Yoon Suk-yeol was sworn in as the 20th president of the Republic of Korea recently, but his government may not have smooth sailing, as it could face domestic and foreign environments comparable to that during the 1990s Asian financial crisis and the 2008 global financial crisis.
In order to ensure steady economic growth and maintain social stability, it therefore needs to adopt bold policies and more closely work with neighboring countries and the international community.
Since both countries are facing severe challenges at home and abroad, they should establish exchange and communication mechanisms in multiple areas, in order to avoid risks in the future
In a telephone conversation with Yoon after his election win, Chinese President Xi Jinping said China and the ROK should strengthen cooperation, promote a just and reasonable global governance system, make positive contributions to the stability of the global supply chains, and promote regional and global peace and prosperity through stable bilateral relations. In response, Yoon said the two countries should deepen cooperation in the spirit of mutual respect on regional and global issues, so as to contribute to the sustainable development of the two countries, meet their mutual interests, and maintain regional peace.
Vice-President Wang Qishan, who attended Yoon's inauguration ceremony, stressed the importance of further strengthening economic ties between the two sides.
To begin with, the new ROK government needs to deal with a series of thorny issues, including high interest and exchange rates, and rising commodity prices, caused by the disruptions in the global supply chains due to the COVID-19 pandemic, the increase in energy prices triggered by the Russia-Ukraine conflict, and interest rate hikes by the US Federal Reserve and other central banks. Since external factors have caused these problems, the new ROK government will face more uncertainties for the country's economy.
From a political and diplomatic perspective, the ROK can emerge from economic slowdown by implementing decisive reforms, promoting technological innovations and adopting proactive fiscal policy. Yet it may find the complex and intertwined regional and international geopolitical issues more intractable.
Given the intensifying conflict of interests between China and the US over multilateralism, free trade and investment, protection of industries and supply chains, and the Korean Peninsula nuclear issue, the policies the ROK adopts will play a key role in addressing the problems it faces.
Despite the changing situations at home and abroad, China and the ROK have maintained close economic cooperation since the establishment of bilateral diplomatic ties three decades ago, and regard each other as important, strategic economic partners. This means bilateral ties may not undergo major changes under the new ROK government, and hopefully, once the pandemic is effectively contained, will have more room to expand diplomatic communication, economic cooperation and people-to-people exchanges.
The new ROK government has announced its agendas in 110 fields, making clear that it will manage regional industry and supply chains with neighboring countries, actively participate in the Regional Comprehensive Economic Partnership, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and other regional trade agreements, and deepen global economic cooperation to improve its foreign trade environment. So the ROK-China economic cooperation on trade and investment is likely to strengthen.
Despite geopolitical instability, global inflation and disruption in the industry and supply chains caused by the pandemic, stable economic and trade cooperation will not only generate common benefits for China and the ROK, but also help minimize potential political and diplomatic risks.
Economic cooperation has been the foundation of China-ROK cooperation, which will continue in the future. The widening of reform and further opening-up by China, combined with its solid economic foundation and a huge consumer market, will not only contribute to the development of the world economy, but also promote economic cooperation between China and the ROK, which will help the two sides to overcome the political and economic changes.
Since both countries are facing severe challenges at home and abroad, they should establish exchange and communication mechanisms in multiple areas, in order to avoid risks in the future.
The two sides should also strengthen high-level strategic communication to avoid intruding in each other's sensitive issues and to broaden cooperation in industry and supply chains, healthcare, the fight against climate change, and to expand cultural exchanges.
People-to-people exchanges, especially tourism, should be resumed between the two countries after the pandemic is controlled. By enhancing communication through the existing means and taking practical actions, the two sides can effectively deal with the challenges posed by the changing political and economic situations at home and abroad, and carry forward their 30-year cooperation momentum.
But most of all, the two sides should expand economic cooperation, because that is the foundation of, and most important and practical basis for, overall bilateral cooperation.
The author is a guest professor at the International Business School, Beijing Foreign Studies University.
The views don't necessarily reflect those of China Daily.