Seoul Village: China Dependence

If XI Jinping doesn't eat himself to death, he'll be leading China well into the next decade. And as he hosted the APEC meeting, he already tried to pose as a new breed of World leader, some kind of a super-blob absorbing every disturbance:
- Airpocalypse? Suspended for the occasion. It came back with a vengeance afterwards, and Seoul got a mean whiff of it for Suneung.
- Democracy? Distant umbrella clicking sounds muffled by thick red padded walls. Even the World's supposedly ultimate Democratic leader came bruised up (a red-painted America for Obama's last Midterm Elections).
- TPP? Sorry to hear about your China-free Trans-Pacific Partnership struggle. Here's our China-led Free Trade Area of the Asia Pacific (FTAAP). And Vladimir? I'm not forgetting our Shanghai Cooperation Organisation, we'll invite Modi and India soon. Meanwhile, here's another big contract for you...
- Shinzo Abe? The Imperial Japan revivalist thought their handshake would mark a diplomatic victory for him, Xi turned it into a public humiliation (a red face as visible as the dot on the flag for Abe, once again shaming the nation).

Meanwhile, South Korea and Park Geun-hye confirmed their honeymoon with China and Xi Jinping by concluding their FTA deal, a few days after the official launch of clearinghouse services by China’s Bank of Communications branch in Seoul (November 6).

I need a pull

We got a deal

Do you think Vlad the Impaler is coming our way?

Asia Pacific leaders beamed down to the size of blue cells.

If you remember the survey recently led by the Asan Institute on "South Korean Attitudes on China" (20140703) and "South Korean Attitudes on the Korea-US Alliance and Northeast Asia" (20140424), Koreans seem to consider their growing dependence on China as ineluctable, and they don't feel so comfortable about it.

But Koreans are not so comfortable with their economic situation and gloomy demographics either, and many are ready to make a quick buck, whatever the long term consequences.

Jeju illustrates perfectly the double-edged sword of Korea's growing dependence on China. Local authorities opened Pandora's box in February 2010 by offering F-2 visas to anyone who invests at least KRW 500 m in real estate, and the Chinese jumped in. Mind you: not just as political risk management tools or evasion tactics. As of June 2014, they owned 5.92 million sqm of land worth KRW 580.7 bn, up from 20,000 sqm worth KRW 0.4 bn in 2009. Over the same period, US citizens gained only 4% more land, and Japanese citizens even lost 2% of their total.*

This year, Jeju will welcome over 5M visitors from China. But beyond the construction of hotels and resorts, China doesn't boost local jobs or consumption**. And at this pace, the island could become a Costa del Sol - style environmental + real estate mess. Local authorities are starting to realize the unsoundness of the equation, but Korea opens other regions to similar schemes, to the risk of creating bubbles, and of sucking much needed steam out of nearby projects that are already struggling.

Otherwise, for places like Songdo, bringing China in the equation helps fill existing towers. And speaking of Incheon: look how the city revived its Chinese heritage over the past decades, from one extreme (a community below the radar) to another (a brand new, colorful Chinatown).

In Seoul, Yeonnam-dong (the southern half of Yeonhui-dong until it joined Mapo-gu) enjoys a long history with China too, and it still shows in the architecture, even if you have to dig deeper and deeper to find one of these 'fusion hanok':

Yeonnam-dong hanok tended to have higher ceilings. Fusion architecture for people from Taiwan. (@theseoulvillage 20140815) - twitter.com/theseoulvillage/status/500156842874380288

Restaurant-wise, there are still a few great Chinese institutions in the neighborhood, but for how long? If flocks of Chinese tourists have recently started pouring in, that's to visit the new duty free shops operated by their compatriots in closed touristic circuits that obviously generate a lot of business, but not much for the local economy. Seoulites won't keep coming if they see Yeonnam-dong's charming streets packed with jay-parked tourist buses. Next thing you know, these closed circuits will include big buffets that will further degrade the neighborhood.

Don't get me wrong: of course China is a chance for Korea at all levels, I'm really happy to see two countries I love develop friendly and fruitful relations, and that's perfectly normal that a big chunk of China's touristic bonanza ends up in Chinese hands.

I'm just worried about the pace and reach of change, and its impacts on Korea's economy, society, and politics.

Not because China's influence is bad in itself, but because massive and rapid changes could trigger anti-Chinese reactions which could not only damage the relations between both nations, but the multicultural fabric of Korea itself.

Likewise, when I mention political issues, that's not only at the national level (typically: okay for outsourcing part of North Korea control, not okay to subscribe to the Northeast Project's 'Hanschluss' agenda): who and what will certain local authorities ultimately run for?

We're probably not at that stage yet, but I believe that Korean leaders should keep these risks in mind to work on a sustainable partnership. And that since this partnership cannot be balanced, to strengthen other partnerships in parallel.

Seoul Village

Thursday, November 13, 2014

China Dependence

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