Korean Foreign Direct Investment (FDI) in China in a changing geopolitical environment An insight into Korean FDI in China amidst the US-China Tech War and Reshoring Dynamics

Abstract

This thesis seeks to examine the trends and evolution of Korean Foreign Direct Investment (FDI) in China, a pivotal destination, with a particular focus on the transformations occurring amid the contemporary geopolitical landscape. The first chapter delves into the development of Korean FDI in China, dividing the period from 1992, marking the establishment of diplomatic relationships between China and South Korea, to recent times, into three distinct phases. This analysis focuses on main bilateral events, major investors, targeted investment areas, and sectors characterizing each phase. The second chapter provides an overview of the profound impact of the China-US tech war on Korean FDI and Korean companies in China. Given South Korea’s deep ties and substantial economic interests in both China and the US, it stands out as one of the most affected countries in this conflict. This chapter highlights key policies, measures, and acts implemented by the three nations, shedding light on their influence on the intricate dynamics of Korean investments. Building upon this foundational understanding, the third chapter investigates one of the strategic responses of the Korean government to the evolving international scene: reshoring. The examination centers on the Act on Assistance to Korean Off-shore Enterprises in Repatriation, enforced in 2013, and its associated policies as some of the main tools employed to address the multifaceted challenges the South Korean economy faces. Through a detailed analysis of these measures, this chapter analyzes how the Korean government tries to fortify its economic resilience, foster domestic job creation, revitalize domestic manufacturing, and reach a balanced regional economic development.