Understanding the Economics–Politics Nexus in South Korea–China Relations

Abstract

A very interesting observation in recent South Korea–China relations is the sharp contrast between their “hot” economic and “cold” political ties. This article proposes to understand the “trade–conflict” relations from the perspective of the two states’ grand strategy of foreign policy. At the bilateral level, Vector Autoregression models are employed to test the Granger causality between Sino-South Korean bilateral trade and political relations. At the regional level, the two states’ economic and political ties with other regional powers in Northeast Asia are examined. The findings reveal different patterns in South Korea and China’s grand strategies to balance their economic and political goals.