce employment and research and development (R&D).

In addition, the government plans to strengthen monitoring to stably manage external risks and promptly implement market stabilization measures through expanded macroeconomic and financial meetings. If foreign currency liquidity management is necessary, it will issue foreign exchange stabilization bonds in a timely manner (with a limit of 1.5 billion dollars this year) and expand foreign currency liquidity through extensions of currency swaps. Furthermore, to realize the peace economy on the Korean Peninsula, it plans to promote humanitarian aid and knowledge cooperation possible within the framework of sanctions based on collaboration with international organizations.