the evolution of china-south korea trade
china and south korea signed the joint communiqué on the establishment of diplomatic relations between the people's republic of china and the republic of korea in august 1992，marking the official establishment of diplomatic relations at the ambassadorial level between two countries，the size of china's trade with korea amounted to around us$5.02 billion，when the united states was south korea's largest trading partner. therefore，it’s very understandable that almost nobody had expected the bilateral trade between two sides would achieve leapfrog growth just in a few years. according to the data from the ministry of commerce of china，with a year-on-year increase of about 26.9%，the scale of bilateral trade had risen to us$362.35 billion in 2021，which means around 72-fold increase over the past three decades. that figure is also widely regarded as representative of changes in the economic relationship between china and south korea. at present，china is south korea's largest trading partner，and south korea is china's fifth largest trading partner. the achievements in trade cooperation between two nations are extremely rare in the history of global trade.
changes in the structure of trade
in the early years of the chinese diplomatic normalization with south korea，top export commodities from china to south korea were minerals，man-made fiber sand grains，characterized by low-technical content and labor-intensive industry，while south korea's exports to china were mainly steel，plastic chemicals，machinery and equipment，classed as capital-intensive industries. with the adjustment of the economic and industry structures，the content of trade between china and south korea changed a lot. the proportion of high-tech products from china continues to increase as its high-technology industries and manufacturing becomes more and more advanced. this is obvious in the businesses of semiconductors，it is doubtless that south korea is maintained its competitive edge，while china’s fast developing in this industry is undeniable. according to a study led by the south korea international trade association (kita)，there is approximately 16.5% of south korea's imports from china were semiconductors. the data from korea customs service is also telling the same story，the country had imported about us$27.8 billion worth of products under hs code 85 which mainly include electrical machinery and equipment and parts thereof，television recorders and so on from china in the first half of 2022，early 24.1 percent increase compared with the same period of the previous year.
the structure of settlement currency has changed considerably. at the beginning days of the establishment of diplomatic relations between china and south korea，the rmb internationalization has not yet started，and the won is also not an international currency. as a consequence，the us dollar was once the only settlement currency between china and south korea’s trades for many years. the situation changed since 2009 of which is widely acknowledged as the beginning year of rmb internationalization. in 2010，a trading company located in shanghai bought goods from a korean company，rmb was chosen as for settlement tool in the transaction，marking the beginning of rmb settlement between china and south korea. after that，the rmb started to play an increasingly significant role in cross-border payments between the two sides，and the transaction volume of rmb raised quickly. at the same time，the proportion of us dollars has been declining. according to the statistics released by the bank of korea，the country’s central bank，although the us dollar is still the largest settlement currency used in china- south korea trade，rmb has become the second largest currency in trade between china and south korea by proportion of settlement at around 7% in south korea's export trade to china，and in settlement of south korea's import from china，the rmb accounted for about 6.4% by 2021.
