South Korean media: Chinese capital suddenly surges ... Large-scale purchase of South Korean government bonds, stocks, and real estate

Recently, China is accelerating its increase in holding South Korean government bonds, while direct investment, stock, and real estate investment have also significantly increased. According to financial industry experts, "Chinese capital surge" has a positive stimulating effect on domestic investment in South Korea, but there is also a risk that the South Korean economy may be influenced by Chinese capital.

China holds more than twice the South Korean government bonds held by the United States

According to data obtained by the office of Rep. Choe Eun-suk (People Power Party) from the National Assembly Committee on Planning and Finance, as of the end of September, the total amount of South Korean government bonds held by Asian countries including China was 138 trillion won (approximately RMB 697.4 billion), far exceeding Europe (109 trillion won), America (27 trillion won), and the Middle East (14 trillion won). The amount of South Korean government bonds held by Asian countries increased by 38 trillion won compared to the end of 2021, which is more than five times the increase in America (7 trillion won). The main reason for the sharp increase in the amount of South Korean government bonds held by Asian countries is China's variable factors. Over the past 10 years, among Asian countries, China has continuously increased its holdings of South Korean government bonds and has always been the top holder of government bonds. Eventually, China has opened up a gap of more than twice the current holding of the second place, the United States.

Over the past decade or so, during the Sino-US trade war, China reduced its holdings of US Treasury bonds, seeking to diversify investment targets. During the COVID-19 pandemic, the yield on South Korean government bonds remained around 3% annually (based on the 10-year term), which offered better investment returns than the low interest rates in Europe and Japan, attracting the attention of China.

However, if the holding of government bonds is overly concentrated in a specific country, it may not only affect the economy but also expand the "shadow influence" on politics and diplomacy. For example, the continuous reduction of US Treasury bonds by China led to a drop in US bond prices (interest rates rose), and if China were to "sell out South Korea," it would cause turmoil in the South Korean financial market.

Choe Eun-suk stated: "Considering foreign risk management, it is crucial to avoid over-reliance on a single source of funding and maintain balance," and "it is necessary to reduce political and diplomatic variables and improve the predictability of the South Korean financial market."

At the same time, Chinese investment in South Korean companies is also increasing continuously. In 2024, the declared amount of direct investment by China in South Korea (including Hong Kong) was 6.794 billion USD, an increase of 147% year-on-year, setting a new record high. The Institute of Foreign Trade Policy Analysis stated: "In the context of the US-China technological competition and global supply chain restructuring, the importance of South Korea as a production base and logistics hub is continuously increasing." Recently, Alipay acquired 19.28% of Kakao Pay shares, and Ant Group acquired 37.71% of Toss Payments shares. China is increasingly investing in the digital finance sector in South Korea. Tencent has also made equity investments in entertainment and gaming companies such as SM Entertainment, Kakao Games, Kwonjeong, and Netmarble.

Large-scale purchase of stocks and real estate

As of the end of September, the value of South Korean stocks held by China was 20.49 trillion won (approximately RMB 103.5 billion), an increase of 45.8% compared to the end of 2024 (14.57 trillion won, approximately RMB 71 billion). Although it is still far behind the United States, which holds 367 trillion won (approximately RMB 1,855.2 billion) in South Korean stocks, the growth rate is higher than that of the United States (35%). Additionally, China remains the top buyer of South Korean real estate among foreigners. In 2024, the number of real estate purchases by Chinese citizens was 11,363, accounting for 65% of the total number of foreigners (17,504). As of the end of September, the number of Chinese people holding real estate in South Korea was 99,804, approaching 100,000. "Stock appreciation" may have helped attract Chinese funds, but the side effect of pushing up Seoul's property prices is expanding continuously.

Source: Chosun Ilbo

Original: www.toutiao.com/article/1844761464983562/

Statement: This article represents the views of the author himself