Oil report

S.Korea uneasy with China's growing economic power

SEOUL, April 13 (Reuters) - South Korea on Monday expressed its concern about China’s rise as a global economic power and stressed the need to act pre-emptively to counter the giant neighbour’s growing influence in the international community.

The Ministry of Strategy and Finance said in an eight-page “reference material” that China’s growing clout was likely to intensify competition between the two countries especially in export markets and energy diplomacy.

“Competition with China is expected to intensify in such export markets as Latin America and Asia because China’s recent currency swap arrangements will enable yuan to be used in trade settlements,” the ministry said in the statement.

South Korea, which lacks natural resources, has relied heavily on exports as a driver of growth that helped it rise from the rubble of the 1950-53 Korean War to become the world’s 13th-largest economy.

The country’s media and policymakers have been voicing concerns that South Korea could lose its export markets to the giant neighbour, which would jeopardize its efforts to catch up with the world’s most developed economies. “In response to the spreading ‘Beijing Consensus’, our country also needs to adopt pre-emptive external economic policy,” the finance ministry said, referring to a phrase used to describe China’s growing influence.

China, with which Seoul normalised diplomatic ties in 1992, has become South Korea’s biggest trade partner and main investment destination.

South Korea’s two-way trade volume with China amounted to $168 billion in 2008, accounting for a fifth of its total trade volume, and nearly 20,000 South Korean companies were operating in China, government figures show. (Reporting by Yoo Choonsik; Editing by Tomasz Janowski)