Cultural, financial gains sought in Korea-China FTA service and investment talks

Production, stockpiling to expand against Middle East war, US-China tensions; AI investment risks also flagged

Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il speaks at the 274th Meeting of Ministers on External Economic Affairs at Government Complex Seoul in Jongno-gu, Seoul, on Monday. [Yonhap]
Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il speaks at the 274th Meeting of Ministers on External Economic Affairs at Government Complex Seoul in Jongno-gu, Seoul, on Monday. [Yonhap]

The government plans to establish a 3 trillion won ($2.24 billion) "overseas construction new strategy fund" to support South Korean companies bidding for projects abroad.

The initiative comes alongside efforts to secure market-opening gains in culture and finance through follow-up negotiations under the Korea-China free trade agreement, and to expand domestic production and stockpiling of key goods in response to the prolonged Middle East war and US-China tensions.

Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il convened the 274th Meeting of Ministers on External Economic Affairs at Government Complex Seoul on Monday, announcing the creation of the 3 trillion won fund. The government also said it would expand package-style contract bids to help revitalize regional economies linked to overseas projects.

Lee said exports have maintained solid momentum and continued to support growth, but external uncertainty surrounding the South Korean economy remains high. The current account posted a surplus of $46.11 billion in August, extending the streak of consecutive monthly surpluses to 40 months.

The government said it would address external risks along three tracks: shifts in the global trade order, supply chain instability, and potential risks to the real economy and financial markets.

On the trade front, the government identified trade bloc formation, pending trade issues with the United States, and the EU's tightening of industrial protection measures as key risks. It plans to closely monitor trade developments in major economies, strengthen external contacts for stable management, diversify its trade network, and support companies expanding overseas.

"We are currently conducting follow-up negotiations on services and investment under the Korea-China FTA," Lee said. "We will work to achieve tangible results in areas such as culture and finance based on the principle of reciprocal market opening, so that conditions for Korean companies operating abroad can improve."

On supply chains, the government said it would continue expanding domestic production and stockpiling of economic security items, building overseas production capacity, and diversifying imports in response to the prolonged Middle East war and US-China tensions. It also plans to use high-level summit diplomacy to build economic and supply chain cooperation frameworks with key countries, and to periodically review the outcomes of such diplomacy to ensure visible results.

Amid persistently high global interest rates, the government also flagged fiscal risks in major economies and the possibility of an AI investment correction as potential external threats. It said it would proactively assess risks to the real economy and financial markets and continue efforts to maintain market stability.

Monday's meeting also covered the implementation review of economic outcomes from recent summits, a plan to develop a dedicated industrial complex in India for Korean companies, and detailed measures for advancing the Global Verified Carbon Market initiative, alongside the external economic risk assessment and response framework.

"The government will respond to external uncertainty without wavering as one economic team, and turn the challenges of change into new growth opportunities," Lee said. "We will prepare thoroughly so that the tasks discussed today translate into tangible results on the ground."


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