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Policy Reference

한국과 중국 연변조선족자치주 경제협력과 향후 발전방안 표지
Policy Analyses Detail View
Title Economic Cooperation between the Republic of Korea and Yanbian Korean Autonomous Prefecture in China and Development Plans
Author LIM Sooho, KIM Junyoung, PARK Jongsang, AN Guo-Shan, and PIAO Yi-Feng
Series Policy References 17-04
Language Korean
Date 2017-09-12

  The Yanbian Autonomous Prefecture (“Yanbian”) of China’s Jilin Province is a border area between the northeastern part of the Korean Peninsula and China and is often referred to as the Tumen River region. Yanbian is a major residential area for ​​Korean ethnic groups and uses both Chinese and Korean as official languages. It is a place which retains the history of the independence movement of the nation, and Baekdu Mountain is located in this region as well. As such, the region shares a deep emotional bond with the Korean Peninsula.
  However, from a geo-economic point of view, Korea needs to try a new approach to Yanbian. Yanbian can act as an important test bed and bridgehead in the process of actively responding to the changing Chinese economy in the era of “new normal,” and in the process of establishing new strategies for Korea to advance into China. In addition, Yanbian is an important hub for Northeast Asia and an important gateway to China and Eurasia. Located adjacent to North Korea, the region will be able to induce the opening of North Korea by serving as a space to establish and execute a creative strategy of engagement with North Korea.
  Therefore, this study sought to identify more concrete cooperation plans in the short and medium term, based on the necessity of economic cooperation for Korea in the Yanbian area. For this purpose, we analyze the process and status of the economic development of Yanbian and analyze the economic cooperation process and obstacles between Korea and Yanbian. In addition, we conducted a more in-depth analysis through joint research with the Consulate General of the Republic of Korea in Shenyang and the researchers of the Economic Research Institute of the Korean Peninsula Research Institute of Yanbian University.
  Throughout the history of China, the Northeast region has been a key industrial base for chemical manufacturing. While Yanbian is located in the Northeast, however, it is in a remote region and its economy remained relatively undeveloped for a long time. Then, following the reform and opening of the nation, the region achieved a 9.5% annual growth rate in GDP from 1991 to present. While not on par with the eastern coastal area of China, the region has seen significant growth in recent years. In particular, after South Korea and China established diplomatic ties in 1992, Korean tours to Baekdu Mountain began, and economic development centered on the service industry took place. This service-led development has been influenced by external factors such as the 1997 Asian financial crisis and the global financial crisis in 2008. However, the tourism and restaurant business in Yanbian has been undergoing development as a whole. In addition, China’s own unique approaches to economic development, such as various trade, investment measures, and financial expenditure by the Yanbian state government to construct infrastructure, contributed to the economic development of Yanbian as well. Interestingly, the economic development of Yanbian benefited considerably from overseas remittances by ethnic Koreans who migrated to Korea, serving as the background to Yanji becoming a top-tier Chinese city in terms of consumption. Currently, Yanbian is striving to maintain the momentum of development by appropriately pursuing new plans and strategies such as the 13th Five-Year Plan of Yanbian, the Chang-Ji-Tu Project, the Yan-Long-Tu project, and the Belt and Road Initiative.
  Yanbian’s economic cooperation with Korea has also contributed greatly to the region’s economic development. As free exchange with Korea gradually expanded, the economic crisis and process of Korea overcoming this crisis became directly and indirectly linked to the Yanbian economy, which continued to develop throughout the events. In particular, it has become the cornerstone of economic development in various fields such as trade with Korea, investment from Korea, remittance from family members in Korea, and acquiring of advanced business culture from Korea. With the Korea-China FTA officially taking effect in 2015, the economic cooperation between Korea and Yanbian is expected to expand further in the mid- to long-term. However, the contribution of Korea to the economic development of Yanbian has been decreasing compared to the past, meaning Korea needs a new approach to Yanbian.
  Therefore, in order to investigate this, our study evaluates the accomplishments and obstacles to economic cooperation experienced by Korean entrepreneurs engaged in business with Yanbian, while also evaluating the demand for Korean cooperation. Many Korean companies that have advanced into Yanbian report that the business conditions in the region have deteriorated as the benefits or preference for Korea have become lower than in the past. In addition, Korean-Chinese business partnerships based on ethnic homogeneity are suffering from weaker trust relations, casting doubt on business performance in the region. Nevertheless, if the South-North Korea problem is resolved in the mid- to long term, it will be evaluated as a region with great potential in the future.
  On the other hand, in the case of Yanbian organizations and local enterprises, Korea is considered an important economic cooperation partner, and it was expected that economic cooperation with Korea will continue to expand in the future. In particular, they still hope to attract Korea’s advanced technology and culture, and emphasize the need for large-scale investments centering on large corporations. In addition, they hope that economic cooperation with Korea will be achieved in accordance with the various plans and policies currently being pursued by Yanbian.
  Our research has attempted to divide the development strategies of Korea and Yanbian into macro strategies and detailed policies. In terms of macroeconomic strategy, first, Korea and Yanbian should strengthen economic exchange and cooperation in a gradual and comprehensive manner. Second, Yanbian can be used as a bridgehead for economic cooperation between China and Northeast Asia and the Eurasian continent. Third, Yanbian could be used as a location to carry out creative North Korean engagement strategies.
  Based on these three strategies, six detailed policy directions were presented. First of all, Korea should support the upgrading of Yanbian’s major industries such as agriculture and fisheries and the service industry. The second policy direction is to establish a joint research center in Yanbian and build a joint human resources training system. Yanbian, where both the Chinese and Korean languages are used jointly, is a fascinating place to cultivate talented people to monitor and engage the dynamic Chinese market. The third and fourth policy directions can be considered as the role of Korea in supporting the gradual development of Yanbian into a Northeast Asia Free Trade Zone and the establishment of international cooperation governance in the Tumen River region.
  Fifth and sixth, policies will be needed to provide a basis for sustainable economic cooperation through step-by-step financial cooperation and strengthening of social and cultural communication.
  The year 2017 marks the 25th anniversary of diplomatic relations between China and Korea, and should be considered an opportune time for South Korea to devise a new approach to the developed Chinese economy. In this context, Yanbian is a great location for Korea to develop new approaches not only for China but also into Northeast Asia and Eurasia, and toward the opening of North Korea in the future. In addition, as the Korean government designs a new economic map for the Korean Peninsula, Yanbian will play a role as a bridgehead into the mainland of Northeast Asia and the Chinese and Eurasian continents.  

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