Despite US Pressure, South Korea's Investment in China Increases by 44.5%

Foreign Direct Investment Actual Usage Increased by 21.5% Until July This Year... Korea, USA, Japan, Germany in Order
State Media Warns Companies Must Bear Losses if Supporting US

[Asia Economy Senior Reporter Cho Young-shin] According to the state-run Global Times, South Korea led foreign investment in China this year. The media cited the announcement of actual foreign capital utilization in China from January to July by the Chinese Ministry of Commerce, reporting that South Korea showed the highest growth rate this year.

According to the Global Times on the 19th, the total foreign capital utilization in China from January to July reached 798.33 billion yuan (approximately 156 trillion KRW), a 17.3% increase compared to the previous year. In US dollars, it amounted to 123.92 billion, marking a 21.5% increase year-on-year, the Global Times added. Foreign capital utilization refers to the inflow of foreign currency (dollars) into China, combining foreign direct investment (FDI) and indirect investments such as capital.

The Global Times particularly highlighted the increase in South Korea's foreign capital utilization. South Korea ranked first with a remarkable 44.5% increase compared to the same period last year.

In fact, Xu Zuting, spokesperson for the Chinese Ministry of Commerce, stated at a press conference with Chinese media the day before, "South Korea ranked first with a 44.5% growth rate, followed by the United States (36.3%), Japan (26.9%), and Germany (23.5%) in terms of foreign capital utilization."

The Global Times mentioned the ‘Chip 4’ alliance while reporting the increase in foreign capital utilization from South Korea, the United States, and Japan. Chip 4 is a semiconductor alliance led by the United States, excluding China, consisting of South Korea, the United States, Japan, and Taiwan.

Bai Ming, Deputy Director of the International Market Research Institute under the China International Trade and Economic Cooperation Institute of the Ministry of Commerce, said, "Half of South Korea's semiconductor exports are shipped to China," adding, "If the United States includes South Korea in Chip 4 to control China, South Korea could face difficulties." This is interpreted as a warning that South Korea might lose the large Chinese market if it participates in the Chip 4 alliance.

The Global Times indirectly pressured South Korea's semiconductor industry by quoting Chinese experts who said that companies in countries siding with the US geopolitical pressure would have to bear losses. It also pointed out the increase in foreign capital utilization by the United States and Japan, who are leading the blockade and containment of China. Although the US emphasizes decoupling in the technology sector, companies in these countries are actually increasing their investments in China, which the Global Times claims indicates no intention to withdraw investments from China.

The Global Times added that foreign capital utilization in advanced industries increased by 32.1% compared to the same period last year, with high-tech manufacturing up 33% and high-tech services up 31.8%.

The Wall Street Journal (WSJ) also criticized the US government's double standards on the 16th (local time), reporting that the US government approved most exports of sensitive advanced technologies such as semiconductors to China.

WSJ cited US Commerce Department data showing that among technology-related items requiring prior government approval, which accounted for less than 0.5% of the $125 billion exports to China in 2020, 94% (2,652 cases) were approved for export to China.

Although the approval rate dropped to 88% last year, WSJ noted that the data analysis method differed from 2020, making direct comparison difficult. It expressed concern that the US pressures China while still trading with China for profit.