Inter-City Linkages and Cooperation Measures for Northeast Asian Cities in the Global Era
Inter-City Linkages and Cooperation Measures for Northeast Asian Cities in the Global Era
- Focusing on the Pan Yellow Sea Zone -
Won Bae Kim Jeong-Ho Moon Sung-Ho Oh Jin-Cheol Jo Min-Ho Seo
Korea Research Institute for Human Settlements For Ministry of Land, Transport and Maritime Affairs
KRIHS Research Monograph 2008-1 · Inter-City Linkages and Cooperation Measures for Northeast Asian Cities in the Global Era
Authors: Won Bae Kim, Jeong-Ho Moon, Sung-Ho Oh, Jin-Cheol Jo, and Min-Ho Seo / Yang-Ho Park / Publisher : Korea Research Institute for Human Settlements Publication Registration No. 2-22 / Printed on July, 25, 2008 / Published on July, 25, 2008 Address : 1591-6 Gwanyang-dong, Dongan-gu, Anyang-shi, Gyeonggi-do (431-712) Tel : 031-380-0114 (main), 031-380-0426 (distribution) / Fax : 031-380-0470 ISBN · 978-89-8182-544-7 Korea Research Foundation Research Classification No. B101100 http://www.krihs.re.kr 2008, Korea Research Institute for Human Settlements ＊The content of this research is the outcome of an independent study conducted by the Korea Research Institute for Human Settlements.
KRIHS Research Monograph 2008-1
Inter-City Linkages and Cooperation Measures for Northeast Asian Cities in the Global Era
- Focusing on the Pan Yellow Sea Zone - • Won Bae Kim, Jeong-Ho Moon, Sung-Ho Oh, Jin-Cheol Jo, and Min-Ho Seo
K R I H S
Authors
Won-Bae Kim, Senior Research Fellow, Project Leader Jeong-Ho Moon, Research Fellow Sung-Ho Oh, Research Fellow Jin-Cheol Jo, Research Fellow Min-Ho Seo, Researcher
K R I H S C ․ O ․ N ․ T ․ E ․ N ․ T ․ S
Contents
Chpter 1. Northeast Asian Regionalization: Trends and Issues ------1 1. Regional Exchange Trend in Northeast Asia ------1 1) Globalization and regionalization trends------1 2) Regionalization trend between China, Japan, and Korea ----4 3) Trends in economic exchange and investment ------7 4) Trends in industrial cooperation ------10 5) Trends in tourist & human exchange ------18 2. Cooperation and Exchange in Northeast Asia: Issues and Prospects ------22 1) Obstacles to further regionalization in Northeast Asia 22 2) China-Japan-Korea FTA promotion: trends & prospects ----23 3) Political and diplomatic obstacles and prospects ------26 4) Cooperation and exchange between China, Japan, and Korea: prospects and tasks------28
Chapter 2. Inter-City Linkages and Cooperation System in Northeast Asia: Current Status and Outlook ------33 1. History of Inter-City Linkages in Northeast Asia ------33 1) Historical background of inter-city linkages in Northeast Asia ------33 2) Economic exchange and inter-city linkages in the Pan Yellow Sea Zone 42 2. Inter-City Cooperation in the Pan Yellow Sea Zone: History and Trends ------46 1) Emergence of the Pan Yellow Sea Zone ------46 2) Geographical scope, key port cities’ current situation, and development strategy for the Pan Yellow Sea Zone ------48 3) History of cooperation between port cities------64 3. Task for Inter-City Cooperation in Northeast Asia ------71 1) Strengthening the administrative linkages and cooperation system between cities ------71 2) Organization of support fund for inter-city linkages and cooperation projects ------72 3) Inducing proactive support from the business community, private sector, and academe ------73 4) Development of practical programs and new projects ------74
Chapter 3. Establishing Logistics and Transportation Linkages Between Cities in China, Japan, and Korea ------77 1. Status of Logistics and Transportation Linkages in Northeast Asia ------77 1) Status of waterway exchange in Northeast Asia ------78 2) Status of airway exchange in Northeast Asia ------82 2. Status of Logistics and Transportation Linkages and Trends in the Pan Yellow Sea Zone ------85 1) Status of logistics and transportation linkages in the Pan Yellow Sea Zone ------85 2) Characteristics of logistics and transportation linkages in the Pan Yellow Sea Zone ------88 3) Recent efforts to expand logistics and transportation linkages in the Pan Yellow Sea Zone ------94 3. Policy Direction for Invigorating Human and Commodity Flows Between Cities in the Pan Yellow Sea Zone ------99 1) Passenger flows: establishment of the 1-day business zone ---99 2) Cargo flows: vitalization of an integrated transportation system ------101 3) Regional linkages: specific measures for enhancing transportation infrastructure linkages------104
Chapter 4. Environmental Problems and Inter-City Cooperation Measures in Northeast Asia ------109 1. Status of Environmental Cooperation Between the Central and Local Governments in Northeast Asia ------109 1) Status of environmental cooperation between central governments ------109 2) Status of environmental cooperation between local governments ------111 3) Climate change and potential inter-city cooperation------114 4) Evaluation of environmental cooperation between the central and local governments in Northeast Asia ------117 2. Inter-City Environmental Cooperation: Cases and Implications---119 1) Inter-city environmental cooperation: examples in the Pan Yellow Sea Zone ------119 2) Implications of environmental cooperation between cities in the Pan Yellow Sea Zone ------125 3. Common Environmental Problems and Measures for Enhancing Inter-City Cooperation in the Pan Yellow Sea Zone ------128 1) Common problems and responses in cities in the Pan Yellow Sea Zone ------128 2) Measures for inter-city environmental cooperation in the Pan Yellow Sea Zone ------133
Chapter 5. Conclusion: Promotion of Inter-City Linkages and Cooperation in Northeast Asia ------141 1. Importance of Regionalization and Inter-City Linkages and Cooperation in Northeast Asia ------141 2. Establishing the Macro Environment for Strengthening Inter- City Linkages in Northeast Asia ------142 1) System improvement to strengthen cross-border cooperation -142 2) Strategic linkages with the China-Japan-Korea FTA ------144 3. Transportation Infrastructure and Environmental Cooperation Measures ------145 1) Measures for improving the inter-city transportation infrastructure in the Pan Yellow Sea Zone ------145 2) Measures for logistics cooperation ------148 3) Measures for inter-city environmental cooperation in Northeast Asia ------149 4. Direction of Territorial Policies for Strengthening Inter-City Linkages------150 5. Role of Local Governments in Promoting Inter-City Linkages and Cooperation in the Pan Yellow Sea Zone ------153
T ․ A ․ B ․ L ․ E ․ S
Tables
Nature of the New Regionalism ...... 2
Comparison of Regionalism in Europe and Northeast Asia ....4
Changes in the Trade Volume of the Northeast Asian Three (China, Japan, and Korea)...... 9
Overview of the Business Bases of Korea’s Hyundai Motors in China ...... 14
Annual Direct Investment Matrix of the Chinese, Japanese, and Korean Electronics Industries ...... 16
Skilled Foreign Workers by Nationality and Visa Type...... 21
Labor Outflow from Korea (2000) ...... 21
Direction of FTA Policy of China, Japan, and Korea ...... 25
China-Korea Trade in the Pan Yellow Sea Zone (Bohai) .... 43
Key Indicators for the Pan Yellow Sea Zone (2006) ...... 50
Economic Status of the 10 Key Cities in the Pan Yellow Sea Zone (2006) ...... 51
Economic and Industrial Structure of Key Cities in the Pan Yellow Sea Zone (2006) ...... 52
Container Traffic and Share of the Northeast Asian Three (China, Japan, and Korea) ...... 78
Container Volume: China-Korea, Japan-Korea, and China- Japan (2000~2006)...... 80
Container Volumes of Key Ports in the Northeast Asian Three (China, Japan, and Korea) ...... 81
Facilities in Key Ports of the Northeast Asian Three (China, Japan, and Korea; 2005) ...... 82
Comparison of Airway Transportation Volume Between China, Japan, and Korea...... 83
Comparison of Airway Transportation Volume: China-Korea, Japan-Korea, and China-Japan...... 84
Container Transportation Volume Between Key Ports in the Pan Yellow Sea Zone (Korea → China; 2006) ...... 89
Container Transportation Volume Between Key Ports in the Pan Yellow Sea Zone (China → Korea; 2006) ...... 89
Container Transportation Volume Between Key Ports in Japan and Korea (Korea → Japan; 2006) ...... 90
Container Transportation Volume Between Key Ports in Japan and Korea (Japan → Korea; 2006) ...... 91
Container Transportation Volume Between Key Ports in China and Japan (2005) ...... 92
Airway Transportation Volume Between Key Airports in the Pan Yellow Sea Zone (2005) ...... 93
Airway Transportation Volume Between Key Airports in Japan and Korea (2005)...... 94
CO₂ Emission Reduction Plan 2010……………………130
Basic Plan for General Waste Processing in Kitakyushu…131
F ․ I ․ G ․ U ․ R ․ E ․ S
Figures
Change in the Trading Structure of the Northeast Asian Three (China, Japan, Korea) for the Past 10 Years ...... 7 Direct Investment by Japan and Korea in China ...... 10 Production Bases of Japanese Automobile Companies in China ...... 13 Regional Distribution of Direct Investment Overseas by Korean Automobile Companies ...... 13 Human Exchange Between China, Japan, and Korea (2006) 20 Key Continental and Maritime Cities in a Mediterranean Sea of East Asia...... 34 East Asian Maritime Zone in a Mediterranean Sea of East Asia ...... 34 Formation of the Exchange Network in the “Commercial Age” of the 16th Century ...... 35 Formation of China-Japan-Korea Maritime Zones at the End of the 19th Century ...... 35 Historical Maritime Zones in East Asia...... 36 Change in the Trading Volume Between China and Korea in the Pan Yellow Sea Zone (Bohai) (2000~2006) .. 44 Change in the Trading Volume Between Japan’s Kyushu and Korea (2000~2006) ...... 46 Geographical Scope of the Pan Yellow Sea Zone 49 Establishment of Inter-City Networks and Launching of Businesses by Kitakyushu...... 63
Change in the Container Volume Between the Northeast Asian Three ...... 80 Change in Airway Transportation Volume (passenger and cargo) Between the Northeast Asian Three (2002~2005)... 85 Status of Joint Rail Cargo Transportation Between Japan and Korea and Rail-Ferry System Between China and Korea... 96 Comparison of the Number of Passengers Before and After the Introduction of the Gimpo-Haneda Line...... 97 Analysis of the Prospective 1-Day Business Zones in China, Japan, and Korea in the Pan Yellow Sea Zone (airway) ...100 Train-Ferry System (RO/RO line)...... 102 Conceptual Diagram of the Road Feeder Service ...... 103 C · H · A · P · T· E · R Northeast Asian Regionalization: 1 Trends and Issues
1. Regional Exchange Trend in Northeast Asia
1) Globalization and regionalization trends
The 1990s saw the trend of globalization of the world economy and development of the multilateral trading system (WTO). To reflect the regionalization trend, pre-existing agreements have been further developed and expanded.
In other words, efforts to promote organized cooperation among different countries at the regional level have been made since the late 1980s. Parallel to such efforts is the initiative to build a unified global market. This is symbolized by the launch of WTO.
Regionalism refers to the promotion of linkages and cooperation between certain countries sharing geographical proximity, history, cultural background, and economic interdependence based on the region’s characteristics. At the same time, however, autonomy in international society is maintained.
By area of interest, regionalism can be classified into economic regionalism or general regionalism. General regionalism addresses political and military issues. By degree of integration and institutionalization, an organization can be a simple regional organization or a supra-national one.
Strictly speaking, regionalism refers to the trend in international economics wherein certain countries that are geographical close to each other and with common historical and cultural backgrounds create a regional market. They also apply the principle of free trade within the region.
Chapter 1• Northeast Asian Regionalization: Trends and Issues 1 Therefore, the process of regionalism based on the pursuit of specific goals can be observed in regional economic integration. Some examples include Europe’s EU, America’s NAFTA, and Asia’s APEC.
Nature of the New Regionalism Old Regionalism New Regionalism Nature of Multi-dimensional order and Cold War, Bipolar System international order globalization trends Compliance with the more all- Specific (economic or Nature of objective inclusive, multi-dimensional social military) trend Nature of Top down More Voluntary, Bottom up governance Group relations between Interest of the Behaviors of various non-state parties people of different participants at the global level nationalities Economic tendency Centripetal, Protective Centrifugal, Open Source: Hettne, Björn (2002). "The Europeanisation of Europe: endogenous and exogenous dimensions." European Integration, Vol. 24, No. 4, pp. 325~326.
Such globalization and regionalization trends tend to result in the diminishing significance of sovereign states, however. Competitions occur between city regions centered on metropolitan cities rather than between countries.
No doubt, advancements have been made in the transportation, information, and telecommunications technologies. The world economic order has been reconfigured as well. As a result, more capital, labor, commodity, service, technology, and information are formed, exchanged, and modified with little regard to national borders. This in turn leads to increasing interaction and trade between various parties including individuals, organizations, businesses, and regions in international society.
That is why the creation of autonomous city-regions around metropolitan cities is becoming increasingly important in vitalizing the regional economy. The same is true for the formation of networks with other city-regions worldwide. As such, cities are trying to enhance their competitiveness and expand their networks with one another to gain geographical advantage.
2 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities China, Japan, and Korea are the core countries of Northeast Asia; they have maintained a very close relationship throughout the long history of exchange and cooperation as well as invasion and war. “Regionalization” in Northeast Asia is not really a new phenomenon.
The exchange and interaction between port cities in Northeast Asia have formed a cycle of ebb and flow. In fact, they have repeatedly occurred throughout the region’s long history; they have survived the rise and fall of various Chinese dynasties and political, diplomatic, and economic relationships between China, Japan, and Korea.
Skinner (1985) conducted a comparative analysis of the growth cycles in the Chinese inland region and near-sea region in the Southeast.1 As a result, he came up with “Maritime Asia,” a concept that has evolved around China, Japan, and Korea since the 12th century.
Northeast Asia (China, Japan, and Korea) has extensive historical experience and huge potential to promote and realize regionalism at the city, regional, and national levels.
Nonetheless, China, Japan, and Korea (particularly China and Korea) have fallen behind Europe in terms of developing regional economic zones and bestowing local governments with autonomous powers. A centralized development strategy focuses on a few select primary cities rather than those incapable of participating in competition. Cities’ competitiveness in Northeast Asia is more heavily influenced by the central governments’ policies.2
China’s opening and reform in the late 20th century have made regionalization efforts by China, Japan, and Korea in Northeast Asia more aggressive. As a result, inter-city and inter-region linkages and cooperation as well as those between countries have expanded and deepened.
1 It represents the “maritime history” viewpoint, i.e., China, Japan, and Korea in East Asia and Southeast Asian countries have constantly built economic and cultural exchange networks through waterways to form “Maritime Asia.” This is comparable to the modern world order of the West (Gawagatsu, 1997; Skinner, 1985). 2 In Europe, cities have emerged as capable competitors outside national boundaries following the establishment of EU. In fact, they are directly competing against one another in the regionalized free market.
Chapter 1• Northeast Asian Regionalization: Trends and Issues 3
Comparison of Regionalism in Europe and Northeast Asia
Europe Northeast Asia Sub-regional economic zones (Southern Chinese Economic Zone, Greater China Economic Euroregions/ Zone, Pan Yellow Sea Example EUREGIO/Transmanche/Öresund Economic Zone, Pan East Sea Economic Zone, Japan-Korea Waters, etc.)/TGA (SIJORI, Tumen River Area) Selective opening of national borders, outcome of inter- Full opening of national borders, governmental agreement or outcome of supra-national policies (ex. Characteristics unilateral policy decision by a EU policies), policy-driven, top-down specific country, market- governance structure driven, bottom-up governance structure Source: Perkmann (2004). "Cross-border cooperation in Europe." WB Kim et al., Cooperative Development Strategy of the Regional Economy in the Korea-Japan Strait Zones. pp. 4~5 (contents revised and reorganized).
2) Regionalization trend between China, Japan, and Korea
The 1990s saw the end of the Cold War and beginnings of globalization trends with information technology development. These developments in turn have reinforced the economic cooperation between China, Japan, and Korea. The Northeast Asian Three have come together and worked closely as a block.
As of 2006, the GDP of the Northeast Asian Three (China, Japan, and Korea) was USD 7.898 trillion or 16.4% of the world’s total GDP. Their trade value of USD 3.66 trillion made up approximately 15.3% of the world’s total trade value.
The rate of increase in their intra-regional trade was higher than the world’s average of 5.8% (6.9% for Korea, 13.4% for China). This explained the increase in the region’s share in the world’s total trade.
Furthermore, China’s rapid economic growth has enhanced the significance of Northeast Asia in the world economy. As a result, Northeast Asia has become one of the world economy’s three pillars along with North America and Europe.
4 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities The economic growth rate of the Northeast Asian Three (China, Japan, and Korea) has surpassed the world’s average economic growth rate of 2.3% between 1990 and 2000 (10.0% for China, 1.0% for Japan, and 5.3% for Korea).
China’s high growth rates of 7.5% (2001) and 10.5% (2006) within the last 5 years are expected to add further to the weight of the Northeast Asian economy vis-à-vis the world economy.
The continuing progress of economic regionalization led by China, Japan, and Korea has given rise to the ongoing FTA talks between the three countries. The ultimate objective is to facilitate regional economic integration.
The China-Japan-Korea FTA was first proposed during the Northeast Asian Three Summit held in Manila in November 1999. The discussion was pursued further when China officially suggested conducting a feasibility study on the three countries’ FTA during the summit held in Phnom Penh in November 2002.
At the time, the leaders of the three countries agreed that their respective national policy research institutes would carry out a joint study on the China-Japan-Korea FTA between 2003 and 2005. As a whole, more efforts similar to such have been made to establish the regional economic community. Since 2005, however, further details have not been discussed.
Discussions on cooperation in the energy, transportation infrastructure, environment, and economic areas in Northeast Asia are also ongoing.
Recently, cooperation works have been commenced to bring together the transportation infrastructure in the region. Specifically, the Northeast Asian Railway Network (consisting of the Trans- Siberian Railroad [TSR], Trans-China Railroad [TCR], Trans- Manchurian Railroad [TMR], and Trans-Mongolian Railroad [TMGR]) has been connected to the Trans-Korean Peninsula Railroad. This has given the Korean peninsula an opportunity to become an important logistics and transportation hub in Northeast Asia.
Chapter 1• Northeast Asian Regionalization: Trends and Issues 5 Discussions on cooperation in energy -- such as the natural gas development in Siberia and Sakhalin and establishment of an integrated electric power network -- are currently underway.
China, Japan, and Korea have held the Tripartite Environment Ministers’ Meeting (TEMM) since 1999. Bilateral cooperation works in the China-Korea and Japan-Korea channels are now in progress. Note, however, that each country has its own different view regarding the importance of and need for environmental cooperation. Moreover, a systematic institution has yet to be established. Thus, a significant outcome has yet to be realized.
As mentioned earlier, most cities cannot act as autonomous entities in Northeast Asia particularly China, Japan, and Korea. Such inability has made them vulnerable to the influence of policies of their respective central governments. Nevertheless, the number of inter-city linkages around a few sub-regional economic zones has grown rapidly.
The following are the key sub-regional economic zones of Northeast Asia:
The “Pan East Sea Economic Zone” was spun off from the economic exchange between Far Eastern Russia, Northeastern China, Korean Peninsula, and East Sea Coast of Japan.
The “Pan Yellow Sea Economic Zone” is the result of the economic exchange between the Bohai Coastal area in China, West Sea Coastal area in the Korean Peninsula, and Kyushu and Yamaguchi areas in Japan.
The “Tropic of Cancer Economic Zone” or “Southern Chinese Economic Zone” is the product of the economic exchange between the Southern Coastal area of China, Hong Kong, Taiwan, Northern Philippines, and Okinawa, Japan.
The “Japan-Korea Strait Economic Zone” is the offspring of the economic exchange between the Northern Kyushu and Yamaguchi areas in Kyushu, Japan and Southeastern Korea specifically Busan.
6 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities 3) Trends in economic exchange and investment
China, Japan, and Korea have established a “triangular trade structure.” Intra- region trade has increased by more than 3.2 times over the past years. As of 2005, Japan recorded a USD 22.2 billion trade surplus with Korea. On the other hand, Korea’s trade surplus with China reached USD 23.3 billion. China’s trade surplus with Japan was USD 16.5 billion.
In 2005, total Korean exports to China stood at USD 61.9 billion; the country’s imports from China amounted to USD 38.6 billion. On the other hand, Korea’s total export to Japan was USD 24.0 billion; total Korean imports from Japan were pegged at USD 48.4 billion. Japan’s exports and imports to/from China were USD 80.1 billion and USD 108.4 billion, respectively.
The Japan-Korea trading relationship is both inter-dependent and competitive; its focus is on capital-intensive industries. As a result, Korea is structurally left with a chronic trade deficit with Japan.
Source: IMF (2006). Direction of Trade Statistics Yearbook 2006 (refer to KITA’s Trade Statistics).
Change in the Trading Structure of the Northeast Asian Three
Chapter 1• Northeast Asian Regionalization: Trends and Issues 7 (China, Japan, Korea) for the Past 10 Years
Korea and China’s diplomatic relationship was formally established in 1992. Since then, Korea’s trade with China has surged. Specifically, Korea’s export to and import from China expanded at an annual average rate of 89.2% and 81.1%, respectively, between 1993 and 2006.
Korea’s trade with China has been growing by approximately 11.9 times for the past 10 years (1995~2005). As a result, Korea became the 4th biggest trading partner (7.6%) of China. For its part, China emerged as the biggest trading partner (18.6%) of Korea.
Korea’s trade with China exhibited a steadily increasing trend. In fact, it only dipped slightly in 1998 due to the Foreign Exchange Crisis or “IMF Bailout” (export decreasing by 11.7%, import declining by 35.0%).
Note that the Chinese economy has posted an annual average growth rate of 9%. This is the major reason for the remarkable expansion of China’s import of semi-finished goods from Korea.
China’s trade deficit with Korea more than doubled from USD 6.4 billion in 2002 to USD 13.2 billion in 2003. It went as high as USD 23.2 billion in 2005.
After peaking in 2003, the growth of China’s trade deficit has slowed down considerably. The two countries’ trading structure is transforming from vertical differentiation to horizontal differentiation. This is attributed to the increasing weight of semi- finished goods with reference to raw materials in Korea’s import from China.
China-Japan trade has ballooned rapidly since Japan’s direct investment grew in the 1990s. The continuing reinforcement of China’s presence in the Japanese economy caused the trade deficit of Japan with China.
In 1993, Japan’s trade deficit with China stood at USD 3.3 billion. It increased more than sixfold, reaching USD 25.6 billion in 2006.
8 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Such trend can partly be explained by the re-export of the goods produced by Japanese companies in China back to their homeland. This practice has become widespread since 1995.
Such change in the trading structure suggests that the focus of the two countries’ trading relationship is shifting from labor- intensive industries to capital-intensive ones. Moreover, their relationship – which is characterized by China’s one-sided dependence on Japan -- is transforming into a mutually dependent, competitive one.
Capital flow between China, Japan, and Korea is practically unchecked. This is because the three countries welcome foreign direct investments.
Changes in the Trade Volume of the Northeast Asian Three (China, Japan, and Korea)
Direct investment between China, Japan, and Korea had mostly originated in Japan and Korea and went to China. Recently, however, China’s direct investment in Japan and Korea has increased.
Japan has become the biggest investor (except Hong Kong) in China since 1997. Korea’s direct investment in China grew continuously; it peaked in 2004 before its growth stalled.
Chapter 1• Northeast Asian Regionalization: Trends and Issues 9 Japan and Korea accounted for 8.6% and 5.0%, respectively, of the total direct investment in China in 2005.
USD 1 million No. of investment cases of No.
Value of Korean Value of Japanese Cases of Korean Cases of Japanese investment investment investment investment
Source: Byung Ki Ha (2007). "Regional issues on economic integration, industry, and trade." International Seminar on Cross-Border Cooperation Between Cities in East Asian Countries, Dec. 13~14, 2007.
Direct Investment by Japan and Korea in China
4) Trends in industrial cooperation
Japan has played a leading role in the regional production network of Northeast Asia since the 1970s. Since the late 1980s, however, the influence of NIES including Korea has grown. Recently, China has emerged as a key production base in Northeast Asian production systems.
The rise of China’s economy proved to be the biggest contributing factor to such change in the industry network. China has recorded rapid economic growth since its government implemented reform and market opening policies in 1997. The country has also attracted immense foreign investments particularly in the coastal areas. This in turn has paved the way for the establishment of industrial clusters.
10 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities China is making all-out regional economic integration efforts by expanding its cooperation with Southeast Asian countries. It is also deepening its trading relationships in Northeast Asia.
In response to such situation, Japan has set the policy direction toward promoting networking efforts between its key areas and those in China and Southeast Asia. Businesses have been more instrumental in pushing through with this plan to build different Northeast Asian production systems for different industries and strengthen regional linkages.
More investments in China for the electric, electronics, automobile, and machinery industries, joint plasma production by Sony and Samsung, etc. (Japanese companies assign the upper-level functions related to core technologies, R&D, and product design in Japan and outsource the production function to China and Southeast Asian countries)
Korea has recently attempted to establish a Northeast Asian production system by expanding its investment in China. Its efforts have not translated into progress comparable to that made by Japan, however.
Korean businesses have made their entry into several overseas markets. In fact, they have become part of many overseas production networks. International production networks have also been created for the automobile, electric, electronics, and steel industries.
Korea has made efforts toward production networking in its electric, electronics, automobile, steel, and shipbuilding industries. The Seoul Metropolitan Area (SMA) in particular established the division of labor in the electric and electronics industries with some key areas in China. The Youngnam Region is starting to establish labor division for the automobile, steel, and shipbuilding industries with China.
Such trend calls for a focused analysis of the automobile and electronics industries, which are typical examples of industrial linkages between China, Japan, and Korea.
The automobile industry boasts of the best developed international production network evolving around Northeast
Chapter 1• Northeast Asian Regionalization: Trends and Issues 11 Asia. It represents how the businesses of Japan and Korea are expanding their production networks in China.
The electronics industry has traditionally observed the vertical division of the labor structure. Nonetheless, the enhancement of China’s technological level and general market growth of the country have rapidly changed the topography of industry networking.
(1) Networking trends in the Northeast Asian automobile industry
Japan’s automobile industry has already made Southeast Asia its production base; the country has rapidly increased investment in China since the early 2000s when China joined the WTO.
Honda paved the way for the entry of Japanese automobile businesses into the China market in the late 1990s. Since then, Toyota and Nissan have built production bases in China to enter the automobile parts market as well as the finished car market of China.
The same is true for the Korean automobile industry. Hyundai first built its production base in Beijing in the late 1990s. Korean automobile parts businesses started to make their entry into the Chinese market at around the same time.
As a result, the production of Korean automobile businesses clustered around Beijing. Likewise, Korea’s unique production network – which consists of multiple parts businesses driven by finished-car businesses – is becoming a fixture in China.
12 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Toyota
Suzuki Honda
Nissan
Source: Seong-Chun Jeong and Hyeong-Geun Lee (2007). Korea Institute for International Economic Policy, p.105.
Production Bases of Japanese Automobile Companies in China
(unit: USD 1 million)
China
Europe US
Southeast Asia
Source: Seong-Chun Jeong and Hyeong-Geun Lee (2007). Korea Institute for International Economic Policy, p. 154.
Regional Distribution of Direct Investment Overseas by
Chapter 1• Northeast Asian Regionalization: Trends and Issues 13 Korean Automobile Companies
Overview of the Business Bases of Korea’s Hyundai Motors in China Investment Production Classification Key Products Production Capacity (2005) Share Launch Hyundai: SONATA, Hyundai Motors 50% 300,000 2002 AVANTE, - Peking Peking (600,000 in 2008) TUCSON Motors: 50%
Hyundai 90,000 Jiangjin Motors - Technology (joint investment planned for 2003 STAREX Hefei transfer commercial vehicle production) Rongcheng Technology GALLOPER, 70,000 2000 Huatai transfer TERRACAN (100,000 in 2008) Guangzhou N/A 2007 (est.) Truck, Bus (20,000 est.) Hyundai Motors Kia: 50% 130,000 (building of a second
Kia Qianlima, Kia - Chefeng Chefeng: plant in 2007 planned to 2002 OPTIMA, Yida 25% upgrade production capacity to CARNIVAL Yida: 25% 430,000) Source: Seong-Chun Jeong and Hyeong-Geun Lee (2007). Korea Institute for International Economic Policy, p. 164.
Note: As of the end of 2005; Rongcheng Huatai Motors was located in Shandong, whereas Jiangjin Motors was based in Anhui.
Japan and Korea’s automobile industry networks in China can be compared as follows:
Some of the similarities include the self-contained network structure, limited inter-network exchange, concentration of production bases on certain areas (Japan: Shanghai, Tianjin, and Guangzhou; Korea: Beijing), dependence of heavy parts procurement on local companies, limited relocation of the R&D function, emphasis on local procurement works, etc.
There are also some differences. For one, Japan pursues a high- quality, high-price strategy. In contrast, Korea pursues a small- profit, large-sales strategy. Unlike Korea, Japan strengthens the Keiretsu structure in parts procurement. It also brings down the
14 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities sales cost through production team discussions and efficiency improvement. Korea does the same based on the producers’ unilateral decision making. Such differences between Korean and Japanese automobile industries are attributed to the size, international competitiveness, and nature of the domestic production network.
(2) Cooperative relationship between the electronics industries of China, Japan, and Korea
In general, the electronics industries of China, Japan, and Korea have been characterized by the vertical division of the labor structure. Japan specialized in core parts production. Korea focused on semi-finished goods and medium-level technology parts production. China concentrated on finished goods assembly and retail parts production.
Accordingly, direct investment was made by Japan in Korea in the past. Investment by Japan and Korea in China started in the 1990s.
Direct investment by the Korean electronics industry targets China, not Japan.
Japan has technological prowess but minimal advantage as a production base. The country hardly has any merit as an investment destination except in terms of sales, production (albeit limited), and technology transfer.
Investment in China is made in the form of relocation and expansion of production facilities for electronic parts, appliances, and AV devices. Such strategy seeks to exploit China’s strengths as a production base, e.g., cheap labor. It also aims at making the most of the Chinese domestic market given its immense potential.
Chapter 1• Northeast Asian Regionalization: Trends and Issues 15
Annual Direct Investment Matrix of the Chinese, Japanese, and Korean Electronics Industries
Unit: USD 1 million Investor Korea China Japan 2000 137 4.3 Korea 2001 165 21.0 2002 218 2.1 2000 2.9 0.26 China 2001 10.6 1.7 2002 4.5 - 2000 153.2 332.4 Japan 2001 45.3 526.1 2002 38.4 304.5 Source: Joo, Dae-yeong, et al (2003). Korea Institute for International Economic Policy, p. 163.
Japanese businesses’ investment in China shrunk in the late 1990s. It bounced back strongly after 2000, however. In contrast, investment in Korea by Japanese businesses has been drastically cut down since 2000. This suggests that Korea has little appeal as an investment destination to Japanese businesses.
Both the Japanese and Korean electronics industries are relocating to or expanding their production bases in China.
Japanese and Korean businesses started moving their production bases to China in 2001 and 2003, respectively. This was due to the dwindling domestic demand and intensifying price competition.
The relocation of production bases from Japan and Korea to China has established the basis for businesses’ strategy of acquiring mass production capability. The maximization of the production advantage based on low labor cost was also targeted.
Sambo Computer, Digital Media Division of Samsung Electronics, and AC, Microwave Oven, and Refrigerator
16 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Production Lines of LG Electronics in Korea are just some of the businesses that relocated their production bases to China. Japan’s Hitachi, NEC, Sony, Matsushita, Pioneer, and Toshiba did the same.
Japanese and Korean electronics industries’ investment in the production bases to China continues to grow. Still, this may result in reduced domestic production. The absence of investment by MNCs at home may further exacerbate the situation.
This trend has been spreading through both the analog and digital sectors of the industry in Korea. In fact, the situation has delayed the upgrading of the industry and creation of value-added.
The production ratio in China is much higher for the electronics industry than the overall manufacturing industries in Japan. This indicates that the industrial hollowing out process has begun in the analog sector with its low value- added.
(3) Geographical linkages of the China-Japan-Korea industrial cooperation
China-Japan-Korea cooperation works in the automobile and electronics industries are being pursued. They center on the three countries’ key economic engines.
In the case of the automobile industry, Honda and Toyota have their headquarters in the Kanto and/or Chubu areas of Japan. They built and started operating production plants in the Guangdong or Beijing areas. Korea’s Hyundai Motors also opened assembly plants in the Beijing area.
The electronics industry is also very important in the three countries’ trading relationship as well as that between the key economic zones of each country. More complex, regionalized production networks than those in the automobile industry are being formed.
Most of the Korea-to-China investments in the electronics industry were from the Seoul Metropolitan Area. The investment destinations were usually the Jingjinji and Changjiang areas.
Chapter 1• Northeast Asian Regionalization: Trends and Issues 17 More specifically, the electronics and telecommunications industries were ranked no. 1 in terms of investment made by Korea’s SMA in China’s three key areas. The three areas also made up 68.5% (USD 4.065 billion incl. Hong Kong) of Korea’s electronics and telecommunications investment in China (Won-Bae Kim, et al, 2007a).
Japan mostly invested in China’s information and telecommunications and other advanced-technology industries. The specific investment destinations were the Kanto, Kinki, and Chubu areas. Note that these areas boast of outstanding industrial infrastructure and innovative capability.
Inter-regional linkages in the China-Japan-Korea industrial cooperation are expected to take the form of both vertical and horizontal production network expansion. The automobile and electronics industries are the targets. Such linkages enjoy great economic and industrial significance considering the key economic zones of each country.
Investment between the key economic zones of the three countries is active. Specifically, Japan and Korea invest in the Zhujiang Delta, Changjiang Delta, and Jingjinji areas of China. This suggests that cross-border, inter-regional linkages will soon emerge as an important factor in a region’s competitiveness.
5) Trends in tourist and human exchange
The number of tourists between China, Japan, and Korea has constantly grown. The change has been particularly prominent in the directions of Korea to Japan and China since 2000. The same is true for Japan to China and China to Korea and Japan. In fact, only the Japan to Korea tourist flow was sluggish.
The three countries recognize the importance of the tourism industry at both the national and regional levels. Thus, they are making proactive policy- related efforts. In particular, they offer bigger incentives to promote the development of the tourism industry. Attracting more tourists serves as another impetus.
18 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities In Korea, tourism development investments within foreign investment areas are eligible for 100% deduction on national tax (corporate tax, income tax) for the first 5 years. On the 7th year, a 50% tax deduction applies. A levy extension of up to 15 years may also be granted for local tax (acquisition tax, registration tax, property tax, total estate tax) as in the case of corporate tax.
Both the central government and individual local governments are establishing policies in support of tourism development investment in China. For instance, Shandong is offering land usage right to investors developing deforested land or areas whose natural environment has been destroyed into tourist complexes. It also levies minimum real estate-related taxes. Guangxi gives a 15% deduction on corporate income tax to domestic and foreign businesses investing in tourism development projects until 2010.
Individual local governments are particularly proactive in attracting tourism-related businesses and investments in Japan. For one, they provide tax incentives such as property tax and acquisition tax deduction or exemption. The One-stop Foreign Investment Housing Service Center is also operating in Akasaka in downtown Tokyo. It seeks to help businesses from different industries attract foreign investment.
Korea’s current foreign workforce is described below. It can explain the labor movement between China, Japan, and Korea.
There was hardly any manual laborer of Japanese nationality. There were a total of 181,449 illegal aliens. Among them, 86,266 (47.6%) were of Chinese nationality as of April 2004.
Industrial trainees numbered 74,923 in April 2004. This figure includes both legal and illegal aliens. At least 29,715 or 39.7% of the total were from China.
For professional labor, 1,115 were from Japan and 1,102 were from China. China and Japan accounted for slightly more than half of language education visa holders. The two countries
Chapter 1• Northeast Asian Regionalization: Trends and Issues 19 also made up a big part of professional workers with E3 visa (45.5% of the class total).
Japan
3.8 million persons 2.3 million persons (-
4.6 million 4.5 million (6% increase compared to 2005) (13% increase compared to 2005)
0.8 million persons 2.1 million persons
4.5 million China 0.9 million (13% increase persons compared (+27%) to 2005) Korea
3.9 million persons
Total of 13.8 million persons (2005:12.5 million persons)
Source: Kurishima, Akiyasu (2007). “National strategy for Japan’s cross-border cooperation." International Seminar on Cross-Border Cooperation Between Cities in East Asian Countries, Dec. 13~14, 2007.
Human Exchange Between China, Japan, and Korea (2006)
20 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities
Skilled Foreign Workers by Nationality and Visa Type
Visa E2 E4 E6 E7 E1 E3 E5 Type (language (technical (art & (specific (professor) (research) (professional) education) training) entertainment) activity) Total
Japanese 102 9.1 382 34.3 209 18.7 32 2.9 3 0.1 4 0.4 385 3.7 1,115 Chinese 149 13.5 246 22.3 295 26.8 2 0.2 1 0.0 106 9.6 304 16.1 1,102 Total 965 22.6 10,657 56.6 1,370 45.5 189 3.1 334 0.1 3,026 10.0 3,266 19.8 19,807 Source: Jang-Won Lee (Jan. 2008). Presentation Materials for Korea Research Institute for Human Settlements’ EG Workshop.
Information on the currently active Korean workforce in China and Japan can be summarized as follows:
As of 2000, a total of 119,370 Koreans were studying abroad. Among them, 31,519 (26.4%) were in Japan and 17,742 (14.9%) were in China.
A total of 25,105 people landed jobs outside Korea. Among them, 5,029 worked in Japan, and 2,272, in China.
A total of 12,285 people emigrated from Korea in 2000. Among them, 28 went to Japan and 4 headed to China.
Labor Outflow from Korea (2000) Study Abroad Employment Emigration Total 119,370 100 25,105 100 12,285 100 Japan 31,519 26.4 5,029 20.0 28 0.2 China 17,742 14.9 2,272 9.0 4 0.0 Source: Jang-Won Lee (Feb. 2008). Presentation Materials for the Korea Research Institute for Human Settlements’ EG Workshop.
The study on the labor flows between China, Japan, and Korea showed that China mostly supplied unskilled labor to Japan and Korea. Moreover, there was very little exchange of skilled and/or professional labor.
A large proportion of Koreans residing in Japan are illegal aliens. They are most probably engaged in manual labor.
Chapter 1• Northeast Asian Regionalization: Trends and Issues 21 Both Japan and Korea are taking a rather stringent stand against unskilled foreign labor. Still, related supply factors are actually on the rise. This suggests that labor flows between the three countries will further expand in the future.
In case of professional and/or skilled labor, there is a relatively smaller cultural difference among the three countries compared to Western countries. This may translate into greater demand for bidirectional human exchange.
2. Cooperation and Exchange in Northeast Asia: Issues and Prospects
1) Obstacles to further regionalization in Northeast Asia
Northeast Asia has great growth potential both at the overall regional level and the individual country level. Such can be realized through economic cooperation. Nonetheless, the region has been taking a long time laying down the foundation for economic integration. In such sense, they pale in comparison with other regional economic zones in Europe and America.
Such lack of progress of Northeast Asian regional cooperation can be attributed to the following historical, political, and socio-cultural factors:
Traces of the conflictual inter-state political structure established during the Cold War, difference in economic systems, and conflicting interests of major superpowers
Division of the Korean peninsula, which is located at the heart of Northeast Asia, coupled with security-related risk factors: They pose a challenge to the setup of a cooperation system between different countries.
Expansion of the military force in China and Japan, lack of effort on the part of Japan to repent on its past wrongdoings
Strong tradition of nationalism, absence of common language, poor infrastructure for socio-cultural exchange
22 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities The physical and institutional infrastructures leave a lot to be desired. Ports, airports, and transportation routes and required facilities for continuing exchanges between China, Japan, and Korea are insufficient. Likewise, the division of the Korean peninsula is serving as an obstacle to the development and use of land transportation routes through the region.
Absence of open institutional basis facilitating the movement of capital, people, and materials within the region; poor business conditions including those in the labor market
China, Japan, and Korea’s preference for pursuing independent, autonomous development plan: This translates into redundant, excessive investments in ports and other infrastructure. Complex transportation systems also remain underdeveloped as a result.
Difficulty in making foreign investment in key port and logistics facilities; physical obstacles such as investment regulations that prioritize investment by domestic businesses (Yim, Yeong-tae, 2006)
More substantive efforts toward the China-Japan-Korea FTA are being made, however. Likewise, there have been positive signs of political and diplomatic cooperation to ease the tension in Northeast Asia. Works aimed at institutional improvement have also been implemented. Such are intended to enable each country to keep pace up with the globalization and regionalization trends.
FTA or trade cooperation policy promoting regional investment cooperation, etc., between China, Japan, and Korea is a matter of urgency.
A triangular trade relationship exists between China, Japan, and Korea. Korea imports capital materials to manufacture and sell parts materials to China. China uses the parts materials imported from Korea to manufacture finished goods and sell them to Japan.
Chapter 1• Northeast Asian Regionalization: Trends and Issues 23 The tariff and non-tariff barriers between China, Japan, and Korea greatly hinder trade promotion between the three countries.
Redundant, excessive investments in Northeast Asian countries’ key industries intensify competition. This in turn causes excess supply and lowers the investment yield in the international market.
(2) Status of the China-Japan-Korea FTA
The conclusion of the China-Japan-Korea FTA is expected to bring about benefits considering the regionalization trend worldwide. Nonetheless, the FTA among the three countries – which are located at the heart of Northeast Asia -- has yet to be discussed in detail.
China, Japan, and Korea account for 20% of the world economy and make for the world’s largest manufacturing industry base. Thus, a China-Japan- Korea FTA is expected to yield major economic effects.
The international trade weight is indicative of the level of market openness. The signing of the China-Japan-Korea FTA is expected to increase it by 5.31%, 2.32%, and 9.53% in China, Japan, and Korea, respectively. Such improvement in market openness will most likely result in 3.08%, 1.43%, and 5.15% rise in the income level of China, Japan, and Korea, respectively, for the next 25 years (Chang-Jae Lee, et al, 2005).
The signing of the China-Korea FTA is forecasted to translate into 0.14~1.28% additional growth for Korea’s GDP. If the tariffs are abolished as well, and with consequent capital accumulation, this figure is projected to reach 0.45~2.30% (Chang-jae Lee, et al, 2005).
Nonetheless, the signing of the China-Japan-Korea FTA is hampered by several obstacles. These include the difference in the three countries’ level of economic development, competitive relationship between China and Japan, asymmetry between security alliance and economic partnership, and unresolved issues related to the region’s history.
24 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities
Direction of FTA Policy of China, Japan, and Korea Country Basic Policy Direction - Simultaneous promotion of several FTAs - Promotion of FTAs with the economic superpowers (EU, US, etc.) Korea to pursue both economic growth and system advancement at the same time - Expansion of its influence within the region while creating an economic zone centered on China through FTAs with ASEAN, China India, and other neighboring countries - Promotion of FTAs for the purpose of securing energy supply - Promotion of FTAs to secure major control over the process of East Asian economic integration Japan - Support for domestic businesses’ activities abroad and expansion of its influence on other countries Source: Federation of Korean Industries (2007). China, Japan, and Korea’s FTA Promotion Status and Related Issues.
(3) Tasks related to the conclusion of the China-Japan-Korea FTA
Northeast Asia is the world’s largest manufacturing industry base. It is heavily dependent on Europe and US for export. Note, however, that progress related to the development of trade within the region has been relatively sluggish.
Therefore, Northeast Asian countries should develop bilateral and multilateral trade relationships among themselves. Through this, the growth of the regional market will be promoted.
China, Japan, and Korea are located at the heart of the region. Thus, economic and trade agreements between them are crucial for the establishment of FTA. Note that the China-Japan-Korea FTA is aimed at bringing together ASEAN as well as the three countries. Nevertheless, trade- and investment-related coordination of different interests among the three countries is proving to be a challenging task.
From the long-term perspective, the conclusion of the China-Japan-Korea FTA will boost the development of the individual country’s economy.
First, the removal of trade barriers between the three countries will result in regional market expansion. This in turn will fuel the economy’s accelerated growth.
Chapter 1• Northeast Asian Regionalization: Trends and Issues 25 Second, the FTA will help the three countries lower the cost of economic restructuring. The overall economy’s efficiency will also improve based on the complementary relationship among the Northeast Asian Three.
Third, strengthening the three countries’ economic cooperation is likely to lead to the resolution of other issues directly related to the region’s security. These issues include the reunification of Korea and the China-Japan territorial dispute.
Fourth, the enhancement of the three countries’ economic linkages can serve as an advantageous condition in negotiations with other trading blocks in Europe and North America. This is particularly important considering the world’s multi-dimensional trading system.
The establishment of an organization and an institute for economic cooperation between the three countries must precede the conclusion of FTA.
3) Political and diplomatic obstacles and prospects
China, Japan, and Korea have formed very intimate cultural, economic, and political relations between themselves based on their geographical proximity.
People from the three countries frequently interacted with each other. They shared Chinese characters, Confucianism, Buddhism, social rules, and historical records. This gave birth to the “Northeast Asian Cultural Area.”
The history of the three countries was not all about peaceful coexistence and cooperation, however. They have gone through countless disputes and conflicts that sometimes resulted in wars. The following problems persist as the innate source of political and diplomatic conflicts between China, Japan, and Korea:
China, Japan, and Korea were defined as a semi-colony, an imperial state, and a colony, respectively, in the late 18th
26 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities century and early 19th century. This is believed to be the cause of conflict structure among themselves. In fact, the history of disputes has reached its peak. Only the debris of mistrust between the people of the three countries remains.
For instance, the sudden change in attitude toward the history of Goguryeo by China highlighted the conflicts and mistrust regarding history between China, Japan, and Korea. The pre- existing problems with the Japanese history textbook are not helping things any.
Controversies on exploitation and repression during the Japanese colonization period are frequently raised. Textbook issues on the historical perspective regarding the Japanese colonization period remain unresolved. The same is true with the territorial dispute over Dokdo Island.
The security dilemma remains unresolved in the international environment surrounding Northeast Asia. In fact, it casts a shadow over the institutionalization of multilateral cooperation frameworks in the region. As a result, Northeast Asia is set apart from the example of European integration.
In Northeast Asia, there is no country that can play the role of a leader as in the case of Europe. Furthermore, the competition on military expenditures is becoming a fixture.
Among the top 11 countries with the highest national defense expenditures, 5 are located in Northeast Asia. Together, they constitute approximately 60% of the world’s total national defense expenditures (Goh, Bong-jun, 2007).
Moreover, “security blocks” are emerging in Northeast Asia. For instance, the US has strengthened its alliance with Japan. It has also forged a traditional alliance with Korea. In addition, the US has established a massive military alliance network extending to Australia and India. In response to such, China and Russia have strengthened their relationship over and beyond the general military cooperation level.
Chapter 1• Northeast Asian Regionalization: Trends and Issues 27 Such security blocks are clearly different from the multi-party approach to security issues. This is directly related to the individual countries’ military spending competition. As a result, the security dilemma between the two blocks can be expanded and reproduced in a vicious cycle.
Despite such security dilemma, the growing economic inter-dependence between Northeast Asian countries is generally believed to have a positive effect on several security issues. This will allow the region to enjoy peace and prosperity. Other plus factors are the opening of market and society and policy reform of North Korea. These can considerably reduce the economic and security risks faced by Northeast Asia.
The spread of democracy through countries in the region including China and North Korea minimizes conflict and likelihood of war in the region. This in turn contributes to the setup of a sustainable peace system.
Nevertheless, the tension between North Korea and US may extend to incorporate China into the conflict structure. This scenario cannot be ignored. Similarly, strengthening the Japan- US military alliance can pose a serious security threat to the region. The same goes for the confrontation with China and its medium- to long-term economic and military growth and confrontation with Japan.
4) Cooperation and exchange between China, Japan, and Korea: prospects and tasks
(1) Prospect for economic cooperation and change in political condition
More opportunities for international competition are given to Northeast Asia. This is because the region has become one of the world’s 3 biggest economic zones together with EU and NAFTA.
Intra-region trade and investment are expected to grow. The process of industrial division of labor will likely be accelerated by FTAs.
28 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Recently, more positive than negative changes in the international political, diplomatic, and security conditions have been noted. This lays down the groundwork for China-Japan-Korea exchange and cooperation.
The successful promotion of the 6-Party Talks will likely lead to the abolishment of the nuclear development program in North Korea.
The South-North Korea relationship has taken a positive turn since the Inter-Korea Summit on June 15, 2000.
The US is likely to take an appeasing stand toward North Korea. This is because the presidential election is set to be held in 2008 in the US.
Such optimistic change in various conditions is aiding in the FTA promotion in Northeast Asia. It also enables the sustained economic growth in China, development of Far East Russia, economic recovery of Japan, and incorporation of Mongolia and North Korea into the Northeast Asian Economic Zone.
Furthermore, the regional economic zones are expected to depend more heavily on international trade. China’s direct investment in other countries in the region is also forecasted to surge in the near future.
Increased trade between the Northeast Asian Three will induce industrial specialization based on each country’s comparative advantage. The trends of expanding intra-region trade and cross investment will also boost the formation of Northeast Asian production systems. Such systems are partially underway under the leadership of MNCs of Japanese and Korean origins as FTA talks progress between the three countries.
Businesses and other private sector players pursue strengthened economic linkages. For this, overall system and policy reform are required in each country. The government needs to accept -- and adapt itself to -- the market-led processes of regionalization and economic integration.
(2) China-Japan-Korea FTA: prospects and strategy
Chapter 1• Northeast Asian Regionalization: Trends and Issues 29 The China-Japan-Korea FTA offers macroeconomic benefits to the three countries. Still, its economic effect on individual industries varies considerably. Thus, objection by certain individuals or organizations can have severe side effects.
There are still disputes and unresolved issues between the three countries. Nonetheless, the conclusion of FTA is still recommendable and necessary despite the various obstacles.
The three countries’ service sector lacks competitiveness in the world market. In particular, the mass transportation system and wholesale and retail industry trade networks should be improved.
Stringent regulations on service trade between the three countries can prevent the region from fostering its service sector’s growth. This in turn will erode the relevant countries’ economic benefits.
The three countries are already involved in a number of FTAs. Thus, the product origin regulations between the three may run counter to the existing policies. Inconsistent product origin regulation can ultimately hinder the establishment of an efficient production network in East Asia. The same can be said for the delay in tariff lifting for too many products.
(3) Exchange promotion strategy in FTA-related areas such as culture, tourism, logistics, and environment
The China-Japan-Korea FTA can result in the removal of tariff barriers. This in turn can cause a shift of tariff administrative works to non-tariff barriers. Thus, the three countries’ customs system must immediately be simplified and coordinated.
For the IT industry, the three countries need to strengthen their cooperation in preparation for the China-Japan-Korea FTA through the following: ① cooperation on standardization; ② promotion of technology and human exchange; ③ establishment of the hyper-speed broadband global research network, and; ④ recognition of the need for trade and investment promotion in the IT industry based on policy cooperation works.
30 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities The liberalization of the transportation sector is further addressed by the General Agreement on Trade in Services (GATS), not by FTA. Specific details are discussed and agreed upon through additional bilateral or multilateral agreements.
With regard to energy cooperation, the China-Japan-Korea FTA may develop into energy integration or Northeast Asian energy system in the long run. Thus, the three countries should stay open to such possibility. From a short-term perspective, they need to focus on the opening of the energy market as well as on making preparations for the future.
Forging the China-Japan-Korea FTA will result in the creation of a regional economy. Both static and dynamic economic benefits can also be expected. Still, concerns over various environmental issues will be raised. Thus, the three countries should build an official environmental cooperation system to strengthen their environmental cooperation works.
(4) Approach to the liberalization of the labor movement
Unlike commodity trade liberalization, not one country has a stronger foothold in the liberalization of trade in services. This is because the service industry has a more complex relationship between the three countries in terms of comparative advantage. Moreover, the labor movement is very important in its liberalization.
The lack of integrated link of the economic structure fundamentally limits the liberalization of the labor movement. Another hindrance is the inconsistency in the wage level between the three countries. Thus, there is a need for a strategic approach to the issue.
Areas for the liberalization of the labor movement between China, Japan, and Korea shall be narrowed down; this way, a certain trend revealed in different FTAs is reflected. Such trend includes the liberalization of the service-related labor movement as part of the liberalization of trade in services.
The issue of labor movement should be viewed from different perspectives. In particular, the possible full-scale economic cooperation and regional economic integration should be considered.
Chapter 1• Northeast Asian Regionalization: Trends and Issues 31 Currently, there is a likelihood of manual labor movement between the three countries. Thus, China, Japan, and Korea should fully utilize the existing labor movement order and system. They should also discuss and agree on the additional details for multilateral liberalization schemes.
The conditions and influence as well as our response strategy for the general labor movement should be reviewed. The general labor movement encompasses the liberalization of manufacturing and agricultural labor as well as the service workers.
32 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities C · H · A · P · T· E · R Inter-City Linkages and 2 Cooperation System in Northeast Asia: Current Status and Outlook
1. History of Inter-City Linkages in Northeast Asia
1) Historical background of inter-city linkages in Northeast Asia
(1) History of “Maritime Asia” and Northeast Asian linkages
Historically, hegemony and political order in Asia were determined by the outcome of the power struggle between Continental Asia and Maritime Asia.
According to Denis Lombard and Jean Aubin (1988, requoted from Choel-Ho Lee, 2007), the power struggle in the Asian waters was driven by commercial exchanges. They named the waters involved as a Mediterranean Sea in East Asia. Such name was inspired by the Mediterranean Sea in Europe.
French Geologist Gipouloux (1996), Japan’s Ogawa Yuhei (2004), and Korea’s Myeong-cheol Yoon (2003) also call the area between Tatar Strait in the North and Strait of Malacca in the South a Mediterranean Sea in East Asia.
A study on the 16th-century commercial exchange network in East Asia was conducted by Nakajima (2004). Based on this, Gipouloux (1996) defined a Mediterranean Sea in East Asia. According to him, a Mediterranean Sea in East Asia had been developed through commercial exchange between maritime cities for a very long time.
Furuta (1992) also did a study on the Shanghai-based trading network and the Pan Yellow Sea Zone formed in the late 19th century. The results also suggest that a maritime belt was formed between port cities in East Asia.
Chapter 3• Establishing Logistics and Transportation Linkages 33
Source: Francois Gipouloux (1998). "Integration ou desintegration? Les effets spatiaux de l'investissement direct etranger en Chine." Perspectives Chioises, No. 46.
Note: Reproduced with permission from the author and the publisher.
Key Continental and Maritime Cities in a Mediterranean Sea of East Asia
Note: Reproduced with permission from the author and the publisher.
East Asian Maritime Zone in a Mediterranean Sea of East Asia
34 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities
Source: Nakajima Gakusho (2004). "South Kyushu during the Age of Commerce: a node of Northeast Asian maritime trade." Workshop on the Northeast Asia Maritime Perspective: A Dialogue with Southeast Asia (Okinawa), Oct. 2004.
Note: Reproduced with permission from the author and the publisher.
Formation of the Exchange Network in the “Commercial Age” of the 16th Century
Note: Reproduced with permission from the author and the publisher.
Formation of China-Japan-Korea Maritime Zones at the End of the 19th Century
Chapter 3• Establishing Logistics and Transportation Linkages 35 From the viewpoint of Continental Asia, near-sea cities of China and other port cities of East Asia had played peripheral roles. From the Maritime Asia perspective, however, the port cities had spearheaded the growth and economic exchange activities in East Asia.
Some experts see the large area spanning Vladivostok, Russia and Bali, Indonesia as a future venue for the further development of East Asia (Shinyasu, 1999).
Hamashita (1990) divides the historical waters of East Asia into Yellow Sea, East China Sea, and South China Sea. He believes these waters will be the ideal site for the unlimited growth of East Asia once they are connected.
Source: Hamashita Takeshi (1990). China-centered World Order in Modern Times. Tokyo: University of Tokyo Press.
Note: Reproduced with permission from the author and the publisher.
Historical Maritime Zones in East Asia
36 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Coastal cities had spearheaded the market and societal opening in the late 19th century. They also became the center of China’s market and societal opening in the 1980s.
As a result, changes occurred in the economic and geographical spatial structures of East Asia.
A supranational space is forming along the East Asian waters. Different areas and zones cluster around each other based on their geographical, historical, and cultural proximity.
The abovementioned revival of Maritime Asia has set the spatial basis for new regionalism. Such new regionalism transcends the territory-based paradigm. It is emerging in keeping with the multi-polar order and globalization trend. Specifically, this new regionalism breaks away from the bi-polar system during the Cold War.
When the continental order dominated East Asia, history was marred with conflicts and confrontations. Under the dominance of the maritime order, however, harmony and coexistence prevailed.
In this regard, this study focuses on the analysis of maritime space in the Pan Yellow Sea Zone. This area is the subject of an economic exchange paradigm that renders national boundaries meaningless.
The importance of port cities in maritime space is being recognized. Thus, linkages between cities are being reinforced. The significance of maritime space as a substantive economic zone is also growing.
(2) History of inter-city linkages and cooperation in Northeast Asia
A. Background of inter-city cooperation
Economic cooperation between different cities and regions and between different countries has been pursued in Northeast Asia since the 1990s.
Inter-city cooperation is generally led by the private sector. In other words, it is driven by the market force. Economic compatibility and geographical and cultural proximity wield strong influence.
Chapter 3• Establishing Logistics and Transportation Linkages 37 Inter-city cooperation offers the cities involved an opportunity for economic diversification. It also helps them share their experience and problem- solving know-how on issues of common interest.
Cross-border cooperation at the regional level (incl. cities) is realized according to the degree of a country’s openness. Another consideration is the relationship between the central and local governments.
China, Japan, and Korea lag behind Western countries in terms of both the degree of openness and local autonomy.
Japan leads in the degree of openness and local autonomy, followed by Korea and China.
B. History of inter-city cooperation in Northeast Asia
Inter-city exchange in Northeast Asia apparently occurs through means other than the initiation of the central governments on the surface (Moon, Jeong-in, 2005).
A total of 127 local governments of China have forged sisterhood relationships with 16 metropolitan bodies and 101 cities, districts, and counties of Korea. Such move aims at promoting exchange and cooperation between them.
A total of 81 local governments of Japan have forged sisterhood relationships with 16 metropolitan bodies and 54 cities, districts, and counties of Korea. The 15 sister-city and alliance proposals between the local governments of Japan and Korea in 1975 ballooned to 130 in 2004.
At least 327 local governments of China have forged sisterhood relationships with 48 prefectures of Japan as of 2004.
Inter-city cooperation in Northeast Asia began with the Pan East Sea Zone Campaign. This originated in Nigata in the 1960s.
Non-metropolitan cities lagged behind after Japan recorded remarkable growth. Thus, they sought to overcome the challenge of regional isolation through interaction with other cities.
38 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities A multilateral body for inter-city cooperation beyond bilateral sister-city relationships was not established until 1994 or later than the Pan Yellow Sea Zone. Nonetheless, it was the first attempt to conceptualize inter-city cooperation in modern Northeast Asian history.
A substantive multilateral inter-city cooperation system in Northeast Asia originated with the 6-City Conference on the Pan Yellow Sea Zone in 1991.
The Pan Yellow Sea Zone is geographically located at the center of inter-city interaction of Northeast Asia. Its urbanization and city networks are undergoing dramatic expansion amid China’s explosive economic growth.
The Pan Yellow Sea Zone is home to approximately 280 million people (4.7% of the world’s population). This accounts for approximately 4% of the world’s total GDP and trade.
Held since 1991, the 6-City Conference on the Pan Yellow Sea Zone was developed into the East Asian City Conference. By 2000, it included 10 cities. Still, its influence is quite negligible. This is because few action programs for promoting inter-city linkages in Northeast Asia are in place.
Participating cities: China (Dalian · Tianjin · Yantai · Qingdao), Korea (Incheon · Busan · Ulsan), Japan (Fukuoka · Kitakyushu · Shimonoseki)
Efforts were made to bring together cities in the Pan East Sea Zone led by Nigata. As a result, the Governors’ Meeting for Growth in the Pan East Sea Zone was established led by Gangweon-do. This came about after the implementation of the Tumen River Development Plan in 1994.
During this meeting, 10 port cities of China, Japan, Korea, and Russia participate in the Hub City Conference on the Pan East Sea Zone.
Participating cities: Japan (Saga, Iminato, Tsuruga, Yonago), Russia (Nakhodka, Vladivostok), China (Hunchun, Yanji, Tumen), Korea (Sokcho, Donghae)
Chapter 3• Establishing Logistics and Transportation Linkages 39 Another inter-region network is the Japan-Korea Strait Governors’ Conference. Launched in 1992, it includes local governments from the Kyushu area of Japan and South Sea area of Korea (Cheol-Ho Lee, 2007).
Participating local governments: 1 Korean city and 3 provinces along the South Sea coast (Busan Metropolitan City, Gyeongsangnam-do, Jeollanam-do, Jeju-do), 3 Japanese prefectures in the Kyushu area (Fukuoka, Nagasaki, Saga)
It aims at developing a new growth hub. Specifically, the network will take advantage of the platform-like function with easy access to two maritime zones (Yellow Sea/East Sea) and two key development axes (Seoul-Busan/Kyushu-Tokyo).
Actually, both physical and human exchanges are in progress. They were commenced after the regular operation of the Busan-Fukuoka/Shimonoseki Ferry and joint cargo train operation in March 2007. The parties involved are currently discussing the connection of various logistics and transportation infrastructures. The basis for such connection is their geographical proximity.
The Organization for East Asian Economic Development (OEAED) drove the recent acceleration of development of inter-city linkages in Northeast Asia. OEAED inherited the East Asian City Conference in 2004; it was based on the existing industry council and sports/youth exchange programs.
OEAED pursues the specific goal of creating the Pan Yellow Sea Economic Zone. It establishes 4 divisions specializing in manufacturing, environment, logistics, and tourism. OEAED also enhances inter-region linkages. Specifically, it promotes industry-academe cooperation, technology transfer, and new business development headed by the Secretariat City designated for each division.
A total of 130 officials from related industries including the director-generals of the 10 cities’ port bureaus attended the 1st Logistics Division Initiation Meeting in July 2005. The purpose of such meeting was to form a “port partnership.” This laid down the groundwork for OEAED to develop into an inter-city alliance system.
40 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities The detailed action plan includes the following: database development of logistics projects and port information; mutual preferential treatment system for member cities; network development for logistics information systems, and; expansion and reinforcement of inter-business network linkages.
The 6-City Industry Council of East Asia consists of the chambers of commerce of 6 cities (Kitakyushu, Shimonoseki, Dalian, Qingdao, Incheon, Busan) in the Pan Yellow Sea Zone. It consists of regional research bodies from Kyushu, Incheon, Busan, and Ulsan. Together, they form the three pillars of the local government-market-academe linkage of the region along with OEAED.
One of Japan’s hub cities for inter-city exchange in Northeast Asia is Yonago. The city forged an alliance with Baoding in Hebei, China in October 1991. It also became a sister city of Sokcho and Goseong in Gangweon-do, Korea in October 1995 and October 1996, respectively (Cheol-Ho Lee, 2007).
The Hub City Conference is held on the Pan East Sea Zone, which focuses on tourist and economic exchanges. Every year since 1994, Yonago has taken turns hosting the conference with Sakaiminato of Tottori, Japan, Sokcho and Donghae of Gangwon-do, Korea, Hunchun, Yanji, and Tumen of Jilin, China, and Nakhodka and Vladivostok of Primorsky, Russia.
Similarly, Japan’s Tottori Prefecture has taken turns with Gangwon-do, Korea, Hunchun, Yanji, and Tumen of Jilin, China, Primorsky, Russia, and Inner Mongolia in hosting the International Cooperation Summit of Local Governments in the Pan East Sea Zone.
Most local governments of Japan have recently planned and implemented an efficient, effective, and mutually preferential international exchange strategy. They consider each project’s significance and objective.
The financial reform of Japan‘s central government has resulted in fewer grants and smaller subsidy provided to local governments. For their part, local governments are suffering from the staggered growth of tax income due to the economic slowdown.
Chapter 3• Establishing Logistics and Transportation Linkages 41 BESETO (Beijing-Seoul-Tokyo) connects the capital cities of China, Japan, and Korea. In other words, it is the link between the primary cities of the three countries. BESETO is also the real driving force of the Northeast Asian economy. Thus, it should be given keen consideration aside from localized cross-border linkages.
2) Economic exchange and inter-city linkages in the Pan Yellow Sea Zone
Exchange around the Yellow Sea is taking place primarily between the Greater Seoul area of Korea, Bohai Gulf area (Jingjinji, Shandong peninsula, Liaodong peninsula) of China, and Kyushu area of Japan.
The Bohai Gulf area of China covers the area around Beijing and Liaodong and Shandong peninsulas. Its key cities are Beijing, Tianjin, Shijiazhuang, Jinan, Shenyang, Qingdao, and Dalian.
The Bohai Gulf area encompasses Jingjinji and Shandong and Liaodong peninsulas. It spans a total area of 519,000km2 or approximately 5.4% of China’s total land area. The region is home to some 230 million people (2006) or 17.5% of China’s total population.
Jingjinji area: Beijing, Tianjin, Hebei province (Tangshan, Langfang, Qinhuangdao), etc.
Shandong peninsula: Qingdao, Yeihai, Yantai, etc.
Liaodong peninsula: Dalian, Shenyang, Dandong, etc.
China’s rapid economic growth has translated into a significant increase in China-Korea exchange through the Pan Yellow Sea Zone. As of 2006, the Bohai Zone accounted for 39.7% of the total China-Korea trade. In particular, the Jingjinji area made up 13.7% of the total trade between the two countries.
42 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities
China-Korea Trade in the Pan Yellow Sea Zone (Bohai) (unit: USD 1 million) Region Export Import Year 2004 2005 2006 2004 2005 2006 China (total) 62,165 76,873 81,628 27,809 35,116 40,334 Beijing 3,468 4,405 5,280 554 788 1,083 Tianjin 5,297 6,403 7,083 1,670 2,094 2,787 Hebei 3,167 4,150 4,214 870 1,200 1,228 Bohai Shandong 7,117 9,242 9,654 5,579 6,690 8,017 Zone Liaoning 2,064 2,165 2,125 2,364 3,067 3,065 Subtotal 21,113 26,365 28,356 11,037 13,839 16,180 Weight 34.0% 34.3% 34.7% 39.7% 39.4% 40.1% Source: China Custom Bureau Statistics, Jan.~Nov. 2006 statistics.
Korea’s share of international trade to and from the Jingjinji area was 12.5% in 2006. As a result, the area was heavily dependent on Korea throughout China.
In 2006, the Jingjinji area’s export to and import from Korea were USD 5.6 billion and USD 14 billion, respectively. This resulted in a USD 8.4 billion trade deficit with Korea.
Most of the exports to Korea were made by the primary metal, mined materials, general machinery, textile, and garments industries. The electric/electronics, petrochemical, general machinery, and automobile parts industries were responsible for most of Korea’s imports.
The Shandong peninsula (Qingdao, Weihai, Yantai) is not a key economic area of China. Nonetheless, it has recently recorded considerable growth through trade with and investment by Korea based on its accessibility to Korea.
Korean investment in Shandong at the end of 2005 stood at USD 15.16 billion. It made up 94.1% of the provincial total by the real value. Korea was clearly the biggest investor in Shandong. Naturally, it was also Shandong’s most important trade partner.
Chapter 3• Establishing Logistics and Transportation Linkages 43 A total of 387 Korean businesses invested in Qingdao, Weihai, and Yantai, Shandong. At least 150 were from Seoul (38.8%), 83, from Gyeonggi-do (21.4%), and 8, from Incheon (2.2%). The 2 cities and 1 province constituted 62.4% of Korean investments in Shandong.
Jingjinji (USD 1 million)
Shandong (USD 1 million) China (USD 10 million)
Source: Korea International Trade Association (www.kita.net), 2007.
Change in the Trading Volume Between China and Korea in the Pan Yellow Sea Zone (Bohai) (2000~2006)
Among the 4 key islands making up Japan, the Kyushu area is located furthest down south. Its area and population are equal to 12% of Japan’s total. In terms of key economic indicators such as GRDP, electric power consumption, annual retail sales, and local government budget, the Kyushu area makes up approximately 10% of the country’s total. It accounts for 10% of Japan’s economy, with its GRDP roughly equivalent to half of Korea’s GDP.
Kyushu is made up of 8 prefectures (incl. Okinawa) such as Nagasaki, Kumamoto, Oita, and Fukuoka. In particular, Fukuoka includes Fukuoka City, Japan’s 4th largest commercial city after Tokyo, Osaka, and Nagoya.
44 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Kyushu has been serving as a gateway to and from East Asia. Its trade with Asian countries such as China and Korea constitutes 47% of the total. Approximately 77% of business entries into foreign countries from the area targeted and penetrated Asia.
․ Area: 44,450 ㎢ (approx. 11.8% of the total in Japan) ․ Population (2007): 14.65 million (approx. 11.5% of the total in Japan) ․ Provincial population: Fukuoka (5.06 million), Kumamoto (1.83 million), Nagasaki (1.45 million), Oita (1.20 million), Miyazaki (1.14 million), Saga (0.86 million), Kagoshima (1.74 million), Okinawa (1.37 million) ․ Key cities: Fukuoka (1.43 million), Kitakyushu (0.99 million), Kumamoto (0.67 million), Nagasaki (0.45 million), Oita (0.47 million), Miyazaki (0.37 million), Saga (0.21 million), Kagoshima (0.60 million), Naha (0.31 million)
The automobile and ship-related industries of the Kyushu area have developed recently. In particular, the automobile industry’s export to the US and China rose 15.6% year on year to JPY 1.395 trillion. Ship export increased 29.8% year on year in 2006 to JPY 447.9 billion.
The Kyushu area’s biggest trading partner used to be Korea. After the expansion of automobile and semiconductor parts trade in 2006, however, Korea handed over the throne to China.
Japan has consistently accounted for approximately 18% of Korea’s total trade.
The Kyushu area depended on Korea for 31.9% of its trade. This figure was the highest throughout Japan as of 2006.
Chapter 3• Establishing Logistics and Transportation Linkages 45 Kyushu (JPY 100 million) Japan
Source: Korea International Trade Association (2007) & Fukuoka Consulate (Moji Customs Office Statistics, 2008).
Change in the Trading Volume Between Japan’s Kyushu and Korea (2000~2006)
The Kyushu area’s export to and import from Korea in 2006 were JPY 1.047 trillion and JPY 569.4 billion, respectively. This resulted in the JPY 477.6 billion trade surplus with Korea.
The Kyushu area’s major export goods included general machineries, raw materials, electric devices, and chemical products. Major import goods were electric devices, mineral raw materials, general machineries, and foodstuff.
Korea’s trade deficit with the Kyushu area has rapidly shrunk from JPY 64.8 billion (approx. 15% of the total trade) in 1997 to JPY 481.3 billion (approx. 30% of the total trade) in 2006.
2. Inter-City Cooperation in the Pan Yellow Sea Zone: History and Trends
1) Emergence of the Pan Yellow Sea Zone
46 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities The Pan Yellow Sea Zone emerged following Japan and Korea’s investment and industry relocation to China. Another contributing factor was the consequent increase in triangular trading between China, Japan, and Korea.
The explosive growth of the Chinese economy and economic cluster development in the coastal areas helped create the Pan Yellow Sea Zone. Such change in the economic and geographical conditions in Northeast Asia has been reflected as inter-city linkages were strengthened and human and physical exchange increased.
China-Korea maritime routes through 5 cities in China – Weihai, Tianjin, Qingdao, Dalian -- and Dandong and Incheon, Korea transported 232,000 passengers in 1998.
Note, however, that a dramatic increase in trade in the Pan Yellow Sea Zone translated into the operation of 13 routes. Qinhuangdao, Yantai, and Shidao, China and Pyeongtaek, Korea have been added to the list of cities. The total number of passengers surged to 972,000 as of 2005. This resulted in an annual average growth of 22.7%.
Geography has also changed with the emergence of the Pan Yellow Sea Economic Zone, at least in terms of the inter-city sisterhood relationships between China, Japan, and Korea. The number of inter-city sisterhood relationships between China and Japan has peaked and plateaued; in contrast, that between China and Korea continues to grow at an astounding rate. Both Japanese and Korean cities are forging sisterhood relationships with cities in the eastern coastal area of China.
Tianjin, China and Kobe, Japan formed a sisterhood relationship in June 1973. Since then, the number of sister-city pairs between China and Japan has ballooned to 227 for the next 30 years.
Sisterhood relationships had already been established between key cities in China and Japan. Thus, the number of new sisterhood relationships between cities in the two countries has begun to decline a few years ago.
Some of the Chinese cities that have forged sisterhood relationships with Japanese cities are located in coastal areas. They include Jiangsu, Zhejiang, Liaodong, Shandong, and Hebei.
Chapter 3• Establishing Logistics and Transportation Linkages 47 Lianyungang, China and Mokpo, Korea became sister-cities on July 1, 1993. By 2005, a total of 85 sister-city pairs had been created between China and Korea. At least 4~8 new pairs had been formed every year.
The number of sister-city pairs between China and Korea has steadily grown. In fact, the recent rate was the world’s highest level. Chinese cities in Shandong, Jiangsu, and Liaodong are geographically close to Korea. As such, they have mostly formed sisterhood relationships with Korean cities.
2) Geographical scope, key port cities’ current situation, and development strategy for the Pan Yellow Sea Zone
(1) Geographical scope of the Pan Yellow Sea Zone
There has yet to be a clear definition of the economic and spatial scope of the Pan Yellow Sea Zone. Generally, the academe defines it as the area covering the Bohai Gulf Zone of China, Korean peninsula, and Kyushu area in Japan (Won Bae Kim, 2001).
North Korea is subject to various geopolitical constraints. Thus, excluding it from the definition of the Pan Yellow Sea Zone at present is only appropriate. Note, however, that it should eventually be included depending on its level of economic openness, exchange, and cooperation. Another consideration is its transportation infrastructure connectivity.
Beijing, Tianjin, and other cities in the Shandong, Hebei, and Liaoning provinces of China constitute the Pan Yellow Sea Zone.
All areas in the Korean peninsula except Daegu, Gangwon-do, Gyeongsangbuk-do, and Chungcheongbuk-do make up the Pan Yellow Sea Zone.
7 prefectures in Kyushu and Yamaguchi, Japan are encompassed by the Pan Yellow Sea Zone.
The Pan Yellow Sea Zone is defined by inter-region and inter-city alliances. It is home to approximately 280 million people (4.7% of the world
48 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities population). The region also accounts for around 4% of the world GDP and trade.
CHINA Geographical Scope of the Pan Yellow Sea Zone
Beijing KOREA Dalian Tianjin Yantai Incheon Qingdao Weihai Gwangju Busan Shimonoseki JAPAN Fukuoka Kitakyushu Kyushu
Note: GRDP was calculated based on data in the statistical yearbook from each country and normalized exchange rate for the year 2006 (USD 1 = CNY 7.9718, USD 1 = JPY 119.00, USD 1 = KRW 929.6).
50 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities (2) Key port cities
All substantive regional alliance efforts in the Pan Yellow Sea Zone are based on the East Asian City Conference launched in 1991. The conference has expanded to include 10 cities.
The following are the population and economic status of the top 10 port cities in the Pan Yellow Sea Zone:
Economic Status of the 10 Key Cities in the Pan Yellow Sea Zone (2006) Avg. GDP per Country/City Population GCDP GCDP per Capita Capita Dalian 6.02 mil. USD 38.7 bil. USD 6,424 USD 5,346 Tianjin 10.75 mil. USD 54.4 bil. USD 5,138 (28.0% that of China Korea) Yantai 6.51 mil.USD 30.1 bil. USD 4,622 (15.4% that of Japan) Qingdao 8.20 mil. USD 45.1 bil. USD 5,503 USD 168.3 Subtotal 31.48 mil. Avg. USD 5,346 bil. Incheon 2.62 mil. USD 43.7 bil. USD 16,674 USD 19,098 (3.57 times that of Korea Busan 3.61 mil. USD 51.8 bil. USD 14,340 China) (55.0% that of Ulsan 1.09 mil. USD 44.3 bil. USD 40,684 Japan) USD 139.8 Subtotal 7.32 mil. Avg. USD 19,098 bil. Fukuoka 1.40 mil. USD 57.1 bil. USD 40,725 USD 34,701 Kitakyushu 0.99 mil. USD 29.7 bil. USD 29,894 (6.49 times that of Japan China) Shimonoseki 0.29 mil. USD 6.2 bil. USD 21,425 (1.82 times that of Korea) Subtotal 2.68 mil. USD 93.0 bil. Avg. USD 34,701 USD 401.1 Total 41.48 mil. Avg. USD 9,670 bil. Source: Statistical yearbook from each country (2007), JETRO (Japan External Trade Organization) (2008).
Chapter 3• Establishing Logistics and Transportation Linkages 51 Note: GCDP was calculated based on data in the statistical yearbook from each country and normalized exchange rate for the year 2006 (USD 1 = CNY 7.9718, USD 1 = JPY 119.00, USD 1 = KRW 929.6).
Economic and Industrial Structure of Key Cities in the Pan
Yellow Sea Zone (2006) Primary Region Secondary Industry Tertiary Industry Industry Dalian 8.5% 46.3% 45.2% Tianjin 3.0% 55.5% 41.5% China Yantai 9.8% 59.5% 30.7% Qingdao 6.6% 51.8% 41.6% Incheon 0.8% 31.6% 67.6% Korea Busan 2.3% 26.1% 71.6% Ulsan 0.6% 79.9% 19.5% Fukuoka 0.1% 11.6% 88.3% Japan Kitakyushu 0.1% 24.2% 75.7% Shimonoseki 1.4% 25.1% 73.5% Source: Statistical yearbook from each country/city (2007).
The Pan Yellow Sea Zone can pool the materials and labor resources of China, technology (manufacturing and heavy industries) of Korea, and capital of Japan.
Its geographical condition and rich logistics infrastructure also facilitate active exchange. Depending on the level of cooperation, the Pan Yellow Sea Zone has huge potential for regional growth.
Accelerated inter-city cooperation in the Pan Yellow Sea Zone can lead to the formation of an economic zone. Such will be based on efficient labor and industrial specialization by China, Japan, and Korea. In such case, Northeast Asia is expected to record high economic growth like EU and NAFTA.
EU is home to only 6.3% of the world population. Still, it accounts for 25.2% and 35.7% of the world GDP and trade, respectively. Similarly, NAFTA constitutes only 6.7% of the world population. Nonetheless, it makes up 36.2% and 22.7% of the world GDP and trade, respectively.
52 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities (3) Development strategy of key port cities
A. Tianjin
Tianjin considerably lags behind Beijing, Shanghai, and Guangzhou in the process of globalization and modernization. Its degree of economic development falls only slightly short of that of Beijing and Shanghai, however.
In terms of its international competitiveness in the financial sector, Tianjin is way behind Shanghai, on a par with Beijing, and ahead of Guangzhou.
Thanks to the city government’s aggressive support, Tianjin’s financial industry has a certain level of growth potential. Moreover, various factors related to its proximity to Beijing will be advantageous to Tianjin. In fact, such will set the city apart from Shanghai and Guangzhou in terms of the degree of service industry development, airport construction, labor resources, and international exchange.
Tianjin is located in the vicinity of Beijing, China’s political center. It is an important industrial base of Northern China. Tianjin is also at the center of the Pan Bohai Zone. Thus, it wields considerable influence on the surrounding area.
The metropolitan area connecting Beijing and Tianjin has potential to become the hub of Chinese politics, culture, education, and large-scale manufacturing industries. Such shall be realized particularly through the expansion of the manufacturing base of the entire China and Asia-Pacific region.
The location of Tianjin allows it to perform the function of a modernized international port city driving the development of the Jingjinji area and Pan Bohai Zone. In fact, its influence reaches the 3 Bei’s (Hwabei, Dongbei, Xibei).
Therefore, Tianjin is expected to play a very important role in the formation of the 3 biggest economic zones (Pearl River, Yangzi River, and Pan Bohai areas) of China.
Development of the New Binhai Area commenced as per the “Opinions on the Development and Opening of New Binhai in Tianjin” ratified by the
Chapter 3• Establishing Logistics and Transportation Linkages 53 State Council in May 2006. This will fulfill three roles in the development of the Pan Bohai Economic Zone.
First, the development of New Binhai will spearhead the development of the Pan Bohai Economic Zone as a whole. It will also enhance Tianjin’s city function by consolidating the Jingjin area.
Second, the accelerated growth of New Binhai will develop Northern China into the country’s new growth engine.
Third, New Binhai will become the test bed for various reforms in the government management system. It shall also accommodate the local incorporation of large businesses as well as the replacement/improvement of aging industrial bases.
B. Qingdao
Qingdao has a very important role for the Shandong province particularly the Shandong peninsula.
The level of globalization in the city of Qingdao determines that of the Shandong peninsula, which in turn determines that of the Shandong province. In other words, the significance of the level of globalization extends to outside the city. The same is true for the outward economic development strategy.
Qingdao ultimately aims to create an “international city” cluster in the Shandong peninsula. Specifically, it shall enhance its international economic competitiveness through globalization and outward economic development strategy.
One primary city in the area must enhance overall competitiveness of the area in keeping with the globalization trend. Through this, city clusters in the Shandong peninsula can develop linkages with one another.
Qingdao is pursuing the goal of becoming an “international city.” It is strengthening its linkages and economic cooperation efforts with other parts of Northeast Asia. As such, Qingdao is keeping up with the globalization trend of integrating the world economy into one.
54 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities The worldwide industrial base transfer targeting China offers new opportunities. Thus, the strategy for promoting inter- regional economic cooperation and development at home takes advantage of such new opportunities.
A unified economic zone has yet to be formed in Northern China. A metropolitan city-based economic zone around Qingdao should be developed further. This ultimately requires the city’s inclusion in the Northeast Asian Economy and Pan Bohai Economic Zone.
C. Qingdao and Yantai
Qingdao and Yantai are located at the heart of the Shandong peninsula. They are geographically close to Japan and Korea. Thus, the two cities have a strategic advantage in regional economic cooperation. Such economic cooperation accompanies FTA-related discussions and industrial relocation efforts between China, Japan, and Korea.
The two cities also have the opportunity to enhance their industrial cooperation with the Kyushu area of Japan and Yellow Sea area of Korea. Again, this is because of their geographical advantage. Another factor is the complementary industry structure.
Qingdao and Yantai are pushing through with the strategy of strengthening their linkages with the Kyushu area of Japan and west coastal area of Korea. Target industries are the electronics, information and telecommunications, automobile, and parts industries.
There is a clear disparity in the level of economic development between Beijing and Tianjin and other areas of the Shandong peninsula.
Industrial restructuring and advancement in Beijing and Tianjin will pave the way for an intimate economic cooperation between the two cities. The same goes for other areas of the Shandong peninsula.
Consequently, a powerful industrial cooperation mechanism can be realized. This will be made possible by the appropriate arrangement of industrial factors between the Jingjinji area and Shandong peninsula.
Chapter 3• Establishing Logistics and Transportation Linkages 55 D. Incheon
As one of its development objectives, Incheon seeks to transform into a Northeast Asian hub.
More specifically, a knowledge-based industry cluster and an environment accommodating international businesses shall be created. The international airport and seaports will be inter- linked to vitalize complex logistics activities. Specifically, Incheon shall establish an international logistics base through cooperation with cities in the Bohai Gulf area. Through this, the city shall take a great leap forward to become a Northeast Asian hub.
Incheon seeks to let the world know of its competitiveness as a city, favorable urban conditions, and development goal. As such it will be hosting Incheon World City EXPO 2009 and Asian Games 2014. In general, the city wants to expand cross- border exchange in related areas.
Incheon promotes the establishment of Northeast Asian logistics hub infrastructure. Such is its international cooperation strategy focusing on the region.
The following related strategies can be specified:
An integrated multi-modal transportation system and the mutually preferential treatment system for member port cities shall be established. Such will lay down the basis for cross- border cargo flows among 10 East Asian cities.
A triangular logistics network connecting China (Dalian), Japan (Kitakyushu), and Korea (Incheon) shall be built.
The promotion of the OEAED logistics division’s activities is essential. Another important task is the creation of a triangular logistics network between China, Japan, and Korea.
Promotion of the OEAED logistics division’s activities
․ Promotion of joint projects dealing with the key tasks for economic development in the Pan Yellow Sea Zone
56 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities ․ Setup of inter-city information exchange and logistics networks, enabling scholarly and technology exchange between universities
Creation of a triangular logistics network between China, Japan, and Korea to vitalize the logistics industry
․ Regular hosting of Incheon-Kitakyushu Port officials’ meetings; identification and development of joint projects ․ Container cargo accommodation and exchange vitalization between the three cities (Incheon, Dalian, and Kitakyushu)
In this regard, the Incheon Port Development Council of Korea and Kitakyushu Port Promotion Council recently signed an exchange agreement (Nov. 2007).
E. Busan
Busan has hosted a number of international events such as the Asian Games and APEC Summit. Thus, it has consistently improved its status as an international city. Likewise, Busan has successfully completed the development of the world’s 5th biggest port. This has solidified its position as a world-class logistics port.
Busan has promoted active exchange with the Fukuoka area throughout its history. Recently efforts to enhance inter-city cooperation have been made. This resulted in the signing of administrative exchange agreements and government-level support works for exchange meetings. Moreover, the city was inducted as a member of international organizations. Private-sector forums have also been promoted.
The Administrative Exchange Agreement signed with Fukuoka was upgraded to a sister-city relationship as of February 2007.
Busan is currently a member of 12 international organizations; in 4 of those organizations, the city is a joint-member with the Kyushu area (Fukuoka and Kitakyushu) of Japan.
․ Japan-Korea Strait Zone Governors’ Meeting, OEAED, Asia- Pacific City Summit, Asia-Pacific Tourism Promotion Agency
Chapter 3• Establishing Logistics and Transportation Linkages 57 ․ The Asia-Pacific Tourism Promotion Agency has a secretariat office in Busan.
Private sector-level support strategies have been consistently implemented. The Busan-Fukuoka Forum has been held since 1996. It invites 22 leaders representing the private sectors of the two areas to discuss the administrative means of vitalizing inter-region exchange.
Busan: Busan Ilbo, Dongseo University, Busan National University, Hanjin Heavy Industries, Busan Chamber of Commerce and Industry, Busan Port Authority, Busan Bank, etc.
Fukuoka: Kyushu Railway, Kyushu University, Nishi-Nippon Citibank, Fukuoka Chamber of Commerce, NHK, Nishi- Nippon Newspaper, Kyushu Electric Power, Sumimoto, etc.
Busan plans to coordinate and promote linkages between the two areas’ automobile industries. It seeks to further its support for human exchange toward such end.
Since the second half of 2007, Busan University and Kyushu University have held a joint lecture. For this activity, professors from each school are dispatched to the other school.
In addition, the city is seriously considering the creation of a “No- translation” zone to strengthen the real-life link between the two areas.
Fukuoka has recently implemented the use of both languages in street signs. It also operates cultural education programs on the other region and mutual exchange programs led by private organizations. As a result, the city has received positive feedback.
F. Ulsan
Ulsan is considered the heart of the Korean heavy industry. It has established the basis for the region’s remarkably high per-capita production of USD 40,000. Nonetheless, it has lagged behind considerably in terms of the maturation of international exchange and city culture infrastructure.
58 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities As such, Ulsan came out with the Basic Plan for the City’s Global Development. The plan presents the following development vision in January 2008, in celebration of Ulsan’s 10th anniversary as a metropolitan city:
Development as an international industrial city
Expansion of world-class city infrastructure
Enhancement of the city’s diplomatic capability and establishment of cross-border networks
Creation of foreigner-friendly residential environment in the city
Development and promotion of citizenship suitable for the Global Village Era
Thanks to efforts related to the plan described above, the 2008 OEAED meeting is set to be held in Ulsan. The city will implement the following strategies as well:
Selection of Ulsan as an International City Model
• “Advanced Industry Promotion City” and “Eco-Industry City” were primarily selected as International City Models. Construction of key facilities and cultural infrastructure in the city
• In the case of transportation infrastructure, the passenger port function of the existing ports is highlighted. The upgrade of the existing airport into an international airport is also promoted. In addition, the electrification of express railways and Donghae- Nambu lines is being pursued simultaneously. Laying down the international city development base for the local government
• In the initial stage, more emphasis is given to the organization/workforce/system-related education/training program development and implementation. The setup of foreigner support systems is also being considered.
Chapter 3• Establishing Logistics and Transportation Linkages 59 G. Fukuoka
Fukuoka has consistently pursued proactive inter-city cooperation and cross- border exchange programs.
The most important fruit of the city’s effort is the Asia-Pacific City Summit (APCS, launched in 1994). APCS has 26 member cities. The secretariat office is located in Fukuoka.
Key accomplishments are as follows: establishment of alliance/sisterhood relationship between member cities; operation of trainee exchange programs; technology cooperation, and; setup and operation of the Asia-Pacific Tourism Promotion Agency
Fukuoka’s waste processing system and related technology were transferred to other cities in Asia. This was part of the technology cooperation in the region. Fukuoka has also created and managed the official website of APCS in recent years.
One of the key international cooperation projects is the “Japan-Korea Scenic Byway” being pursued by Busan and Fukuoka.
The Fukuoka Asian City Institute has jointly conducted a field study on the feasibility of my-car-tour between Fukuoka and Busan. Fukuoka City has commissioned the Gyeongnam Development Institute for the study.
The project plan sought to promote the two areas’ tourism development. The feasibility of my-car-tour would also be assessed through the Busan-Fukuoka route. Such is expected to be the primary link for the Asian highway in the future.
The study also aimed at laying down the groundwork for Fukuoka’s great leap forward as Asia’s exchange hub.
In addition, new Japan-Korea trip routes are planned in celebration of the 1 Million Passenger Era for the Busan- Fukuoka Ferry in 2007.
The field study revealed that my-car-tour would require huge costs for vehicle transportation. Compared with the use of a local rental car, my-car-
60 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities tour would incur more than twice the expenses. The burden of cost also increased when the procedural inconvenience and time cost were considered.
My-car-tour between Japan and Korea seems to require major institutional and economic improvements before it becomes feasible. Enhancement of convenience is also a must. Busan and Fukuoka plan to implement the phased-out institutional reform at the local government level. Specifically, they shall maximize their sisterhood relationship.
The Asia Gateway Campaign 2011 is a noteworthy endeavor. It markets Fukuoka as a prominent gateway to and from Asia in time for the completion of the Kyushu Line of Nippon Railway in 2011.
The plan was established to promote tourism development through joint efforts with Busan. Citizens and private businesses will engage in different projects to connect Busan and Fukuoka to a tourist exchange zone between 2008 and 2011.
More specifically, the transportation systems in the two cities will be inter-linked. Different events are also planned to connect the two areas. The ultimate goal is to develop a single, unique tourism product. The creation of a unified tourist zone that can be accessed using passenger vehicles is being considered. This is still in line with the ongoing “Japan-Korea Scenic Byway” project.
The two cities are carrying out simultaneous tourist attraction works as well. For instance, global PR activities are being held simultaneously with the Beijing Olympics and Shanghai EXPO. Such activities include the pilot program of different tourist routes for key personnel and tourism industry show. Fukuoka plans to establish the Business & Industry Promotion Council to promote such efforts better.
Considerable effort is made to eliminate the obstacles to traveling between the two cities. In fact, transportation transfer, payment settlement, and other shared service offices are now operational.
The two cities’ common logo was developed with input from citizens and businesses. They are also trying to encourage visitors to extend their stay by highlighting their unique charms.
Chapter 3• Establishing Logistics and Transportation Linkages 61 The abovementioned project is designated and promoted as a pilot case for APCS TPO.
H. Kitakyushu
Kitakyushu is one of the key heavy industry bases of Japan. It used to have the heaviest industry concentration and highest technological prowess in Western Japan.
The city overcame the threat of severe pollution in the 1960s. Since then, Kitakyushu has become an international environmental cooperation city based on technology and experience accumulated in the process.
Kitakyushu spearheaded the launch and operation of the East Asian City Conference (founded in 1991), which is now known as OEAED. It is the secretariat city of OEAED.
In the beginning, the East Asian City Conference aimed at promoting economic cooperation between -- and mutual prosperity of -- different cities. It rides on the flourishing Chinese economy and rapid development of the Pan Yellow Sea Zone.
The assessment found that the East Asian City Conference focused on improving cities’ friendly linkages. Thus, OEAED was established during the November 2004 meeting.
Kitakyushu has achieved remarkable feats in international environmental cooperation. It banks on its past experience as an industrial city. Related efforts have paved the way for the entry of its local businesses in overseas markets. The city’s growth has reached maximum levels as well.
The Kitakyushu International Technology Cooperation Association (KITA) was established in the 1980s. It seeks to dispatch experts to and train researchers in developing countries. KITA has contributed considerably to improving the environment in developing countries. The technology accumulated in the process of pollution elimination is used.
After it was commissioned by JICA in 1986, KITA introduced the environmental training program.
62 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities It has also unveiled a program to train 400 persons a year (2000 persons in 5 years). KITA aims at becoming Asia’s environmental education hub by 2006.
Throughout its history, KITA has trained 4,117 people from 118 countries. It has also dispatched 108 experts to 25 countries.
Penang Asian Environmental Cooperation City Network
Semarang Surabaya
Establishment of Inter-City Networks and Launching of Businesses by Kitakyushu
Kitakyushu’s environmental cooperation with Dalian, China has been lauded by the Japanese government and UN. The city has formed an inter-city network for Asian environmental cooperation with Southeast Asian cities as well.
The Dalian-Kitakyushu project was the first international cooperation work to be organized and led by a local government through the Japanese government’s Official Development Assistance (ODA). The most substantive example is the Dalian Environment Model Zone Planning project.
Chapter 3• Establishing Logistics and Transportation Linkages 63 Aside from international cooperation, Kitakyushu has created an eco- friendly town called the Total Environment Kombinat. The Kombinat has been expanded to include the entire Kitakyushu since October 2004.
Key projects: Recycling and Reuse Campaign, utilization of the existing industrial infrastructure, and setup of the environmental business system
Kitakyushu expects its efforts toward cross-border environmental cooperation to translate into new business opportunities.
3) History of cooperation between port cities
(1) Organization for East Asian Economic Development (OEAED)
The best known inter-city institution in the Pan Yellow Sea Zone is the East Asian City Conference (currently known as OEAED).
Participating cities (10 cities): China (Dalian · Tianjin · Yantai · Qingdao), Korea (Incheon · Busan · Ulsan), Japan (Fukuoka · Kitakyushu · Shimonoseki)
Kitakyushu (secretariat city) has led the operation of OEAED since its launch as the East Asian City Conference in 1991.
In the beginning, the East Asian City Conference aimed at promoting economic cooperation between -- and mutual prosperity of -- different cities. It rides on the flourishing Chinese economy and rapid development of the Pan Yellow Sea Zone.
An assessment found that the East Asian City Conference focused on improving cities’ friendly linkages. Thus, OEAED was established during the November 2004 meeting.
The member cities agreed that the Pan Yellow Sea Zone was home to the notable development of the steel, semiconductor, shipbuilding, and automobile industries. Moreover, they believed that the horizontal division of labor between different cities would be realized through the export and import of parts in the area. Thus, the East Asian City Conference was renamed OEAED.
64 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities OEAED established 5 key tasks and 4 divisions to realize substantive accomplishments in 2004.
5 key tasks: promotion of East Asian FTA; creation of the Pan Yellow Sea Environment Model; creation of the new business generation system, implementation of the Pan Yellow Sea tourism brand strategy; establishment of technology transfer/talent education platforms
4 divisions: manufacturing, environment, logistics, and tourism; the following are the members of each division:
· Manufacturing: Kitakyushu, Yantai, Ulsan
· Environment: Kitakyushu, Dalian, Incheon
· Logistics: Shimonoseki, Tianjin, Busan
· Tourism: Fukuoka, Qingdao, Busan
The manufacturing division seeks to promote industrial exchange between China, Japan, and Korea. It is currently considering the following projects:
Designation of offices for business inquiries, promotion of online/offline business exchanges, expansion of manufacturing exchange between 10 member cities, research on and promotion of industrial transfer between 10 member cities, hosting of the East Asian Environment Industry Technology and Investment Show, establishment of network platform, and establishment of advanced technology/top goods exhibition center
The Environment division aims at the compilation and organization of city environment information and environment industry information and related exchange of opinions. It pools suggestions for cooperation projects from member cities.
Some of the projects are as follows: establishment of information exchange platform; information compilation and organization of a group of environment-related scholars from universities and research bodies; inducement of participation of businesses and research bodies in the environment division’s activities; promotion of talent education through
Chapter 3• Establishing Logistics and Transportation Linkages 65 international workshops; identification and development of joint research projects; fostering of the circular economy in the region, and; joint operation of the youth education program.
The logistics division is developing a database of port information. It prepares policy suggestion reports for central governments and vitalizes cargo processing through international airports. The division also modifies logistics promotion projects for the Pan Yellow Sea Zone.
Some of the detailed project proposals include the following: hosting of the annual meeting of the International Association of Ports and Harbors; utilization of the multi-cross port service at the Hakata Port; promotion of sustainable and mutual benefits for the East Asian region; provision of quick delivery service; construction of the logistics association network for 10 member cities; establishment of the Ferry RORO route between 10 member cities; provision of mutual support between ports sharing certain characteristics, and; development of logistics cooperation project and international logistics works.
Finally, the tourism division facilitates the sharing of tourism information between member cities. It maintains the region’s tourism website and publishes city-guide literature.
Pan Yellow Sea Tourism Campaign, tourism information network development, tourism product development, incentive-based tourist attraction, field trip planning, promotion of easing regulations, etc.
(2) Japan-Korea Strait Zone cooperation & establishment of the Busan- Fukuoka Economic Zone
Since it was initiated in 1992, cooperation between local governments in relation to the Japan-Korea Strait Zone has continued (Won-Bae Kim, et al, 2005).
The governors of 3 prefectures (Saga, Fukuoka, and Yamaguchi) in Southwestern Japan and 2 cities (Busan and Ulsan) and 3 provinces (Gyeongsangnam-do, Jeollanam-do, and Jeju-do) in Southern Korea meet regularly. As a result, various cooperation projects for the youth, culture, and sports
66 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities have been promoted. Environment technology and other business areas have also been pursued.
The following are some of the key projects: environment technology exchange; fishing industry-related exchange; citizen fraternity programs led by tourism promotion agencies; environment-friendly agricultural exchange; disaster prevention exchange; science and technology exchange, and; information network establishment.
The forum for regional research institutions was established to support the governors’ meeting in 1994. Since then, it has conducted joint research works in various fields.
Even with the abovementioned projects, however, economic accomplishments for the past 16 years have been minimal.
Nonetheless, the secondary accomplishments cannot be ignored. These include the significant increase in the number of cross-border travelers between Japan and Korea (mostly Korean tourists to Japan) and improved understanding of the two countries’ culture.
The meeting is operated considering all the members’ interests and consensus. This explains the relatively poor economic accomplishment.
Busan first suggested to Fukuoka the creation of a supra-regional economic zone between Busan and Fukuoka in March 2008. Based on the continuous bilateral discussions, detailed plans are being implemented.
The establishment of the supra-regional economic zone was inspired by a change in the future outlook of the two cities particularly Busan. In other words, it is an expression of Busan’s will to open the Era of Cities through joint efforts with Fukuoka. The city recognizes that surviving the inter-city competition in the 21st century on its own would be difficult.
Fukuoka has a relatively inferior status within Japan in terms of economic size and technology level. Thus, it seems to have decided as well on cooperating with Busan to form a unified economic zone. The city realized that such cooperation would benefit it more than an independent development strategy.
Chapter 3• Establishing Logistics and Transportation Linkages 67 The single most important project is the launch of the Busan- Fukuoka Economic Cooperation Conference; the details of organization and operation are currently being discussed.
Busan and Fukuoka have started commissioning research works that can be conducted through joint efforts. The joint study mainly focuses on the introduction of low-cost flight shuttle between Busan and Fukuoka. Other thrusts are as follows: tourism promotion to expand the scope of cultural exchange; increased automobile parts industry-related exchange; strengthening of industry-academe cooperation through the appropriate agency; expansion of human exchange between universities; IT industry exchange between Japan and Korea, and; establishment of a talent bank in the Japan-Korea Strait Zone (Busan Economic Policy Division, 2008).
Efforts have been made to create a supra-regional economic zone beyond the national boundaries by Busan and Fukuoka. This presents us with a new direction for inter-city cooperation in Northeast Asia. Note that it is quite similar to the cross- border cooperation between Malmo and Copenhagen in the Oresund area of Europe.
Whether or not Busan and Fukuoka can create a supra-regional economic zone will depend on two factors: receptiveness of citizens and businesses to the political leadership and their efforts toward accomplishing the goal.
(3) Other exchange and cooperation programs and projects
Some of the substantive programs aimed at enhancing exchange and linkages between key cities in the Pan Bohai Zone are as follows: Pan Bohai Zone Economic Cooperation Conference of China, Japan, and Korea; Pan Yellow Sea Zone Economic and Technology Exchange Meeting, and; China-Japan-Korea Industrial Exchange Council.
The Pan Bohai Zone Economic Cooperation Conference of China, Japan, and Korea was first held in Tianjin on August 30, 2004. Government and economic officials from China, Japan, and Korea participated in the conference; they agreed to disseminate Japan and Korea’s capital, industry, and technology to aging industrial regions in Eastern China and Pan Bohai Zone. The three countries decided to maximize their strengths to help China,
68 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Japan, and Korea begin a new history of cross-border cooperation in the Pan Bohai Zone.
Key participants were the three countries’ government officials and industry leaders. They included China’s Commerce Minister Bo Xilai, high-ranking officials from the Policy Committee of Japan‘s House of Representatives, and former Korean Prime Minister Su-Seong Lee.
The need for China-Japan-Korea economic cooperation was raised. Thus, the Pan Yellow Sea Zone Economic and Technology Exchange Meeting was introduced during the ASEAN+3 Summit (Philippines: 1999; Singapore: 2000). During the summit, participants decided to promote intimate economic cooperation and exchange in the areas of international trade, investment, and technology.
The 1st meeting was held in Fukuoka in March 2001, the 6th meeting, in Rizhao of Shandong, China in September 2006, and the 7th meeting, in Kumamoto, Japan in November 2007.
During the Pan Yellow Sea Zone Economic and Technology Exchange Meeting, discussions focused on the promotion of trade and investment, science and technology exchange, and education and human exchange as the main issue.
The China-Japan-Korea Industrial Exchange Council is the first joint project for economic cooperation. It brings together the three countries’ trade and investment-related government agencies (China’s Ministry of Commerce, Japan’s Ministry of Economy, Trade, and Industry, and Korea’s Ministry of Commerce and Industry) and supporting agencies (KOTRA, CCPIT, JETRO).
During the meeting, an industry show for businesses from the three countries was held. Other activities included a symposium featuring the economic cooperation between businesses in China, Japan, and Korea, several investment and procurement council meetings, and other economic activities.
China, Japan, and Korea take turns hosting the council meeting every year. The meeting for 2007 was held at the same time as the International Parts & Materials Show 2007 (KINTEX, June 2007) in Ilsan, Korea.
Chapter 3• Establishing Logistics and Transportation Linkages 69 Most cooperation projects accompanying the inter-city exchange activities in the Pan Yellow Sea Zone are being implemented in the environment sector. Some of the examples are the Dalian-Kitakyushu Environmental Cooperation Project, Qingdao-Yamaguchi Ecotown Construction Review Committee, and China-Korea Industrial Cooperation Complex Construction in Donggang, Dandong.
The abovementioned inter-city linkages and cooperation activities in the Pan Yellow Sea Zone are led by businesses. Korean investment in Shandong accounts for 90+% of the total investment in the province. This suggests the close investment relationship between Korean and Shandong. This study focuses on cooperation projects at the city level, however.
First of all, the Dalian-Kitakyushu Environmental Cooperation Project was developed after the Dalian Environment Model Zone Construction Plan Development Survey was conducted between 1996 and 2000. Such survey was led by Kitakyushu, a strategic city-ally of Dalian.
The citizens’ cooperation activities and city governments’ careful management of different sub-level projects in Dalian and Kitakyushu were studied. Through such study, the validity and importance of international cooperation at the local level were highlighted.
Kitakyushu is a clear international leader in the environment sector. It has implemented various cooperation works based on related requests from Dalian. In fact, the Dalian Environment Model Zone Construction Plan was proposed by Kitakyushu. The project soon became a pilot project; its outcomes were marketed and promoted throughout China.
Kitakyushu used ODA to conduct a development survey. The purpose was to establish an environmental improvement master plan. As a result of such cooperation efforts, Dalian became the first Chinese city to be given the Global 500 award by the UN Environmental Plan in 2001.
It was also the first case of developing a cooperation project between local governments into an ODA subject. Kitakyushu and Dalian have expanded their scope of cooperation to include the following: environment-related administration; environment monitoring; sewage processing, and; plant cleaner production.
70 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Similarly, the Qingdao-Yamaguchi Ecotown Construction Review Committee was organized. It sought to facilitate technology transfer related to environmental protection and waste materials use from Yamaguchi, Japan. The construction of an ecotown and fostering of a circular economy in Qingdao served as the backdrop.
Qingdao implemented the Clean Hazardous Waste Management project through joint efforts with UNIDO and with technical support from Yamaguchi, Japan. It also pushed through with the Hazardous Wastes in City and Other Waste Purification and Management Fellowship project. For this project, the city collaborated with the Asia-Pacific Regional Center for Hazardous Waste Management Training and Technology Transfer.
3. Task for Inter-City Cooperation in Northeast Asia
1) Strengthening the administrative linkages and cooperation system between cities
The representatives of Fukuoka and Kitakyushu were interviewed in this study. Note that Kitakyushu was the secretariat city of OEAED, the biggest inter-city cooperation program in the Pan Yellow Sea Zone. By learning more about OEAED, the authors were able to come up with the following assessment of different issues related to inter-city cooperation in Northeast Asia:
First of all, the East Asian City Conference boasts of 15 years’ history. Member cities have reached a consensus on the need for inter-city cooperation.
The challenge lies in changing the focus of inter-city cooperation from one- sided assistance to actual cooperation. Toward this end, member cities need to identify and develop different projects of interest to them. They should also promote inter-city cooperation through those projects.
As mentioned earlier, there is a secretariat office in Kitakyushu. Note, however, that the office’s role is to promote communication between member cities rather than lead the organization.
Apparently, there are concerns over the invisible competition among member cities. Therefore, the perception on inter-city linkages and cooperation needs to be changed. The objective is to form a city network- based economic zone and a highly efficient, specialized economic
Chapter 3• Establishing Logistics and Transportation Linkages 71 community instead of ranking the competing members. Note that cooperation is the key to mutual prosperity.
Fukuoka plays a relatively passive role in the Kitakyushu-led OEAED. On the other hand Kitakyushu is a relatively passive player in the Fukuoka-led APCS.
Representatives of Kitakyushu are rather skeptical about further increasing the number of member cities. Tianjin recommended other Chinese cities as candidate members. At the time, however, the decision was deferred for medium-term consideration.
2) Organization of support fund for inter-city linkages and cooperation projects
Primarily, substantive, sustainable cooperation (particularly through OEAED) between cities in Northeast Asia requires a set fund to be organized. Vitalizing inter-city cooperation activities using only the members’ annual contribution has its limits.
Thus, Tianjin argued for the setup of a local financial organization like Bohai Bank.
It has become customary for the host city to shoulder in part the burden of meeting and discussion-related costs. These include on-site costs, airfare, and accommodation costs.
The secretariat city covers the secretariat operation cost of the inter-city cooperation organization.
In the case of Japan and Korea, the regular replacement of local government heads can adversely affect policy continuity. This will not help the related operations of other member cities.
A financial organization should be formed to facilitate inter-city cooperation in the region. Before that, however, funds for inter-city cooperation organization activities should be secured. A separate secretariat office should also be set up to support program operation based on the provisions of city government ordinances.
This fund can be used in developing the website, collecting related materials and information, and preparing joint research
72 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities reports. Through this, the basis for inter-city linkages and cooperation as well as secretariat operation can be established.
Each organization can seek program consulting from world- class experts in the initial phase of inter-city cooperation programs. Financial support can also be provided, albeit on a limited scale.
Ultimately, the setup of funds to support inter-city linkages and cooperation in East Asia should be discussed at the central government level. The ODA or Economic Development Cooperation Fund was secured by each central government to support developing countries. In particular, it is intended for use in enhancing inter-city linkages and cooperation. The partial transfer of such funds can be considered.
Currently, projects targeting key cities in the Pan Yellow Sea Zone are not the beneficiaries of the abovementioned funds. Given the subject cities’ poor financial condition, however, preferential support as a result of discussions between central governments should be ensured. Inter-city linkages and cooperation projects should also be upgraded.
3) Inducing proactive support from the business community, private sector, and academe
Most inter-city meetings in Asia have been held to promote friendly linkages and exchange in the region.
Note, however, that efforts to identify and develop substantive cooperation projects have been made since the Urumqi Declaration was made in relation to APCS 2006.
Examples of such efforts include the following: city planning with the participation of citizens; Machijukuri-organized workshop, which is open to the public in Japan, and; different events such as the UN-Habitat Journalists’ Meeting held in linkage with the summit.
The selection of key tasks and organization of sub-level divisions under OEAED are noteworthy efforts. Proactive participation and cooperation by business organizations should be encouraged. This way, more visible accomplishments related to economic linkages/cooperation for each division can be realized.
Chapter 3• Establishing Logistics and Transportation Linkages 73 Separate investment-related agreements between different cities can offer incentives. The objective is to encourage inter- regional investment. Examples of such incentives include land acquisition and employment-related support.
Cooperation with the academe, research bodies, and civic organizations as well as local governments and economic organizations is needed. Through this, the basis for the consistent promotion of different projects can be established. International cooperation-related education and employment programs are also recommended.
Specialized academic research institutes and training agencies should be set up in each city. This way, inter-city linkages and cooperation in Northeast Asia can be supported. Both central and local governments should consistently guide them in forming a specialized network.
Kitakyushu’s environmental cooperation effort is often considered the best practice case of inter-city linkage and cooperation work. Its success is attributed to the systematic collaboration between KITA (training agency) and JICA (government organization). KITA was established by the city government and industry; JICA offered the necessary financial support.
Likewise, IGES, academic research city council, Asian women’s exchange research forum, and ICSEAD act as think- tanks. They set the direction and establish the strategy for inter-city linkages and cooperation. These organizations also educated and fostered high-quality talents. Thus, they have greatly contributed to the consistent promotion of different projects and expansion of international exchange.
4) Development of practical programs and new projects
The most urgent matters in inter-city cooperation in Northeast Asia are the establishment of practical programs and identification and development of projects.
As mentioned earlier, identifying and developing projects that can equally reflect the interests of all cities in the network are very difficult.
74 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Bilateral exchange-oriented projects can yield more substantive outcomes. Still, they will fall short of enhancing network-wide linkages.
The area of greatest yet common interest in inter-city cooperation in Northeast Asia is tourism, followed by logistics and environment. In particular, interest in the environment has recently been on the rise. In the tourism area, joint efforts for the development and marketing of tourism infrastructure and products are deemed most important. The introduction of e-tourism is expected to facilitate the sharing and spread of information (Kim, 2000).
Local experts in Dalian consider the tourism area to have the highest cooperation potential.
Environmental technology cooperation between Kitakyushu and Dalian is rated highly based on substantive quantitative and qualitative outcomes.
In cooperation projects, all member cities should be able to choose instead of being forced to participate. These kinds of projects should be promoted and pursued. This in turn will ensure the success of an organization such as OEAED.
Chapter 3• Establishing Logistics and Transportation Linkages 75
76 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities C · H · A · P · T· E · R Establishing Logistics and Transportation Linkages Between 3 Cities in China, Japan, and Korea
1. Status of Logistics and Transportation Linkages in Northeast Asia
The cross-border logistics system in Northeast Asia can be defined by inter- port competition and complementary relationships. It is also characterized by the dominance of a few hub ports.
Key ports in the region are fiercely competing to secure trans- shipments. This is because there are many variables affecting the choice of transfer port for trans-shipment. Such is generally processed at the port in the departure/arrival area.
Ports in China, Japan, and Korea have both a competitive as well as a complementary relationship. They complement one another’s function as departure, transfer, and final destination ports within the maritime transportation system.
Each of the Northeast Asian countries is making various proactive efforts to become the region’s logistics hub. As such, different ports are aggressively competing against one another to gain control of the logistics market.
Northeast Asia is run by an inefficient transportation system. Such system depends heavily on maritime transportation for freight and airway transportation for passengers. There are also geopolitical obstacles such as the North Korean nuclear issue. In particular, the North Korea issue severely limits the use of the land transportation system.
Trading volume in Northeast Asia is growing steadily. Still, the tendency of large ports to cluster in the Pan Yellow Sea Zone hampered the functional division of labor between ports. Inefficiency in the use of ports in Northeast Asia can pose a serious problem in the future. Thus, the shared use and development of ports in China, Japan, and Korea should be discussed among the three countries.
An increase in the regional trading volume in Northeast Asia will translate into a growing demand for small~medium-sized
Chapter 3• Establishing Logistics and Transportation Linkages 77 feeder container ships suitable for short-distance transportation. This is to reduce the economy of scale, which is frequently achieved through the construction of large-scale facilities and use of large ships. In this regard, excessive, redundant investment in the development and maintenance of large ports can pose a problem in the future.
1) Status of waterway exchange in Northeast Asia
Maritime freight processed by the Northeast Asian Three (China, Japan, and Korea) was pegged at 1.048 billion TEU. It accounted for approximately 31% of the world total in 2005. Trading volume between the three countries reached 7.74 million TEU. Korea grabbed the lion’s share in in-region trading volume; its trading volume with China and Japan made up 45% of the total.
Container Traffic and Share of the Northeast Asian Three (China, Japan, and Korea) Unit: 1,000 TEU, % Classification 1990 2000 2001 2002 2003 2004 Trading 2,348 8,530 9,287 11,720 13,050 14,299 Korea Volume Share 2.74 3.68 3.81 4.24 4.36 4.24 Trading 1,204 35,483 44,726 55,717 61,898 74,540 China Volume Share 1.41 15.31 18.34 20.15 20.68 22.13 Trading 7,956 13,621 13,127 13,501 15,056 15,937 Japan Volume Share 9.29 5.88 5.38 4.88 5.03 4.73 Trading 11,508 57,634 67,140 80,938 90,004 104,777 Subtotal Volume Share 13.44 24.88 27.54 29.27 30.07 31.10 World Trading 85,597 231,689 243,815 266,337 299,280 336,858 Total Volume Source: Containerization International Yearbook 2005 (requoted from KMI World Maritime & Fishery Statistics).
78 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities The world’s maritime freight travels through Northeast Asia. This is credited to the explosive growth of the Chinese economy. Another contributing factor was the region’s aggressive investment in infrastructure building and expansion amid the inter-port competition.
Container trading volume within Northeast Asia rose 89.1% in 5 years to 9.89 million TEU in 2006. The figure is expected to exceed 10 million TEU by 2007.
As of 2006, maritime freight routes were ranked as follows according to the size of freight processing: China-Korea (45.8%); Japan-China (31.6%), and; Japan-Korea (22.6%). Import and export volumes were the same for the China-Korea and Japan-Korea routes. For the asymmetric China-Japan route, however, export by China constituted about 70% of the total freight.
Maritime trading volume between China, Japan, and Korea has grown by an average of 1.89 times for the past 5 years. This figure was 2.37 times that for the China-Korea route, 1.87 times that for the China-Japan route, and 1.37 times that for the Japan-Korea route.
Outward movement from China made up approximately 64% of freight movement in the asymmetric China-Korea route in 2000. Note, however, that the enhanced function of Busan Port as a hub port has recently stabilized freight movement at 56%. The increased export to China also served as a contributing factor.
Exchange through the Japan-Korea route can be defined by stable freight movements in a symmetric structure.
In 2000, export by China was equal to 74% of the total freight movement in the China-Japan route. This figure shrunk to approximately 69% by 2006. Nonetheless, the asymmetric structure is expected to be maintained.
Chapter 3• Establishing Logistics and Transportation Linkages 79
Container Volume: China-Korea, Japan-Korea, and China- Japan (2000~2006) Unit: 1,000 TEU China-Korea Japan-Korea China-Japan Classification Korea→ China→ Korea→ Japan→ Japan→ China→ Total Total Total China Korea Japan Korea China Japan 2000 1,593 576 1,017 1,436 657 779 1,432 375 1,057 2001 1,932 678 1,254 1,627 749 878 1,674 444 1,230 2002 2,641 895 1,746 1,745 831 914 1,836 513 1,323 2003 2,958 1,070 1,888 1,940 908 1,032 2,252 669 1,583 2004 3,340 1,177 2,173 2,088 989 1,099 2,605 778 1,827 2005 4,260 1,851 2,409 2,161 1,024 1,137 2,854 849 2,005 2006 4,535 1,981 2,554 2,237 1,069 1,168 3,125 965 2,160 Source: Containerization International Yearbook 2007 (requoted from KMI World Maritime & Fishery Statistics).
China-Korea Japan-Korea China-Japan
Source: Customs Office Trade Freight Statistics (Korea, 2007) and SCAGA (Japan, 2007). Change in the Container Volume Between the Northeast Asian Three
80 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities At least 5 ports in Northeast Asia (Shanghai at No. 3, Busan at No. 5, Qingdao at No. 11, Ningbo at No. 13, and Tianjin at No. 17) ranked among the world’s top 20 ports in terms of trading volume. Including Greater China (Hong Kong at No. 2, Shenzhen at No. 4, and Guangzhou at No. 15), there are actually 8 Northeast Asian ports in the said list.
Massive investment (development of New Busan Port, etc.) has been made in Korea in response to the port development competition in China; growth remained sluggish at 1.6%, however.
All key ports in China have posted an annual average growth rate of 20% in cargo volume. This drastically changed the logistics system in Northeast Asia. Shanghai emerged as a clear leader in the international port system, thanks to the opening of Yangshan Port (50 docks) in 2007.
The Tokyo, Yokohama, and Kobe ports ranked among the world’s top 20 ports between 1990 and 2000. Their cargo volumes have continued to decline, however.
Container Volumes of Key Ports in the Northeast Asian Three (China, Japan, and Korea) Unit: 1,000 TEU Port 2000 2001 2002 2003 2004 2005 2006 Shanghai 5,613 6,334 8,620 11,283 14,557 18,084 21,710 Busan 7,540 8,073 9,453 10,408 11,442 11,840 12,030 Qingdao 2,120 2,640 3,410 4,240 5,140 6,268 7,702 Ningbo 902 1,210 1,860 2,772 4,006 5,149 7,068 Tianjin 1,708 2,010 2,410 3,020 3,814 4,817 5,900 Tokyo 2,899 2,536 2,712 3,314 3,358 3,700 - Source: Korea Container Terminal Authority, 2007.
Chapter 3• Establishing Logistics and Transportation Linkages 81
Facilities in Key Ports of the Northeast Asian Three (China, Japan, and Korea; 2005)
Docking Inner Wall Water Depth Area Country Port C/C (unit) Capacity Length (m) (m) (1,000 ㎡) Shanghai 23 7,071 9.4~13.2 3,256 46 Tianjin 8 2,450 12~15.2 1,005 15 China Ningbo 4 2,138 13.5~15 757 16 Qingdao 8 3,367 10.5~17.5 1,136 22 Busan 24 7,173 11~16 3,927 70 Korea Gwangyang 16 5,100 15~16 1,707 24 Tokyo 14 4,016 10~15 1,021 26 Japan Kobe 22 6,000 16 1,870 - Source: Korea Container Terminal Authority, 2007.
2) Status of airway exchange in Northeast Asia
The use of the land transportation system is limited (due to the geopolitical obstacles posed by North Korea). Moreover, each country’s transportation infrastructure has not been integrated. Together, these have resulted in an inefficient transportation system for Northeast Asia. Note that the region depends heavily on maritime transportation for freight and airway transportation for passengers.
The air cargo volume between China, Japan, and Korea was 7.74 million TEU. This figure accounted for only 9.5% of the total freight volume in 2004. Nonetheless, China’s rapid economic growth is expected to hike up the volume to around 40% (EU and NAFTA levels) in the future.
Airway passenger transport in Northeast Asia (China, Japan, and Korea) stood at 424.5 billion persons*km. This made up 11.4% of the world total. Intra-region airway passenger transport has recorded an annual average growth rate of 23% for the past 10 years.
· Airway passenger transport between primary cities of the Northeast Asian Three (China, Japan, and Korea) for the past 7 years was investigated. That for the Seoul-Tokyo route was 3.52 million for an annual average growth rate of 23%. Airway passenger transport for the Beijing-Seoul route was 1.43 million, for an annual average growth rate of 12%.
82 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities · Airway freight transport in the Seoul-Tokyo route reached 210,000 tons per year for an annual average growth rate of 4%; this figure was approximately twice the volume for the Beijing-Seoul route per year, for an annual average growth rate of 21%. Such rate was more than 5 times that for the Seoul-Tokyo route.
In 2005, airway passenger transport was pegged at 8.59 million; airway freight transport between Japan and Korea stood at 448,000 tons. These figures represent 15.3% and 4.7% increases for passenger and freight, respectively, compared to 2000. Airway passenger transport and airway freight transport between China and Korea were 6.57 million and 354,000 tons, respectively. These represented 184% and 210% growth, respectively, compared to the same period.
China-Japan airway passenger transport was 1.74 times that of China-Korea and 1.33 times that of Japan-Korea. Similarly, China-Japan airway freight transport was 4.03 times that of China-Korea and 5.1 times that of Japan- Korea.
Comparison of Airway Transportation Volume Between China, Japan, and Korea Unit: Passenger (1 mil. persons·km), Freight (1 mil. tons·km) Korea China Japan Classification Passenger Freight Rank Passenger Freight Rank Passenger Freight Rank 2002 62,992 7,913 8 123,908 5,014 4 164,773 8,102 2 2003 63,099 8,312 7 124,591 5,651 5 144,054 7,985 4 2004 65,874 7,969 8 176,268 8,188 3 154,362 8,938 4 2005 69,292 7,433 8 201,961 7,579 2 153,289 8,549 5 2006 72,823 7,752 9 234,505 7,692 2 151,394 8,480 5 Source: ICAO, Annual Report of the Council (requoted from KCADA, 2007, www.airportal.go.kr).
Note: Information on transportation volume was compiled based on each country’s domestic and international processing records and regular flights; the rankings were determined after consolidating passenger and freight transport records and normalizing them by the ton*km unit.
Chapter 3• Establishing Logistics and Transportation Linkages 83
Comparison of Airway Transportation Volume: China-Korea, Japan-Korea, and China-Japan Unit: Passenger (10,000), Freight (10,000 tons)
2006 913.7 6.3% 45.6 1.8% 732.1 11.4% 41.3 16.7% 739 15.8% 115.3 1.8% Source: Airway Statistics – Korea (KCADA, 2007), Study on Airway Transportation Statistics (Japan’s Ministry of Land, Infrastructure, and Transport, 2007).
Note 1) The information on transportation volume includes both regular and irregular transportation works as well as both the direct and transfer transportation works.
Note 2) The same adjustments made to the values published by Japan were applied to those for the Japan-Korea materials. Such adjustments were also applied to the information on the transportation volume between China and Japan.
84 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Unit: 10,000 persons Unit: 10,000 tons
Japan-Korea Japan-Korea China-Korea China-Korea Chi J Chi J
Source: Airway Statistics – Korea (KCADA, 2007), Study on Airway Transportation Statistics (Japan’s Ministry of Land, Infrastructure, and Transportation, 2007).
Change in Airway Transportation Volume (passenger and cargo) Between the Northeast Asian Three (2002~2005)
2. Status of Logistics and Transportation Linkages and Trends in the Pan Yellow Sea Zone
1) Status of logistics and transportation linkages in the Pan Yellow Sea Zone
(1) Status of China-Korea logistics and transportation linkages
The previous trade balance mismatch (import:export = 63.8:36.2, 2000) in China-Japan cargo transport was transforming into one with a symmetrical structure (import:export = 55.2:44.8, 2007). This made for the most important trend.
This was because the trans-shipment processing done at the Busan and Gwangyang Ports was delivered directly to ports in China. This in turn was due to the change in the Northeast Asian logistics and transportation system. The trans-shipment
Chapter 3• Establishing Logistics and Transportation Linkages 85 processing at the Busan and Gwangyang Ports constituted 40% of the total.
The continued port expansion and building in China can result in a new trade balance mismatch, this time in the opposite direction.
Note that approximately 25% of the export/import containers (total of 500,000 TEU) in 2004 were LCL (Less than Container Load). Moreover, LCL weight dramatically grew to approximately 40% (900,000 TEU) for export containers and shrunk to 4.6% (130,000 TEU) for import containers in 2007.
The problem of FCL (Full Container Load)-LCL mismatch in China-Korea maritime transport accompanies the trade balance mismatch between the two countries. Thus, coordination of the Northeast Asian maritime transportation system by China, Japan, and Korea is essential. This will improve the efficiency of maritime transportation in the region.
Economic exchange between China and Korea occurs mostly through maritime transport. This is because the use of the land route connection is an unreliable option. In particular, the problem lies in the aging and deterioration of land transportation infrastructure in China and North Korea. In short, the Pan Yellow Sea Zone connection is at the heart of the China- Korea linkage.
Human exchange between China and Korea is realized through both airway and waterway. For example, ferry constitutes 40% of the Beijing-Seoul linkage.
The operation of the Train-Ferry system between Incheon and Yantai or Pyeongtaek and Weihai is being considered. The objective is to bring cities closer in the Pan Yellow Sea Zone. The Gimpo-Hongchao (Shanghai) Air Shuttle Service has also been unveiled recently. Thus, the Gimpo-Beijing Air Shuttle Service is now being planned.
In 2005, 29.4% of Koreans traveling abroad were concentrated on the routes to China; 1.43 million people traveled to Beijing and Tianjin in a year.
The Gimpo-Shanghai Air Shuttle Service is expected to realize cost reduction effects of KRW100 billion per year for exchange activities between the two countries (Korea Airports Corporation, 2006). It will also contribute greatly to the
86 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities promotion of regional economic cooperation and improvement of passenger convenience.
(2) Status of Japan-Korea logistics and transportation linkages
The Japan-Korea logistics linkage has been made possible through maritime transportation under the leadership of the Korea Near-sea Freight Conference (KNFC). KNFC was established in November 1991.
Eleven regular container shipping companies, four non-regular bulk shipping companies, and six container and bulk shipping companies (total of 19 Korea-based shipping companies) make up KNFC. They operate a total of 74 ships in the Japan-Korea waterway routes.
Foreign shipping companies include APL, Sea-Land, Maersk, Kyowa Shipping, and Car Ferry, a Japan-Korea joint venture company.
There are 34 waterway routes between Japan and Korea; some of them are the Kobe, Yokohama, Tokyo, Osaka, Nigata, and Hakata ports of Japan and the Busan, Incheon, Masan, and Ulsan ports of Korea.
The Joint Route Planning Commission has been in operation since September 1996. It seeks to facilitate fare stabilization and ensure the timely transport of export/import freight. The commission also aims at securing market order following the amendment of the Shipping Law and based on the cooperation between shipping companies operating in the Japan-Korea waterway routes.
(3) Status of China-Japan logistics and transportation linkages
Regular waterway routes between China and Japan have been planned and operated under the leadership of the China-Japan Regular Shipping Association (CJRSA).
CJRSA is in charge of unified service fare estimation and transport processing for member shipping companies. Nonetheless, most of the freight traveling from China conclude CIF or C&F contracts with Chinese shipping companies. Thus, the organization deals mainly with tasks involving freight traveling to China.
Chapter 3• Establishing Logistics and Transportation Linkages 87 The Yokohama port processes most of the Chinese containers bound for Japan, followed by the Kobe, Nagoya, Osaka, and Hakata ports; in particular, the Yokohama and Kobe ports manage half of the total trading volume.
The Shanghai port handles most of the Japanese containers bound for China, followed by the Qingdao, Dalian, and Tianjin ports. The Shanghai and Qingdao ports process approximately 40% of the total trading volume.
China-Japan container demand is recording an explosive growth. Such growth is driven by products with high value–added (electronics and semiconductors). Thus, the basis for the creation of an express container transport system between Hakata and Shanghai has been established.
For the first time in 54 years, a regular direct route for maritime freight transport (express container shipping) between China and Japan was opened in November 2003.
The express container transport system between China and Japan is also called "Shanghai Super Express." It is a roundtrip route connecting the Hakata and Shanghai ports. It takes half the shipping time between Tokyo and Shanghai (from 8 to 4 days).
2) Characteristics of logistics and transportation linkages in the Pan Yellow Sea Zone
Note that the trading volume between key ports in China and Korea is about 3 times that between those in Japan and Korea.
· Korea: Busan, Gwangyang, Incheon, Ulsan, and Pyeongtaek ports
· Japan: Tokyo, Yokohama, Nagoya, Shimizu, Osaka, Kobe, and Fukuoka ports
A study was conducted on the logistics movement between key ports in China and Korea. Results showed that freight was evenly distributed between the Dalian, Shanghai, Qingdao, and Tianjin ports in China. At least 2/3 of the total freight was concentrated on Busan Port in Korea.
88 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities
Note: The Shanghai and Ningbo ports are not included in the Pan Yellow Sea Zone. Their information is included to demonstrate the overall logistics and transportation linkage trends.
Note: The Shanghai and Ningbo ports are not included in the Pan Yellow Sea Zone. Their information is included to demonstrate the overall logistics and transportation linkage trends.
Chapter 3• Establishing Logistics and Transportation Linkages 89 The trading volume between key ports in China and Korea in the Pan Yellow Sea Zone was 3.5 million TEU. This made up approximately 70% of the total trading volume between the two countries in 2006. Freight from China was about 1.26 times bigger than that from Korea.
A study was conducted on the logistics movement between key ports in Japan and Korea. Results showed that freight was evenly distributed between the Fukuoka, Tokyo, Yokohama, Osaka, and Kobe ports in Japan. At least 4/5 of the total freight was concentrated on Busan Port in Korea.
he trading volume between key ports in Japan and Korea was 1.1 million TEU. This accounted for approximately 60% of the total trading volume between the two countries in 2006. Freight from Japan was about 1.16 times bigger than that from Korea.
Note: The Tokyo, Yokohama, and Kobe ports are not included in the Pan Yellow Sea Zone. Their information is included to demonstrate the overall logistics and transportation linkage trends.
90 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities
Container Transportation Volume Between Key Ports in Japan and Korea (Japan → Korea; 2006)
Note: The Tokyo, Yokohama, and Kobe ports are not included in the Pan Yellow Sea Zone. Their information is included to demonstrate the overall logistics and transportation linkage trends.
For the China-Japan freight transport, the volume of freight originating in China was significantly greater than that from Japan.
Container transportation statistics between China and Japan since 2004 were reviewed. Results showed that cargo movement between the two countries depended heavily on Shanghai Port for both final arrival and initial departure. In fact, Shanghai Port constituted approximately 45% of the total trading volume. The tendency of freight to be concentrated on the Shanghai and Qingdao ports persists.
The Dalian and Tianjin ports process around 10~12% of the China-Japan container volume in China; approximately 50% of China-related trading in Japan is handled in the Yokohama and Kobe ports.
Chapter 3• Establishing Logistics and Transportation Linkages 91
Container Transportation Volume Between Key Ports in China and Japan (2005)
The logistics network in the Pan Yellow Sea Zone was also analyzed. The analysis focused on the Dalian, Tianjin, and Lianyungang ports of China. Results showed that Dalian Port managed cargo transport to and from Japan and Korea based on its coastal linkage with the Qingdao and Tianjin ports. Clearly, the three hub ports in the Pan Yellow Sea Zone had poor direct connection with the key ports in Japan and Korea.
A feeder container shipping network between key hub ports should be built in the Pan Yellow Sea Zone. This will allow the efficient expansion of the region’s logistics linkage and enable securing stable transportation routes.
Except for the domestic coastal routes, Tianjin Port is directly connected to the Incheon and Busan areas of Korea. Qingdao Port is directly linked to the Northern Kyushu and Osaka areas of Japan.
Ultimately, the logistics network connection in the Pan Yellow Sea Zone is enabled mostly through arterial shipping routes. Such routes bring together hub ports such as the Shanghai and Busan ports. This suggests a heavy dependence on the international logistics network.
One characteristic of the airway transportation in the Pan Yellow Sea Zone is that passenger transport and freight transport for the China-Korea route were 3 and 3.7 times bigger than passenger transport and freight transport, respectively, for the Japan-Korea route.
92 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Key airports in the Pan Yellow Sea Zone
For passenger transport between key airports in China and Korea, different local airports in Tianjin, Dalian, Yantai, and Weihai generated demand that was comparable to China’s Beijing Airport. In contrast, 90% of the demand in Korea was concentrated on Incheon Airport. No international routes were developed through Gimhae (Busan) except the connection to Beijing and Tianjin. There was practically no demand for international flight service through other local airports.
Note: Gwangju Airport has an operational international terminal. Note, however, that the number of international passengers to and from Japan and Bohai Gulf Zone of China is negligible, i.e., 700 per year.
Chapter 3• Establishing Logistics and Transportation Linkages 93 The China-Korea freight transport between key airports in the Pan Yellow Sea Zone was 46,281 tons in 2005. At least 96% of the total volume was concentrated on Incheon Airport in Korea; 55% and 28% of the total volume were distributed to the Beijing and Tianjin airports, respectively, in China. Clearly, China benefited from a more even distribution in demand than Korea.
Airway passenger transport between Japan and Korea in the Pan Yellow Sea Zone was made possible through the Fukuoka, Gumamoto, and Kagoshima airports in Japan and Incheon and Gimhae airports in Korea. Here, most of the passenger transportation was carried out through the Incheon/Gimhae- Fukuoka connection. This left little for other local airports, however.
The Incheon-Fukuoka route accommodated 89% and 96% of the total passenger and freight transport demands, respectively.
Airway Transportation Volume Between Key Airports in Japan and Korea (2005)
Note: Gwangju Airport has an operational international terminal. Note, however, that the number of international passengers to and from Japan and Bohai Gulf Zone of China is negligible, i.e., 700 per year.
3) Recent efforts to expand logistics and transportation linkages in the Pan Yellow Sea Zone
94 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities (1) Establishment of integrated transportation systems (incl. the Japan-Korea Joint Railway Freight Transportation)
Multi-modal integrated transportation systems in the Pan Yellow Sea Zone are not feasible from a short-term perspective for geopolitical reasons. Recently, however, efforts to introduce a multi-modal transportation system have been made. Such system brings together land and waterway transportation systems and subsequently generates value-added to port use.
China, Japan, and Korea have recognized the efficiency of the “Train-Ferry connection.” Thus, they have recently been promoting its application. In particular, the joint railway freight transportation plan between Busan and Fukuoka has been implemented since March 2007.
An MOU for the launch of the Train-Ferry System between China and Korea was signed in April 2007. Since then, pilot operation has been ongoing for the Incheon-Yantai route.
The Japan-Korea Joint Railway Freight Transportation (KORAIL-Heunga Shipping-JR Freight) operation has been ongoing between Busan and Fukuoka since 2007. It provides value-added container transport within 60 hours. It also offers much lower rates than the airway transportation system.
· Introducing the Train-Ferry System between China and Korea in the Incheon-Yantai or Pyeongtaek-Weihai will bring down route transportation cost related to loading and unloading by 40+%.
Chapter 3• Establishing Logistics and Transportation Linkages 95 Seoul Customs & Transfer
China-Korea Train-Ferry Project Under Discussion, Incheon-Yantai, Pyeongtaek-Weihai
Source: Internal materials at Korea’s Ministry of Construction and Transportation and KORAIL, 2007
Status of Joint Rail Cargo Transportation Between Japan and Korea and Rail-Ferry System Between China and Korea
(2) Enhancement of the human exchange network through air shuttle services
Efforts to enhance inter-regional linkages in airway transportation for the Pan Yellow Sea Zone have continued. An example of such efforts is the air shuttle service provided between key cities in the Northeast Asian Three.
The Air Shuttle Service was first introduced between the Gimpo (Seoul) and Haneda (Tokyo) airports in 2003. Its success as an inter-regional airway transportation system has frequently been discussed at the China-Japan-Korea Summit.
96 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities The air shuttle service comes with a very high time-to-cost value. This is because the domestic airports in downtown areas are used. It is considered the best passenger transport system to go hand in hand with the 1-Day Business Zone development efforts in the Northeast Asian Three.
The Gimpo-Haneda Air Shuttle has been successfully operated based on the improved accessibility to the airway transportation service. Another plus factor is the shorter transportation time resulting from the use of airports located in downtown areas. Since it was first provided in November 2003 with 8 trips a day, the service has expanded to 16 trips a day. This was in response to the explosive demand increase, i.e., annual average rate of 52%.
The seat occupancy rate for all flights between the Gimpo and Haneda Airports reached 85% (near-full capacity). As such, the air shuttle service accounted for 37.5% (1.42 million persons/yr) of the Seoul-Tokyo Flight Market in 2006. Before the launch of the air shuttle service, the annual growth rate of demand for the Seoul-Tokyo airway passenger transport was 3.3%. After the service launch, however, this figure rose to 10.9%. Synergistic effects were also realized.
Source: Airportal (KCADA, 2005).
Comparison of the Number of Passengers Before and After the Introduction of the Gimpo-Haneda Line
Chapter 3• Establishing Logistics and Transportation Linkages 97 China, Japan, and Korea have positively responded to the success of the Gimpo-Haneda Air Shuttle Service. In fact, they launched the Gimpo- Hongchao and Haneda-Hongchao Air Shuttle Service. The inclusion of Beijing for the service route is currently being considered.
(3) Direct connection of the China-Japan-Korea land transportation networks
The construction of the Japan-Korea Undersea Tunnel has been considered even before the introduction of the abovementioned Train-Ferry and other total transportation systems. A discussion on the construction of the China- Korea Undersea Tunnel was recently started as well.
The construction of the Japan-Korea Undersea Tunnel has been planned and replanned as early as 20 years ago. Nonetheless, the huge project budget and economic and political issues have hindered the project from making any substantive progress.
The Japan-Korea Undersea Tunnel is supposed to connect Karatsu (Southern Fukuoka) and Tsushima of Japan and Busan, Korea through a 200km-long undersea tunnel. For the past 20 years, different routes and tunnel construction methods have been considered. Geological and topographical studies have also been conducted. In addition, more than KRW100 billion has been spent on project planning and related research works.
Note, however, that the study conducted by Japan showed that the project should be executed 200+m undersea for all three possible routes. Moreover, more than KRW200 trillion in costs would be incurred. The undersea tunnel connection could also give rise to disputes regarding the controversial socio-political issues between the two countries. All in all, the further promotion of the project is fraught with difficulties.
Nonetheless, the rapid increase in trade within the Pan Yellow Sea Zone has stimulated active discussion on the construction of the China-Korea Undersea Tunnel. This in turn reopened discussions on the construction of the Japan-Korea Undersea Tunnel.
The Weihai-Incheon (or Pyeongtaek) connection is the most feasible means of extending the China-Korea Undersea Tunnel to a total length of 374km. The latest plan involves a total budget of KRW109 trillion as well as more than 20 years’ project period.
98 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities The Yongyeon (North Korea) - Shandong Undersea Tunnel is also proposed as an alternative. This is because the length can be reduced to around 160km.
The Northeast Asian economy particularly the Pan Yellow Sea Economic Zone is rapidly expanding. Thus, the implementation of the abovementioned plan is expected to bring about massive economic impact and inter-regional cooperation enhancement effects. Still, the astronomical cost seems to outweigh the substantive benefit for the China-Korea Undersea Tunnel. Such is still being discussed at the conceptual level.
These projects differ greatly from the France-UK Euro Tunnel (50.45km, 6-year construction period, KRW14 trillion) or the Morocco-Spain Gibralta Undersea Tunnel (38km, scheduled for completion in 2025, KRW17 trillion) both in terms of project difficulty and size. Note that the Morocco-Spain Gibralta Undersea Tunnel is currently under construction. More careful study is needed from different perspectives.
The establishment of the China-Japan-Korea FTA can make the discussion on the direct connection of land transportation networks in Northeast Asia more relevant. The consequent growth in inter-regional trading volume will also be a factor. In this case, new light can be shed on the evaluation of the China-Korea and Japan-Korea Undersea Tunnel projects.
The undersea tunnel construction being discussed can be considered as a means of overcoming the geopolitical problem involving North Korea. Still, the conflicting opinions between China, Japan, and Korea have prevented the three countries from reaching any specific agreement.
3. Policy Direction for Invigorating Human and Commodity Flows Between Cities in the Pan Yellow Sea Zone
1) Passenger flows: establishment of the 1-day business zone
The Pan Yellow Sea Zone is driving the economic growth in Northeast Asia. Thus, the promotion of economic and human flows in the Pan Yellow Sea Zone should be accompanied by the creation of an optimal business environment for inter-regional movement. As such, there is a need to establish an efficient transportation system.
Chapter 3• Establishing Logistics and Transportation Linkages 99 In this regard, 1-Day Business Zones need to be created in the Pan Yellow Sea Zone. Furthermore, air shuttle services should be expanded around the key hub areas in the Pan Yellow Sea Zone to facilitate the movement of people. Note that the demand for air shuttle services has been growing recently.
Prospective 1-day business zones were analyzed based on movement/access time and distance estimation between key cities in the Pan Yellow Sea Zone. Figure 3-5 illustrates the result. The results revealed that the entire Pan Yellow Sea Zone can be included in 2-day business zones.
1-day business zones were set up around the key airports of Korea. The objective was to include cities with minimum population of 1 million. A 4-hour business transaction requirement was the basic assumption.
Analysis of the Prospective 1-Day Business Zones in China, Japan, and Korea in the Pan Yellow Sea Zone (airway)
The establishment of 1-day business zones between key cities in the Pan Yellow Sea Zone should be accompanied by the introduction of a special no- visa pass/multiple visa system. This will allow visitors on short-term business and tourists to make the arrangements apart from the conventional cross-border traveling.
100 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities The special pass system introduced for the APEC Summit can be used as a reference. The no-visa entry system can also be considered for airway traveling between China, Japan, and Korea.
The demand for the abovementioned air shuttle service has been growing explosively. Thus, it needs to be expanded for key hub cities in the Pan Yellow Sea Zone. Different regional airway transportation means should be used (low-cost airline, etc.).
The airport shuttle service should include more cities in the Pan Yellow Sea Zone. This in turn necessitates the transformation of a country-based airway connection to a city- based one within the resulting unified economic area. The development of the intra-region air shuttle service network will lay down the basis for inter-city exchanges in Northeast Asia.
The air shuttle service can also minimize the economic loss associated with intra-region movements. This will contribute greatly to the improvement of efficiency of the passenger transport system.
2) Cargo flows: vitalization of an integrated transportation system
The creation of an efficient cargo transport structure is being pursued through the Japan-Korea Joint Railway Freight Transportation. The purpose is to respond better to the explosive increase in demand in Northeast Asia, The introduction of the Japan-Korea and China-Korea Train-Ferry Systems (TFS) is being discussed as a practical alternative in multi-modal transportation networks.
Previous TFS-related studies suggest that the introduction of the Incheon (Korea) – Yantai (China) or Pyeongtaek (Korea) – Weihai (China) route will yield the biggest reduction effect on transportation time and cost. It also had sufficient economic feasibility.
TFS is a complex transportation system (cutting down 2-time loading and unloading process in maritime transportation to a 1-time one). Here, trains directly deliver the freight to the ship at the harbor. TFS combines the cost advantage of maritime transportation and mass transportation convenience and cost advantage of railway transportation in land.
Chapter 3• Establishing Logistics and Transportation Linkages 101 The water and land connection of the ferry and freight train is executed in three steps: train loading; train arrangement and lashing, and; train extracting and transporting. TFS is also called RO/RO line, which stands for roll-on and roll-off processes.
Train-Ferry System (RO/RO line)
The following are the strengths of TFS: timeliness of logistics; cost reduction through the 1-time transport process; improved transportation efficiency, which increases with the land transportation distance, and; simplification of transportation-related paperwork through the unified transportation contract (Won-Bae Kim, et al, 2008).
To be operational, TFS must be preceded by the establishment of the necessary port facilities and building of railway infrastructure in the port area. Coordination of the railway system between the countries involved is also a must.
TFS was first introduced in the UK in 1850. It has developed in coastal countries in the Baltics. TFS connecting Germany and Russia (Sassnitz/ Mukran - Baltijsk) was first opened at the end of 2006 as well.
102 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities In China, Zhangjiang-Hainan TFS has been running since 2002. Dalian-Yantai TFS has been operational since 2006.
The road feeder system (RFS) can be considered as an alternative.
RFS is the service through which freight from another area is transported by truck to the airport and transferred for airway transportation. Such airway transportation is provided to accommodate trans-shipment demand at specific airports.
The system provides shipping information check and standardized freight processing services. Specifically, a tracking number is assigned to each freight unit sent from a city without airline connections. This ensures that customers are offered shipping and delivery services of the same quality regardless of the point of departure.
Unlike the conventional sea & air freight transport, all administrative works are processed as one Air Way Bill (AWB). The objective is to simplify and streamline many intermediary procedures such as customs, piling, and transport for improved speed and reliability of the service.
Cargo Drop Center near the Departure Port Domestic Port
Source: IIAC, RFS Introduction to Increased Airway Freight to China (2006).
Conceptual Diagram of the Road Feeder Service
The biggest strengths of RFS are the shorter transportation time and reduced transportation costs.
Delays often occur during the peak season. This is because of the difficulty in securing freight loading space in the plane under the conventional Sea & Air system. In contrast, RFS can
Chapter 3• Establishing Logistics and Transportation Linkages 103 shorten the transportation time by more than 6 hours. It can also cut down the transportation cost by USD200/ton.
· Transportation Cost: Intra-region Road & Air ≒ Air & Air 〉RFS 〉Sea & Air
· Transportation Time: Sea & Air 〉RFS ≒ In-region Road & Air 〉Air & Air
The introduction of RFS can improve the freight service supply capacity for products with high value-added between China, Japan, and Korea. This in turn will enhance airlines’ freight transport competitiveness. It will also help the three countries overcome the geopolitical challenges in realizing the integration of the logistics market.
3) Regional linkages: specific measures for enhancing transportation infrastructure linkages
(1) Measures by central governments
The creation of the land transportation system network in the Pan Yellow Sea Zone is restricted by various geopolitical factors. Promoting it would be more difficult and time-consuming compared to the examples from Europe.
Therefore, the introduction of multi-modal transportation systems (TFS, RFS, etc.) linking the existing transportation networks should be discussed between the three countries at the central government level. Related plans can also be developed in detail through the promotion of pilot projects.
Toward this end, efforts toward developing the specific operation system and technology should be made. The objective is to customize multi-modal transportation systems so that they meet the needs of the Northeast Asian Three better.
In addition, inter-city logistics and transportation systems in the Pan Yellow Sea Zone should be examined closely. This will promote LCL/FCL balance symmetry in the three countries for greater transportation efficiency.
From the medium- to long-term perspective, emphasis should be placed on the Asian Highway and Asian Railway Network projects led by UN-ESCAP.
104 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities China, Japan, and Korea should seek the establishment of direct connections for land transportation networks in China and Korea, however limited it may be. This can be done through diplomatic efforts to utilize land transportation networks in North Korea.
Policy support for the introduction of the e-logistics and customs system should be provided. The same goes for the simplification of customs process in CIQ and use of appropriate vessels for each transportation objective. Through this, the Northeast Asian multi-modal transportation system can be run efficiently and practically. The land transportation route connection through North Korea will also be promoted.
The e-logistics system should be developed by introducing RFID and other related IT technology.
The logistics system of the three countries should be standardized. This way, the efficiency and timeliness of the customs process are enhanced.
Securing a reliable, stable financial source is crucial for the systematic promotion of the abovementioned projects. Therefore, the setup of the Northeast Asian Infrastructure Investment Bank or Pan Yellow Sea Financial Institute should be considered. Moreover, a joint promotion committee should be organized. It should be participated in by government agencies, private businesses, and specialized research bodies from the three countries. Through this, the Northeast Asian Land Transportation Network project can be pursued.
(2) Measures by local governments and private businesses
Local governments have played a much more important role in promoting regional linkages and cooperation in Northeast Asia than central governments. On the other hand, cooperation between local governments has been spearheaded by the network of port cities.
“Port Alliance” should be considered as a means of solidifying the strategic alliance3 between different cities and to strengthen linkages and cooperation between them.
Port alliance is a strategy that offers ports negotiation power against shipping companies. It also gives ports an advantage in the world market
3 Strategic alliance involves sharing resources among businesses for strategic purposes within a certain period of time.
Chapter 3• Establishing Logistics and Transportation Linkages 105 based on the shared use of regional resources. Specifically, it breaks away from the past trend characterized by inter-port competition.
Such global competition strategy promotes inter-port cooperation. This is made possible through the reduction of the port service fee, waterway connection, information/technology/human exchange, joint effort in the establishment and operation of a regional logistics complex, and port integration (joint terminal operation) under the leadership of port authorities (local governments and port management corporations).
Port supply needs to be expanded primarily to deal with the rapidly increasing inter-regional trading volume in Northeast Asia. Recent trends point to the possibility of excess port supply by 2012, however.
Port alliance is a strategic inter-port cooperation system. Therefore, it should be established based on the principle of mutual prosperity. Port alliance enables securing a reliable freight transport system, reducing logistics cost, enhancing investment efficiency through the shared use of port facilities, and upgrading port management standards through information and technology sharing.
The forging of the Northeast Asian Port Alliance can be divided into four stages: ① selection of ports for strategic alliance; ② opening of shipping routes and development of joint services; ③ formation of economic partnership, and; ④ integration of port services.
Examples of port alliance in Northeast Asia are the opening of new shipping routes between Busan (Korea) and Dafeng (China) Ports and opening of a direct route between Busan (Korea) and Nigata (Japan) Ports. The Hunchun Inland Container Depot (ICD) was developed as a logistics complex to support port operation. The Zarubino (Russia) Port was built in Russia to redirect freight transport demand from the area through the Hunchun-Zarubino Project.
Port alliance can be established under the leadership of local governments and/or private businesses (port authorities, etc.) with minimal input from the central government. Consequently, it can lay down the foundation for expanding regional linkages and cooperation in Northeast Asia. Port alliance can also form the basis for sustainable inter-city linkages and cooperation system. This is because it pursues the objective of profit generation.
106 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities The forging of port alliance in Northeast Asia should be preceded by institutional improvements. Such improvements include the following: creation of the Northeast Asian Port Logistics Information Network; standardization of port logistics specifics; establishment of an integrated e-customs processing system, and; organization of a discussion channel for local governments and private businesses.
Chapter 3• Establishing Logistics and Transportation Linkages 107 108 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities C · H · A · P · T· E · R Environmental Problems and Inter- 4 City Cooperation Measures in Northeast Asia
1. Status of Environmental Cooperation Between the Central and Local Governments in Northeast Asia
1) Status of environmental cooperation between central governments
(1) Tripartite Environment Ministers’ Meeting (TEMM) between Korea, China, and Japan
TEMM is a meeting of top officials between central governments in Northeast Asia. It was established to cope jointly with environmental problems such as yellow dust and acid rain. TEMM is also aimed at enhancing the perception of environmental communities between Korea, China, and Japan. These three are the key countries in Northeast Asia.
The need for tripartite cooperation in Northeast Asia arose in the latter part of the 1990s due to trans-border environmental problems such as yellow dust. As such, TEMM has been held each year since 1999.
Korea, China, and Japan each present the status of their domestic environmental policy promotion and achievements during the annual meeting of TEMM for mutual sharing. These countries also review and evaluate cooperation projects on pending environmental issues. In addition, they present cooperation projects as a form of joint communiqué.
Six major cooperation projects have been promoted: the Ecology Restoration Project in the Western Part of China; Environmental Industry Roundtable for the Water Quality Improvement of Lakes and Marshes; Tripartite Co- Environmental Education, and; Common Website of the Three Countries and Environmental Education Network.
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 109 The TEMM working group was formed as the body in charge of the development method for the environmental cooperation system in Northeast Asia. Related research institutes of the three countries conduct co-research on the development methods for TEMM and Northeast Asian environmental cooperation system.
(2) Northwest Pacific Action Plan (NOWPAP)
NOWPAP is a cooperative organization between Korea, China, Japan, and Russia. It aims at environmental cooperation in the marine sector in Northeast Asia. NOWPAP was established as part of the Regional Seas Programme of UNEP in 1994.
During the second meeting of NOWPAP in 1996, the setup of a trust fund was decided as the institutional basis for the financial sector. The target for each country was set as follows: Korea – USD 100,000 (20%); China – USD 40,000 (8%); Japan USD 125,000 (25%), and; Russia – USD 50,000 (10%).
During the 6th meeting in 2002 and UNEP Enforcement Board meeting in 2001, discussion on the establishment of the Regional Coordinating Unit (RCU) began. RCU was supposed to be the institutional base in the organization sector.
Until 2003, UNEP played the role of temporary RCU of NOWPAP as a supervisory organization. A co-RCU was established in Busan (Korea) and Toyama (Japan) in 2004, however.
For the major activities, the four member countries share their roles by setting up four Regional Activity Centers (RACs). To date, eight regional cooperation projects have been promoted.
Korea focuses on Marine Environmental Emergency Preparedness and Response including petroleum pollution control.
China focuses on Data and Information Network.
Japan focuses on Special Monitoring and Coastal Environment Assessment.
Russia focuses on Marine Pollution Monitoring related to air pollution originating in land and wastes thrown into the sea.
110 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities 2) Status of environmental cooperation between local governments
(1) Environmental cooperation between governors/mayors/prefecture heads of coastal areas between Korea and Japan started in 1992
At present, 1 city, 3 provinces, and 4 prefectures (Busan Metropolitan City, South Gyeongsang Province, South Jeolla Province, and Jeju Province and Fukuoka Prefecture, Saga Prefecture, Nagasaki Prefecture, and Yamaguchi Prefecture) participate. The meeting of governors/mayors/prefecture heads and working-level meeting are held annually.
Currently, the Environmental Technology Exchange project is being promoted for the environmental preservation of both Korea and Japan.
Projects on broad, various environmental technologies and air pollution prevention measures are implemented jointly between provinces, cities, and prefectures of coastal areas between Korea and Japan.
To date, environment-related exchange projects have been limited to joint surveys.
Joint survey of acid rain in the atmosphere in 1995 and 1996
Joint survey of organism verification for river water quality in 1998 and 1999
Nitrogen flux survey in rivers and collection basins in 2000 and 2001
(2) Environmental cooperation of Northeast Asia Regional Governments (NEAR) initiated in 1996
NEAR started out with 29 regional governments of the 4 countries. Today, it has grown into the largest international organization of its kind with 65 regional governments. North Korea and Mongolia joined NEAR in 2006.
An Environment Sub-Committee was established in 1998 along with 7 other sub-committees. Since then, Japan’s Toyama Prefecture has been playing the role of coordinator.
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 111 NEAR consolidates environment information exchanges and co-perception of environmental protection. It also pursues mutual cooperation between regional (local) governments within Northeast Asia. The ultimate aim is to address the global environmental problems in the 21st century.
For the smooth implementation of individual projects relevant to the environment, NEAR coordinates opinions between regional governments. It also concretizes project plans and conducts reviews and provides consulting regarding their implementation measures.
The selection and promotion process of the NEAR Environment Sub- Committee project consists of 3 stages. The first stage involves examining a proposal. In the second stage, the participation intent of the regional governments is surveyed. The third stage is the implementation of the proposal in cooperation with regional governments. The focus is on the regional government that came up with such proposal.
The following are the individual projects promoted through the 3 stages: Seashore Driftage Examination off the East Sea and Yellow Sea; Joint Survey of Migratory Birds in Northeast Asia; Northeast Asian International Environment Symposium, and; Northeast Asian Youth Environment Symposium.
The Seashore Driftage Examination off the East Sea and Yellow Sea began in 2000. In this project, coastal regional governments and NGOs detect environment pollution in the seashores in terms of marine driftage and buried matter in the East Sea and Yellow Sea. It also seeks to upgrade the local residents’ environment protection awareness.
Japan’s Toyama Prefecture and Russia’s Maritime Territory of Siberia have participated in the Joint Survey of Migratory Birds in Northeast Asia since 2000. Private organizations and young people also conduct a co-survey. They then disseminate the survey results in Northeast Asia.
The Northeast Asian International Environment Symposium was held in China, Korea, and Russia from 2001 to 2003. It aimed at promoting associated cooperation from the local government and international environment dimensions.
112 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities During the Northeast Asian Youth Environment Symposium, the young Northeast Asian participants jointly engage in environmental learning and preservation activities. They also exchange opinions on environment preservation.
NEAR came out with the Pan East Sea Environment White Paper 2003. It also held the Environment Protection International Youth Conference in Northeast Asia in 2005. In addition, NEAR has provided information on the environmental policy related to its Environment Sub- Committee since Feb. 2004 through its website.
(3) Environmental cooperation of the Organization for East Asia Economic Development (OEAED) commenced in 2004
Economic exchange activation is enabled through the efficient use of locally restricted resources. For this, OEAED cites 4 areas (manufacturing, environment, logistics, and tourism) as major exchange fields. It also established 4 units (manufacturing, environment, logistics, and tourism) as affiliated organizations and assigned practical functions to them.
In addition, OEAED identified the major tasks to be performed through the activities of each unit. The environment unit cites the major tasks for making the Pan Yellow Sea Zone a model of an environment-friendly region in the world. Specifically, it promotes the coexistence of environment preservation and industrial activities. These are ultimately aimed at creating a zero-waste society.
The environment unit is currently promoting the following major projects: Networking for Environmental Cooperation, Creation of Model of Environment-friendly Region, and Promotion of International Union of Recycling.
Environment industry cooperation has been commenced. The environment preservation symposium, environmental fact- finding survey of member cities, and examination of private firms’ needs served as the basis.
To create models of environment-friendly region, the standardization of environmental regulations and greening of the Pan Yellow Sea Zone are promoted.
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 113 Sharing of and cooperation on technologies, cutting-edge facilities, and research on the treatment of industrial products or waste and recycling (regeneration of resources) are promoted. This ensures the international union of environmental recycling in the Pan Yellow Sea Zone.
To promote such major projects, the environment unit held conferences in 2004 and 2006. It also collected and classified the information of each city into urban environment and environmental industry. In addition, the unit agreed to the exchange between the environment-related industry, academe, and research sectors and promotion of cooperation projects. This way, the enhancement of understanding of the environment industry of each member city is promoted.
In addition, each city’s common perception of the environment business is formed. The activation of research and corporate activities is also promoted by holding environment-related symposiums and EXPOs.
3) Climate change and potential inter-city cooperation
(1) Increase in demand for cooperation regarding CO2 reduction in relation to climate change
Nowadays, there is a growing need for international cooperation regarding CO2 emission reduction related to climate change. Cooperation on CO2 emission reduction in the atmospheric environment in Northeast Asia is expected to be a major factor.
In February 2005, the United Nations Framework Convention for Climate Change (UNFCCC) decided on a unilateral clean development mechanism (unilateral CDM and South to South CDM). Thus, interest in CO2 emission reduction and certified emission reduction (CER) has been stimulated in the Northeast Asian region. Above all, the carbon market mechanism induces the voluntary participation of governments and corporations in carbon emission reduction.
The general meeting of concerned countries of the UN Climate Change Convention held a UNFCCC meeting in Bali, Indonesia on Dec. 3~14, 2007. A Bali Roadmap was drawn up during the meeting. This roadmap consolidated the new
114 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities climate change and consultation contents deciding on a climate change response system.
The mandatory greenhouse gas emission reduction countries made all advanced countries including the US -- which rejected the rectification of the Kyoto Protocol -- and developing countries participate in greenhouse gas emission reduction. This was considered the biggest achievement of the Bali Roadmap.
Major contents of the Bali Roadmap
○ Expansion of the target negotiation countries for greenhouse gas emission reduction (including the US and developing countries)
○ Definition of negotiation rules
- Discussion on climate change response with the participation of developed and developing countries
○ Discussion on the measures for procuring financial resources against climate change
- Imposition of carbon tax and setup of fund by contributing 2% per CER trade
○ Concrete reduction target and measures to be decided in 2009
- Meeting to start in Mar. 2008 - Final decision to be made during the 15th general meeting in Copenhagen, Denmark in 2009
(2) Factors for increasing potential inter-city cooperation against climate change
A. Feasibility of financial resource procurement
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 115 Environment problems related to climate change may promote the environment as a market economy through CER trade. This will facilitate financial resource procurement.
The difficulty in financial resource procurement has weakened the binding commitment to cooperate between Northeast Asian governments until now. Still, financial resource procurement in cooperation between cities in Northeast Asia remains feasible. This is because environmental cooperation will not only be consolidated; the consolidation of other economic cooperation fields will be enabled as well. Thus, potential cooperation between cities is expected to be strengthened.
B. Cooperation in the environment industry using an international division of labor between cities in the Pan Yellow Sea Zone
The economy of Northeast Asia is operated through a production specialization structure between cities. This increases the possibility of combining China’s manufacturing industry and Japan and Korea’s cutting- edge environment production and treatment systems.
Since the 11th Five-year Plan in China was established, the environmental regulations in the manufacturing industry have been strengthened. There is also a growing need to supplement the manufacturing process’s production and treatment system. Foreign investments in the sewer/wastewater treatment of cities are required.
In the case of Tianjin Eco-city, sewer/wastewater treatment is one of its core projects. Korea’s GS Construction is set to participate in the project.
Such specialization structure in production between cities is closely linked with the multinational corporations’ activities in each city. If cooperation is fostered in association with CER trade, more solid cooperation can be realized between cities in Northeast Asia. This is because the mandatory carbon emission reduction amount against climate change will likely be imposed on such corporations.
C. Local government’s efforts to reduce carbon emission
Interest in response to climate change has recently been a hot issue. Thus, local governments in Northeast Asia are actively taking part in carbon emission reduction.
116 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Korea’s Suwon and Gwacheon Cities in Gyeonggi Province and Gwangju Metropolitan City plan to introduce a carbon point system in September 2008. Here, points will be awarded to commercial facilities inputting the details of energy savings such as electricity and natural gas. The local government concerned will then provide corresponding public utility fee discounts. Households, restaurants, and stores are also eligible to participate.
Mayor Yamada Gage of Japan’s Kyoto City will introduce a CO2 Emission Reduction Bank system for the first time in Japan. A household reducing the amount of electricity and natural gas consumed and reporting such to the bank will earn the corresponding environment points. These points can be used to buy goods in stores (Feb. 11, 2008, JoongAng daily newspaper).
Such efforts can foster bottom-up environmental cooperation (cooperation between corporations, citizens, and local governments) beyond the government-led, top-down environmental cooperation. This can be realized by implementing environment campaigns in daily life through linkage between corporations and citizens via local governments. Inducing citizens’ participation is also crucial.
4) Evaluation of environmental cooperation between the central and local governments in Northeast Asia
(1) Weakness of environmental cooperation between governments
Cooperation between the central and local governments tends to be superficial; such cooperation is not pursued together with various cooperation subjects such as local governments and NGOs.
The areas of cooperation are deemed appropriate; they concentrate on pending regional environmental issues in Northeast Asia such as yellow dust and acid rain. Still, the binding force is weak. This is because the form and character of cooperation are mostly based on voluntary intentions.
Continuous, active environmental cooperation is impossible. This is because the financial resource procurement structure has yet to be established between the Northeast Asian Three (Korea, China, and Japan). Another factor is the absence of public development funds including ODA and
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 117 cooperation promotion funds in the government sector in charge of environmental cooperation.
(2) Shift of the cooperation paradigm from environment preservation to environment industry
Environment cooperation between governors/mayors/prefecture heads of coastal areas between Korea and Japan in 1992 and NEAR in 1996 depended on the environment preservation paradigm. Nonetheless, such efforts were pursued only from the dimension of academic exchanges and survey, without any meaningful outcome.
Environmental cooperation in Northeast Asia from the 1990s to the mid- 2000s was pursued at the rudimentary level. This was mainly due to the asymmetric economic development between the countries concerned.
Environmental cooperation was a means of supporting exchange cooperation particularly economic cooperation.
With the launch of OEAED in 2004, the environment unit among the 4 units has focused on environment industry cooperation. It promotes the environmental fact-finding survey of member cities for environment industry cooperation and private firms’ needs survey. The environment unit also pursues international cooperation such as practical environmental cooperation and recycling including the treatment and recycling of industrial products or waste.
Such change is based on the history of exchanges, which is based on the asymmetric economic growth and exchanges in Northeast Asia. Cooperation in the environment industry appears to be the most practical approach.
(3) Consolidation of environment industry cooperation between cities
To date, environment preservation cooperation has focused on the examination of outcomes at the city or region level. The focus is now shifting to preventing environmental pollution and pollutants. Major city development (input) and industrial activities are the main sources.
Environmental cooperation between governors/mayors/prefecture heads of coastal areas between
118 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Korea and Japan and NEAR used to focus on the examination of the existing air and water pollution including air pollution (acid rain, etc.). Controlling such pollution was also studied.
Recently, however, environmental cooperation in cities has been deemed more important for environment preservation. Note that cities are the sources of waste treatment and recycling considering the corporate activities and urban development. Environment industry cooperation is being consolidated as well.
(4) Prospect of cooperation between cities against climate change
Unilateral CDM and South to South CDM drew attention to CO2 emission reduction. This was made possible through the CER trade between each country of Northeast Asia in February 2005. Still, carbon emission reduction through cooperation between cities in Northeast Asia has yet to be realized.
In fact, the three countries’ greenhouse gas emission volume is very large. China is ranked 2nd, Japan, 5th, and Korea, 9th among the world’s leading countries in terms of the CO2 emission amount for 2007.
A series of responses to the recent climate change include the Bali Roadmap in December 2007. Such responses demand a joint countermeasure for the reduction of CO2 emission in Northeast Asia. Cooperation between countries, regions, and cities has yet to materialize, however.
A major means is cooperation on the control of pollutants generation in cities. Note that cities are major sources of CO2 generation in industrial activities. These in turn are related to climate change. Therefore, a joint countermeasure is recommended through environment industry cooperation and carbon market creation in Northeast Asia. Specifically, cooperation between cities shall be pursued.
2. Inter-City Environmental Cooperation: Cases and Implications
1) Inter-city environmental cooperation: examples in the Pan Yellow Sea Zone
(1) International cooperation for the environment industry in Kitakyushu
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 119 Kitakyushu has contributed to the environmental improvement of developing countries. It uses the technologies it accumulated in the air pollution prevention process. The city has been dispatching experts and establishing training centers for developing countries since the 1980s (Environment International Cooperation 2008 of Kitakyushu, www.city.kitakyushu.jp).
KITA was established in 1980. It started offering environmental training courses in full swing in 1986 after it was commissioned by the International Cooperation Group (currently known as JICA, KOICA’s Japanese counterpart).
Every year, some 250 trainees are accepted in environmental training courses in Kitakyushu. These include the creation of a zero-waste society through the eco-city project and energy savings.
For the creation of a zero-waste society, the administrative policy (combination of policy on proper treatment/recycling and environment industry attraction and fostering) is introduced. The Kitakyushu Eco-city and recent corporate technologies (technology for the proper treatment of waste and resource recycling and environmental management) serve as the backdrop.
In the energy savings field, energy conservation measures and training curriculum are provided. They are aimed at promoting measures against global warming and energy savings. Such measures include urban planning, which applies smaller load to the environment and use of reusable energy.
Kitakyushu City tries to accommodate 400 trainees annually and 2,000 trainees for 5 years. It seeks to become Asia’s stronghold fostering talented personnel specializing in the environment.
Kitakyushu forms various environment cooperation networks including the Environment unit of OEAED, Asian Environment Cooperation City Network, and Kitakyushu Initiative Network.
The environment unit of OEAED consists of 10 cities of Korea, China, and Japan in the Pan Yellow Sea Zone. It pursues the creation of the Pan Yellow Sea Economic Zone through the promotion of economic and personnel exchanges.
120 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities The environment unit holds seminars on industry-academe- research linkage. It has also established an advanced environment database. It seeks to contribute to the sustainable development of the Pan Yellow Sea Zone while encouraging the cultivation of talented personnel in the area.
The Asian Environment Cooperation City Network was established during the Asian Environment Cooperation City Conference held in Kitakyushu in 1997. It sought to enable the sharing of each city’s experiences and take new actions to realize sustainable development in Asia. The conference was jointly established by 4 countries and 6 cities in Southeast Asia.
Kitakyushu is making an effort to solve problems through training, dispatch of experts, and hosting of seminars.
The Kitakyushu Initiative Network has adopted the Kitakyushu initiative for a clean environment. This was to ensure the smooth promotion of environment improvement in the Asia-Pacific region with its environmental pollution. Kitakyushu’s experience was used as a model. The policy for preventing environmental pollution and enabling city recovery as presented during the MCED held by UN ESCAP in 2000 was also applied.
The Kitakyushu Initiative Network was founded based on this; 62 cities in 18 countries of the Asia-Pacific region participated in the network as of December 2006. Seminars, study tour, and pilot projects for urban environment improvement have been implemented.
The Kitakyushu international cooperation network fosters practical cooperative relations with China and Southeast Asian cities.
Typical cases are as follows: creation of a zero-waste society (China’s Tianjin, Suzhou, Qingdao); sewer treatment technology field (China’s Kunming and Huhehaote); Dalian environment model zone maintenance plan project (Dalian, China); environment education project (Cebu, Philippines), and; project on making food waste compost (Bangkok, Thailand and Surabaya, Indonesia).
Creation of a zero-waste society (Tianjin, Suzhou, and Qingdao): An attempt to realize a zero-waste society is currently underway in China. This shows that China has taken an active interest in the eco-town project of Kitakyushu.
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 121 Seminars are held in Tianjin and Qingdao to introduce the policies of Kitakyushu. The eco-town project is also presented during the seminar.
Suzhou conducts surveys on the construction of an eco-town in the district. It also proposes the building of eco-towns suitable for China’s social system.
Dalian’s environment model zone maintenance project (Dalian, China): Various forms of cooperation have been pursued to date. Such was in response to the request for cooperation by Dalian City. Dalian’s environment model zone maintenance plan as proposed by Kitakyushu serves as a pilot project. Kitakyushu seeks to expand its achievements across China.
For the realization of the plan, Kitakyushu conducted a development survey. Such survey aimed at coming up with an environment improvement master plan using ODA.
This is the first case wherein the local government’s cooperation was connected with the ODA agenda. Kitakyushu pursued cooperation in the following fields: environment administration, environment monitoring, sewer treatment, and factory cleaner production (CP).
As a result of such cooperation, Dalian was awarded the “Global 500 Prize” by the UN Environment Plan for the first time in China in 2001.
A. Environmental economic cooperation through the environmental international business
For Asian countries, Kitakyushu actively encouraged participation in the environment business by private firms with high technological prowess. This was in addition to the previous cooperation projects of the government. Kitakyushu targeted China and Korea, where rapid economic development is being pursued.
Information on the overseas environment business is obtained through cooperation projects or business feasibility survey. Such information has been widely disseminated. Business mission dispatch and exhibition consultation meeting and participation have been planned as well. Thus, the participation of firms within Kitakyushu and are interested in foreign countries has been actively supported.
122 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Thanks to such efforts, three companies dealing with the environment in Kitakyushu advanced into China in 2005.
(2) Fukuoka waste landfill and international cooperation between cities
A. Description of the Fukuoka waste landfill
A special semi-aerobic landfill measure was developed as a co-project between Fukuoka City and Fukuoka University. Such measure became widely known as the Fukuoka measure.
In 1966, Fukuoka University started research on landfill technology to improve the quality of leachate.
A series of experiments were conducted for 3 years beginning in 1973. The cooperation of the Japanese government’s former Welfare Ministry and Fukuoka City was solicited.
In 1975, Professor Masataka Hanashima of Fukuoka University presented a semi-aerobic landfill development concept. Its biological features were first tested with the Shinkamata Landfill in Fukuoka.
Concept of semi-aerobic landfill development (Fukuoka Environment Bureau, 2008)
The basic concept involves improving the quality of leachate of landfill wastewater through the increase in oxygen and decrease in hazardous gas such as methane and sulfuretted hydrogen. This can be done by increasing microbe activities.
The research found that various landfill layers exist. Moreover, the types of microbes were found to differ according to the landfill layers. The types were classified into 5.
This concept and measure were formally named the Fukuoka Measure. The former Japanese Welfare Ministry recommended this semi-aerobic landfill measure in the Instructions for Final Waste Treatment. This has led to the adoption of the measure throughout Japan.
The development of the Fukuoka measure enabled various academic research activities on landfill technologies, which have not been systematically organized.
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 123 The landfill can be converted into useful land resources. Thus, the measure contributes to the creation of a zero-waste society.
B. International cooperation between cities in relation to the Fukuoka waste landfill
Fukuoka City boasts of the following international cooperation achievements: cooperation project through JICA; cooperation on landfill technology transfer to Malaysia (transfer of low-cost Fukuoka measure); technological cooperation with China’s Weifang City through the UN Human Habitat Program; signing of agreement on technology cooperation between Tsinghua University (China) and Fukuoka University, and; improvement of landfills in Samoa.
Fukuoka City has been contributing to environmental pollution reduction in the Asia-Pacific region. Specifically, it is working on the transfer of waste landfill technology in cooperation with JICA.
UN Human Habitat Program (UN-HABITAT): The Fukuoka branch deals with habitat environmental improvement in the Asia-Pacific region. It also establishes a project on introducing the Fukuoka measure in China’s Weifang City. In addition, the Fukuoka branch signed an agreement with China’s Construction Ministry.
Fukuoka City assumes that active international cooperation can help address urban environmental problems. It hopes to contribute to Asia through the waste landfill measure. The Fukuoka branch of the UN Human Habitat Program recommends dispatching personnel including engineers to the local cooperation city.
On November 7, 2003, an agreement for environmental technology cooperation and dissemination of the Fukuoka measure was signed. In particular, the technology cooperation covers the waste treatment technologies of Tsinghua University, Fukuoka City, and Fukuoka University.
The environment group of China’s Tsinghua University (in Beijing) recognized the problems of waste treatment measure development. Thus, it visited Fukuoka’s Nakata landfill as part of the exchange program between Fukuoka University and Tsinghua University.
124 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities China decided that the Fukuoka measure was very suitable for its small cities. Thus, the country requested for cooperation from Fukuoka City and Fukuoka University to promote the Fukuoka measure (semi-aerobic landfill measure) and signed an agreement.
Tsinghua University introduced the Fukuoka measure for the Mengzi-Yunnan province. It was the initial project on the landfill measure dissemination within China.
2) Implications of environmental cooperation between cities in the Pan Yellow Sea Zone
(1) Activation of partnership between the private sector and public administration
Environmental pollution and other forms of pollution resulting from modernization and high growth through the heavy and chemical industries are some of the common problems of Japanese cities. Through the unity of citizens, corporations, and public administration, however, such problems have been minimized.
Public administration has promoted the policy of restriction and monitoring consolidation and infrastructure layout. For their part, citizens have launched campaigns to cope with environmental pollution. Corporations have introduced environmental pollution prevention facilities. They also focused on technology development and served as a technical leader in the environment industry.
London aims at carbon emission reduction by each economic stakeholder including citizens, firms, and government. Thus, it has presented guidelines for green homes, agencies, and buildings. The city has also activated the carbon reduction partnership.
In the case of the US, a practice plan in five fields -- land, air, water, energy, and transportation -- was presented. The participation of New York citizens was also encouraged.
The experiences and efforts of advanced environmental cities would have come to naught without the help and participation of the private sector (citizens and firms). They also have important implications regarding environmental cooperation between cities in the Pan Yellow Sea Zone.
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 125 Furthermore, they suggest the need for a measure wherein both citizens and firms participate in addition to cooperation between municipal governments.
(2) Use of networks of various forms of domestic and international cooperation
The overall city image has been transformed into that of an environmental city and upgraded to that of an international city. Such has been realized through the use of many environment-related, relatively advantageous technologies. Policy operation based on the partnership between citizens, firms, and administration for international cooperation was also a contributing factor.
To promote the image of the city as an international environmental city, environment-related personnel are dispatched to developing countries. Trainees from developing countries are also accommodated.
Japanese cities have taken the lead. For one, they create international environment-related cooperative organizations. They have also secured a leading position in the international cooperation network.
Kitakyushu establishes various environmental cooperation networks through the Environment unit of OEAED, Asian Environmental Cooperation City Network, and Kitakyushu Initiative Network.
Practical projects are also organized by area (creation of a zero-waste society, sewer treatment technology field, etc.). In addition, partnerships with cities in China and Southeast Asia are promoted.
Cooperation on the environmental programs of international organizations including the UN Human Habitat Program, UN-ESCAP, SPREP, etc., is actively promoted.
Accordingly, existing environmental cooperation organizations including the Environment unit of OEAED should be stimulated. This will help activate cooperation between the Pan Yellow Sea Zone cities. Cooperation on practical projects and establishment of project organizations by environment field should also be strengthened.
126 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities There is a need to consolidate environmental cooperation in the Pan Yellow Sea Zone in close association with UN environment-related affiliated agencies located within Northeast Asia.
(3) Active support for environmental cooperation between central governments
Japan supports environmental cooperation in Northeast Asia. Specifically, it establishes training programs including local governments’ various training courses through JICA.
Japan actively supports environmental cooperation in Northeast Asia. Such support takes the form of loan provision, China’s sewer treatment projects, environmental education, and environment model zone maintenance.
As mentioned earlier, the Japanese government actively supports environmental cooperation in the Pan Yellow Sea Zone. This will most likely give rise to environmental cooperation support projects between the central governments of Korea and China. In addition, the central governments of Korea, China, and Japan need to promote the setup of the Pan Yellow Sea Zone Environmental Fund. Such fund is expected to activate environmental cooperation in the Pan Yellow Sea Zone. The Pan Yellow Sea Zone Environmental Fund would be jointly created by the three countries through the support of each country.
(4) Technology development and environment industry cooperation through the consolidation of industry-academe-research linkage
Fukuoka commenced research on landfill technology as a joint project between Fukuoka City and Fukuoka University. It also developed a semi- aerobic landfill measure (Fukuoka measure).
Fukuoka has consolidated industry-academe-research linkage in environmental cooperation. This includes the waste treatment technologies of Tsinghua University, Fukuoka City, and Fukuoka University and dissemination of the Fukuoka measure.
Environment industry cooperation requires R&D cooperation. The cultivation of the Yellow Sea Zone environment industry should be jointly pursued as well. In particular, environment industry development should be promoted. Thus, a linkage program between universities, city governments, corporations, and research institutes should be established and activated.
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 127 3. Common Environmental Problems and Measures for Enhancing Inter-City Cooperation in the Pan Yellow Sea Zone
1) Common problems and responses in cities in the Pan Yellow Sea Zone
Common problems in cities in the Pan Yellow Sea Zone in the industrial development age include air and marine pollutions. To cope with such problems, each relevant city changed its industrial production into an environmental improvement type. It is also changing its industrial structure.
Recently, a greenhouse gas emission reduction measure related to climate change has been a major interest in environmental improvement. Environmental improvement problems form the mainstream from the perspectives of the transportation field, residential field, compact cities, and urban green areas in addition to the industrial production type.
In this study, cities in the Pan Yellow Sea Zone were assumed to have similar environmental problems. Based on Japan’s experience in Kitakyushu, which spearheaded efforts in responding to environmental problems, this study sought to analyze how the abovementioned cities should cooperate. Specifically, the industrial production type and its change process and result were examined. The advent of urban design and development of the citizen participation-type environment industry were also investigated.
(1) Environmental pollution reduction by industrial development (evolution of the industrial production type)
Kitakyushu’s measures for coping with air and water pollution in the age of industrial development are classified into the following: measures for companies, local governments’ regulations, sewer and wastewater treatment, etc.
Companies need to install desulfurization facilities, denitrification facilities including dust collection facilities, and drainage treatment facilities to meet the discharge criteria.
The prices of resources and energy soared in the 1970s. Thus, firms have promoted the efficiency of the production process.
As a result, cleaner production (CP) technology that prevents wastage in raw materials and fuels, enhances production efficiency, and reduces pollutants has been introduced.
128 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities The city made an additional investment in EOP (end of pipe) including exhaust gas treatment. As such, it secured comprehensive environmental pollution facilities combining CP and EOP.
Example of pollution reduction through the combination of CP and EOP of the steel industry in Kitakyushu City: Sulfurous acid gas was reduced from 27,575 tons in 1970 to 607 tons in 1990. Actually, 75% was attributed to CP, e.g., converting to fuel, energy and resources savings. The remaining 25% was an EOP effect, e.g., treatment at the discharge openings and desulfurization and dust collection facilities.
(2) Environment policies of Kitakyushu City
The environment policies of Kitakyushu City have been implemented through strengthened administrative measures. These include regulations and monitoring in sewer and wastewater treatment. Institutional provisions for the establishment of environmental pollution prevention ordinances have also been stipulated.
Kitakyushu City set strict discharge criteria according to environmental laws and regulations. It also stipulated the punishment for violation and compensation responsibility of businesses generating the causes of health damage in 1970.
Furthermore, the city installed automatic gauges in many places and set up a central monitoring bureau equipped with a telemeter system. Intensive monitoring was also implemented.
In 1972, the environmental pollution prevention ordinance was enforced to promote environmental pollution prevention administration.
Kitakyushu has been establishing an environmental pollution prevention plan every 10 years since 1972. As such, it has come up with proven environmental pollution prevention measures.
The city began the maintenance of public sewers in 1967. It introduced a beneficiary charge system that is fully understood by its citizens, thanks to the production of enlightening documentaries and road shows.
At the end of 2005, sewer maintenance was almost completed with a 99.8% provision rate.
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 129 In 1971, segregated household waste collection was enforced. Likewise, the segregation of cans and bottles and the paid waste bag system were implemented in the 1990s. The idea was to promote energy recovery from waste and reduction of waste generation.
Electricity is generated from the incinerated heat coming from 3 incinerators. Any redundant electricity is sold.
Kitakyushu opened a seaside landfill for the long-term, stable treatment of waste in 1980.
(3) Compact City (urban design) approach
The urban plan of Kitakyushu has been promoted as a direction for compact city development. Such was based on land use restrictions in the suburban area, reintroduction of city function in the central zone, light electric railway, environmentally sustainable transportation (EST), BRT, and bicycle-only roads.
In particular, the use of cars has been controlled to reduce greenhouse gas generation. The city also promoted new regenerated energy use in residential and commercial facilities. As a result, it reduced greenhouse gas generation due to the use of fossil fuels.
The volume of CO2 emission in Kitakyushu was reduced by more than 3%, thanks to the emission reduction in the industrial sector. CO2 generation rose in the residential, business, and transportation sectors, however.
Therefore, the city came up with the Kitakyushu Regional Promotion Plan Against Global Warming in 2006.
CO₂ Emission Reduction Plan 2010 Residential sector (per household) 10% reduction compared to Business sector (per floor area) 2002 Transportation sector (per vehicle) Source: 2008 website of Kitakyushu, International Environmental Cooperation http://www.city.kitakyushu.jp
As a leading industrial city in Japan, Kitakyushu also boasts of a rich nature. It was designated to promote symbiosis between the city and nature for the
130 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities future. Thus, the city adopted a Basic Plan for Natural Environment Preservation.
The city plans to build eco-symbiotic houses to reduce CO2 emission by 30%. As such, it introduced solar energy generation with capacity of about 200kW and state-of-the-art energy-saving device.
To promote the reduction of waste and to recover energy from waste, Kitakyushu adopted a Basic Plan for General Waste Processing. Through such plan, the city sought to come up with a waste treatment measure based on the previous Recycling measures. Such measure shall be developed into a comprehensive policy including the expansion of demand for recycled goods (green purchase) based on the 3Rs (Reduce, Reuse, and Recycle), i.e., formation of a zero-waste society.
Based on this plan, Kitakyushu has promoted a waste paper collection measure (2004), an industrial waste processing measure (2004), and a re-review of the household waste collection system (2006).
Basic Plan for General Waste Processing in Kitakyushu Basic idea Shift from Recycling to Zero waste. Period 10 years, from 2000 to 2010
5% reduction through “Reduce” and “Reuse” Target Improvement in recycling rate from 13% to 25%
Source: 2008 website of Kitakyushu, International Environmental Cooperation http://www.city.kitakyushu.jp
(4) Citizen participation-type environment industry development
The city made the most out of its citizens’ participation and communities. As a result, environment industry development has been promoted under the motto “fostering talented personnel specializing in the environment.”
An eco-life event was held. An environment passport project and an environmental education project have also been implemented.
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 131 Environment passport project: This system was built to expand participation. Here, environment points are distributed using the local currency structure including environmental cards and environmental seals. This system allows the environment participants to enjoy the benefits.
Card project: Environment points are accumulated using the card. The behavioral history is also recorded. In other words, one’s contribution to the environment can be confirmed by records indicating the CO2 emission reduction volume. All points can be used in exchange for eco-products or donation to NPO. Thus, this project can be linked to much more significant environmental actions.
Seal project: The “No shopping bag campaign” is one of the most effective mechanisms for changing the environmental behavior of citizens. If one refuses the proffered shopping bag, one gets a seal. A minimum of 20 accumulated points can be exchanged for a 50 Yen discount voucher at member stores.
The Kitakyushu Eco-Town project is promoted as an exclusive local policy integrating the industrial promotion policy and the environment preservation policy. It is aimed at building a zero-waste society.
It has been comprehensively implemented with approval from the central government in 1997. The project covers education and basic research in the environment sector as well as technology development, empirical research, and commercialization. It is linked with nearby Kitakyushu as an academic research city.
(5) Lessons from the Kitakyushu experience and direction of policy on climate change
In response to the environmental pollution in the industrial development age, environmental pollution by industrial facilities is checked. Specifically, sewer and waste treatment facilities are installed. Responses to CP and EOP- oriented industrial production and local government’s restrictions are also made.
China is in the industrial development age. CP and EOP- related industrial cooperation enables cooperating with Korea and Japan. This forms the mainstream of cooperative relationships.
132 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities In response to environmental pollution after the industrial development age, the clean development system’s environment economy forms the mainstream. It is based on the city design and climate change.
For the cooperation between the cities in Japan and Korea, collaboration in the fields of city design and environment economy is expected to be strengthened.
Cooperation with China is partly possible.
Kitakyushu attempts to expand environmental awareness as an environment response. In particular, it induces the reform of environmental awareness of citizens and motivates them to participate.
A new realization has been formed, i.e., environmental awareness cannot be spread without the activation of citizens’ participation. This is made possible through symbiotic buildings and various environmental education and events.
Kitakyushu implements environmental reform in both the consumption process and production process. Specifically, it expands the scope to the consumers’ purchase of environmental goods. It goes beyond the concept of recycling for resource conservation purposes.
Such concept is an advanced one in the world. The environmental concept has been formed by shifting from the existing preservation to environmental production; from zero-waste state, it pursues environmental consumption. This connotes a circular self-contained process. Moreover, it strongly suggests that the environment is integrated as an economic mechanism.
2) Measures for inter-city environmental cooperation in the Pan Yellow Sea Zone
(1) Environment industry cooperation (from the aspect of environmental producers)
A. Cooperation on the production measures
In the example of the Kitakyushu steel industry, 75% of sulfur dioxide could be reduced through cleaner production (CP), conversion to fuel and energy, and resources conservation. Thus, there is a need for mutual cooperation between cities in Northeast Asia vis-à-vis technology cooperation and consulting.
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 133 Cooperation needs to be consolidated in EOP, e.g., exhaust, drainage, and dust collection. This is because air and water pollution can be prevented considerably through EOP.
Note, however, that concrete cases of such cooperation need to be found. Co-response to cooperation between cities in the Pan Yellow Sea Zone should also be promoted. In particular, Korea’s technologies and experiences as well as those of Japan have been accumulated.
B. Cooperation on urban sewer and wastewater processing
Cooperation by production type is actually applied to industrial producers. Still, the issue of urban sewer and wastewater processing can be considered an issue from the local government dimension. It is related to urban environmental infrastructure such as sewer pipes and wastewater treatment plants.
Korea and Japan have relatively more developed urban sewer and wastewater treatment facilities than China. Waste in the two countries is also used as energy resource through heat processing. Thus, cooperation on construction-related technology and services is a must.
C. Carbon market creation and activation of carbon trade between cities in Northeast Asia
The environmental market has developed remarkably not only in advanced countries but in almost all countries in the world. This was attributed to the introduction of the independent clean development mechanism and a system between developing countries in 2005. As a result, the carbon market has been created. Nonetheless, the carbon market has hardly been dealt with in the previous environmental cooperation between cities in Northeast Asia.
According to the Bali Roadmap in 2007, all developing countries can be designated as mandatory CO2 emission reduction countries in the post- Kyoto Protocol (after 2012) scenario. This in turn gives rise to a situation wherein firms in the cities of China, Korea, and Japan are allocated the mandatory CO2 emission volume and required to buy CER.
Currently, Europe allocates CO2 emission volume to some 17,000 companies.
134 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Installing CO2 emission reduction facilities incurs huge costs. Thus, firms will most likely buy CER or focus on the new regenerated energy businesses of developing countries.
Therefore, there is a need to foster exchange and cooperation to activate the carbon market between OEAED cooperation cities (many firms are distributed in the cities of OEAED).
Carbon market cooperation and environmental market cooperation are forms of economic cooperation. They can serve as the foundation for the rapid institutionalization of cooperation between cities in Northeast Asia.
Creating a kind of Northeast Asian Development Bank as the base of financial resource procurement has high potential. The environmental financial industry can be activated, and cooperation can be fostered in Northeast Asia.
(2) Cooperation on environmental awareness reform (from the aspect of environmental consumers)
A. Cooperation on environmental awareness reform in residential/daily life
Kitakyushu City recorded a CO2 emission reduction of approximately 3% in 2006 compared to the 1990s. CO2 emission in households, businesses, and transportation sector is on the rise, however.
Reducing CO2 is a major task against climate change. Thus, citizens in Northeast Asia should take part in the reduction efforts in daily life including the residential and business sectors.
There is a need to search for a measure for jointly constructing pilot buildings related to daily life. Examples include model houses for reducing CO2 emission in the central square in the downtown area and environmentally symbiotic houses. Manuals for reducing CO2 emission can also be published.
B. Cooperation on the environmental benefits (from recycling cooperation to zero-waste cooperation) through environmental transactions
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 135 Cooperation on environmental awareness reform is both enlightening and normative. To boost such cooperation, however, the environment should be beneficial to Northeast Asian citizens as a product.
There is a need to come up with a trade device such as the Kitakyushu Environmental Card System. This system is based on the Northeast Asian currency structure. It is expected to facilitate the activation of environmental products. Efforts toward the creation of such product are essential.
A joint carbon point system in the Pan Yellow Sea Zone should also be established. This system should be linked with Korea’s carbon point system.
C. Activation of spatial planning including resource-saving urban planning
Resource-saving urban planning should be activated. This can be done through the sharing of experiences. Such planning covers compact cities, expansion of green areas in city centers, and new regenerated energy use in residential and commercial facilities. City design should also be modularized in response to climate change. Through this, securing CER is facilitated.
There is a need to obtain CER by modularizing transportation plans. The focus shall be on public transportation such as light electric railway.
(3) Formation of an environmental promotion system between cities and pursuit of related projects
A. Formation of central organization (organizing environmental communities)
Environmental industrial cooperation and environmental awareness cooperation only through OEAED are insufficient in terms of size and contents. As such, there is a need for a review to expand and reorganize OEAED.
From the long-term perspective, the creation of the environmental community in Northeast Asia is promoted. This is aimed at achieving joint environmental targets such as EU and NAFTA.
B. Enhancement of industry-academe-research cluster formations between cities for the environment industry
136 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities With the consolidation of environment industry development and cooperation between cities, the formation of an industry-academe-research cluster is recommended in fostering environmental cooperation in Northeast Asia.
For the industry-academe-research cluster cooperation between cities in Northeast Asia, Korea and Japan need to cooperate first. Support for the developed environmental technologies can then be provided for Chinese firms. The three countries can specialize in the waste recycling business depending on the characteristics of the cities concerned.
(4) Central government’s role in environmental cooperation in Northeast Asia
The environmental cooperation paradigm is shifting from environmental preservation to environment industry cooperation. In terms of the recent climate changes, such paradigm is rapidly changing to cooperation (environmental finance) from the aspect of environmental consumers. Currently, cooperation between cities is applied to the environmental market paradigm particularly environment industry and finance.
Europe and America have CER trade markets. In fact, CER trade has been active centering on Europe since 2008. The price of CO₂ per ton rapidly rose from Euro 15 in 2007 to Euro 25 in April 2008. This suggests that the environmental market trend is rapidly developing.
Meanwhile, the CER trade market from the aspect of environmental consumers has yet to be activated in Northeast Asia.
An approach in terms of the role of the central government is needed by classifying it into the following: firm-related environment industry cooperation; city design and city infrastructure-related environment cooperation, and; cooperation from the consumer aspect (environmental finance cooperation).
Environment industry cooperation involves air and water pollution controlling facilities related to the industrial producers and CP and EOP. In the case of Japan, it played a huge role in minimizing industrial pollutants considerably.
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 137 City design- and infrastructure-related environmental cooperation includes city design cooperation. Examples are city infrastructure cooperation related to sewer and wastewater treatment, public transportation activation cities, and compact cities.
Environmental cooperation from the consumer aspect (environmental finance cooperation) involves the creation and activation of a CER trade market in Northeast Asia. A system wherein regular citizens earn carbon points that can be used to purchase environmental goods can also be built.
In Northeast Asia, there are no international cooperative organizations such as EU and NAFTA. Consultation between central governments is required to support environmental city development and keep up with the market trend of the environment.
For environmental cooperation between cities in Northeast Asia, new town development can be considered. This will capture CP and EOP cooperation, city infrastructure, and design cooperation. In the case of Korea, there is a need to apply the accumulated new town development capabilities to major cities in China given its rapidly growing population (especially OEAED member cities). Such capabilities should be developed into something similar to Tianjin Eco-city.
Domestically, the modularization of environmental cities related to the eco-city in association with the clean development system may be implemented, Through this, the means for applying the carbon market to the environmental city (see the case of clean development system of the environmental city as a new regenerated energy city of Payeongtaek-Sosabul of Korea Land Corporation) is expected to be established.
Fostering cooperation between the local governments in Northeast Asia requires close cooperation between central governments. Likewise, the focus should be on preparations for financial resource procurement. Note that this was the cause of the lack of cooperation between cities in Northeast Asia.
For issues related to city designs including housing, transportation, and compact cities in environmental
138 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities cooperation between cities in Northeast Asia, joint CO2 emission reduction plans should be supported. Targets against climate change should also be established between local governments in Northeast Asia. In addition, a measure for providing assistance through cooperation via the central governments should be devised.
From the start, such reduction plan can be associated with a clean development system. This way, the carbon trade futures market such as EU-ETS can be established through close cooperation between central governments in Northeast Asia. Based on this, the environmental financial system in Northeast Asia should be rearranged. The financial resource procurement in environmental cooperation should also be pursued.
A means of supporting the government’s ODA fund should be devised. Such support should be similar to that for the Dalian environment maintenance zone by Kitakyushu. Note, however, that selective support needs to be provided through an evaluation system for the cooperation between local governments.
The creation of carbon tax and CER fund is a must. In fact, this has been verified through research on carbon tax imposition and 2% fund accumulation per CER trade as presented in the Bali Roadmap. The same is true for devising a means of using the fund as financial resource for environmental cooperation between cities.
Various CO2 emission reduction plans can be achieved through modularization in a variety of fields. Thus, the creation of an expert group and a specialized organization for consulting by field is necessary. Above all, a measure for fostering the relevant personnel is required.
(5) Role of the local governments in the environmental cooperation between cities in Northeast Asia
Until now, many of Korea’s local governments do not have an international cooperation department. This partly explains the insufficient environmental cooperation between cities in Northeast Asia. Therefore, the creation of an international cooperation department in each city and environmental cooperation sub-department should be promoted between cities in Northeast Asia from the long-term perspective.
Chapter 4•Environmental Problems and Inter-City Cooperation Measures 139 The concept of environmental cooperation between cities in Northeast Asia is mirrored in OEAED member cities. Nonetheless, it is still at the environment preservation level. Therefore, the weight of the environment industry and environmental finance should be expanded in relation to the climate change response system. Efforts to secure leadership in the environmental economic community are also necessary.
Environmental programs linking citizens, firms, and city governments through the carbon point system, etc., should be created. The partnership between the private sector and administration should also be activated.
In addition to the promotion of the industry-academe-research linkage domestically in relation to the environment industry, efforts should be made to use the international industry-academe-research network. This can be done by actively collaborating with universities in Japan and China.
140 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities C · H · A · P · T· E · R Conclusion: Promotion of Inter- City Linkages and Cooperation in 5 Northeast Asia
1. Importance of Regionalization and Inter-City Linkages and Cooperation in Northeast Asia
The trend of regionalization has emerged in the course of implementation of the multilateral system of WTO and globalization of the world economy and Northeast Asian economic zone. In particular, the Northeast Asian economic zone has grown into one of the world’s three largest economic zones along with EU and NAFTA since the 1990s. Likewise, opportunities for economic cooperation have expanded.
The importance of Northeast Asia in the world has been increasing considerably. Such is attributed to the rapid economic growth of China. As a result, the region has been serving as one of three important axes in the world economy.
In such situation, Korea as a geographical center should come up with national policies that will help it become a core country in realizing mutual prosperity in Northeast Asia in the 21st century.
The competition regime has kept up with these globalization and regionalization trends. Specifically, it has transformed into one occurring among global city-regions focusing on large cities rather than among countries.
In particular, trans-border inter-city linkages and cooperation among cities with homogenous features and functional interdependency can serve as the driving forces enabling collaborative development. For one, a network economy can be created by maximizing complementarity and reducing transaction costs. Economies of scale can also be achieved in the common use of resources and public goods or infrastructure. Moreover, a flexible regional economy can be developed.
Chapter 5•Conclusion: Promotion of Inter-City Linkages and Cooperation 141 Europe’s experience in trans-border regional cooperation tells us that economic complementarity, institutional compatibility, and geographical proximity are crucial factors.
Subsequently, the reinforcement of linkages, cooperation, and exchanges between countries in various fields such as human exchange, environmental issues, culture and history, and trade and industrial investment has been pursued in recent years. Thus, active discussions have been held. Linkages and exchanges at the city and local levels within countries have been further concretized and activated as well. This shows that sub-regional zones such as the Pan Yellow Sea, Pan East Sea, and Japan-Korea Strait Zone have been successfully created. In particular, the creation of sub-regional economic zones centering on seas is closely related to the revival of Maritime Asia and active foreign economic policies of China.
The deepening regionalization of the Northeast Asian economy is a process of creating new values through exchanges and amalgamation. These exchanges are not limited to economic activities in a narrow sense, such as trade and investment. Rather, they involve socio-cultural exchanges such as tourism, education, and culture.
Strategic promotion focusing on sub-regional economic cooperation zones such as the Pan Yellow Sea instead of relationships between countries is required. This will further enhance the regionalization of Northeast Asia effectively. Moreover, inter-local or inter-city linkages and exchanges should be strengthened. In particular, aspects involving as many fields as possible should be considered instead of being limited to an individual field.
2. Establishing the Macro Environment for Strengthening Inter-City Linkages in Northeast Asia
1) System improvement to strengthen cross-border cooperation
The creation of the macro environment is a prerequisite to ensuring the success of trans-border cooperation.
Based on Europe’s experience, we can see that a favorable trans- national environment accelerates trans-border cooperation.
The European Parliament and the INTERREG Plan it is promoting play an important role in trans-border cooperation at the local or regional level. Having a transnational mechanism in place also helps.
142 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities In the Scandinavian peninsula, no trans-national mechanism exists. Still, trans-border cooperation is being accelerated as a long- standing cooperative tradition.
The capability of the local and regional authorities spells either success or failure for trans-border cooperation. Thus, each nation should strive to strengthen its local and regional capabilities from the long-term perspective.
Ideally, a regional unit representing the region beyond the local government should be created similar to Europe’s Euregio Project. Likewise, measures for forming a governance system - - wherein external intervention in the newly created regional unit is enabled -- should be established.
As shown in the case of OEAED (Organization for East Asia Economic Development) the necessary funds should be secured first. Only then can practical cooperation between cities in Northeast Asia be fostered.
Accordingly, the funds required for operating the programs of inter-city cooperation organizations among certain cities should be secured from the budget of the city for an appropriate period. This can be realized through the legislation of laws by city. Securing such operating funds should precede the establishment of a financial institution for inter-city cooperation, As such, a secretariat should be established. The operation of inter-city programs should also be supported.
In the long run, discussions on fund-raising for inter-city linkages and cooperation in Northeast Asia should be held at the level of each government.
For instance, ways of strengthening inter-city linkages and cooperation should be explored by providing ODA or EDCF, which is currently available to cities and provinces.
In addition, specialized research institutions and training institutions for inter- city cooperation and linkages should be nurtured in each city. The creation of related networks should be steadily supported by central and local governments as well.
The active participation and cooperation of economic organizations should be induced. Through this, visible results can be attained as in the case of OEAED (e.g., provision of incentives and support for employment and land for regional
Chapter 5•Conclusion: Promotion of Inter-City Linkages and Cooperation 143 cooperation through individual investment-related agreements among cities).
In addition, the foundation for the steady promotion of programs should be established. This requires fostering and supporting the cooperation of not only the local authorities and economic organizations but also universities, research centers, and civic groups.
2) Strategic linkages with the China-Japan-Korea FTA
The political environment in Northeast Asia hinders the emergence of a trans- national organization and multilateral cooperation similar to those in Europe in the very near future. The development of bilateral cooperation similar to that in the Scandinavian peninsula will be more realistic, however.
With China, Japan, and Korea currently discussing FTA, now is the best time to promote trans-border cooperation.
During the meeting of OEAED, for instance, the inclusion of trans-border cooperation in the negotiation details of FTA can be proposed to the central government.
Trans-border cooperation at the city level should be formally encouraged in the FTA agreements. Such will be very conducive to developing the structure of inter-city cooperation or detailed plans.
Of course, this is not the level that can satisfy international laws. Still, it is enough to establish the basis for the execution of semi-diplomatic policies of the local and regional governments.
Liberalization in the service sectors and complementarity in IT and logistics should be included in the FTA between Japan and Korea or China and Korea.
Tariffs may be lifted following the conclusion of FTA among China, Japan, and Korea. Thus, institutional improvement actions should be taken for speedy customs procedures and distribution channels. Note that institutions dealing with the domestic market particularly commercial trade and distribution can serve as an obstacle to non-tariff transactions.
144 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities To improve the cooperation of the three nations for the IT industry in preparation for the conclusion of FTA, trade and investments in IT should be expanded through the following: ① cooperation on standardization; ② technical and human resource exchanges; ③ creation of high-speed global broadband research networks, and; ④ policy cooperation.
Logistics is partly dealt with in GATS rather than FTA. Bilateral or multilateral agreement is usually promoted for individual and detailed matters.
The movement of human resources related to FTA should be examined from various angles. Full-scale economic cooperation and regional economic integration should be the premise.
Unlike goods, service trade including the liberalization of movement of labor resources is not dominated by any certain country.
The integrative connection of the three nations’ economic structure and equalization of income level are not implemented. This fundamentally deters the liberalization of movement of human resources. As such, strategic approaches to dealing with this issue are necessary.
In other words, the liberalization of flow of human resources in the three nations requires examining ways of multilateral liberalization and utilizing existing orders and institutions for additional liberalization. Korea should also examine the conditions, effects, and counter-strategies for liberalization. This is because workers in services as well as those in the manufacturing and agricultural industries are involved.
Korea should clearly specify the details of FTA so that the competitiveness of the service sector can be enhanced. Through this, the country’s role as Northeast Asia’s exchange hub can be strengthened.
3. Transportation Infrastructure and Environmental Cooperation Measures
1) Measures for improving the inter-city transportation infrastructure in the Pan Yellow Sea Zone
Chapter 5•Conclusion: Promotion of Inter-City Linkages and Cooperation 145 Creating a 1-day business zone (human exchanges): The demand for air shuttles has been rapidly increasing recently. Therefore, their coverage should expand to major areas in the Pan Yellow Sea Zone.
Creating the zone can realize intra-regional exchanges. Introducing a special pass or a multiple visa system will also allow non-visa entry by passengers who are planning to do business or travel for a short period of time within the region. Such intra-regional exchanges are expected to have considerable ripple effects.
A regional air system wherein medium-sized planes are utilized should be created. This way, more cities rather than only a few major ones in the region can enjoy the benefits of the 1-day business zone.
Activating the multi-modal transport system (logistics): Logistics has recently recorded an explosive increase. As such, they need to be handled efficiently. A practical alternative related to the multi-modal transport system is the promotion of TFS (Train-Ferry System) between China and Korea and between Korea and Japan and RFS (Road Feeder System).
Strengthening the traffic infrastructure networking (regional networking): The Japan-Korea undersea tunnel for the direct networking of the three nations has been conceptualized a long time ago. The China-Korea undersea tunnel has also been discussed recently. Still, huge costs as well as political and social issues are involved. Thus, the actual promotion of the projects is difficult at the moment.
Among the features of the China-Korea undersea tunnel, the route from Weihai, China to Incheon (or pyungtack), Korea has the biggest potential. Nonetheless, prudent approaches are required. This is because KRW 109 trillion in costs are expected to be incurred for more than two decades based on the current assumption.
From the mid-term perspective, the means for China-Korea direct road networking and multi-modal transport system of Korea and Japan should be secured. This will require diplomatic negotiation efforts from the three nations. North Korea can also be persuaded to cooperate. The focus will be on the Asian highway or train network promoted by UN- ESCAP.
146 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Creation of strategic international air networks to support open air traffic network in Northeast Asia
The functions of the Inchon International Airport as a premier Asian airport, e.g., 24-hour, full–service operation, should be strengthened. The activation of other international airports should also be supported. In addition, transfer lines or routes connecting the Inchon International Airport and local airports should be established.
The liberalization of airways should be promoted through bilateral or multilateral negotiations with Japan and China regarding airlines, departure points, and more airplanes. This way, international airports such as Inchon, Kimpo, Kimhae, Chungju, and Jeju can offer and expand more routes as main international airports. A particularly urgent matter is the opening/expansion of air routes at the local international airports.
International airports in the capital region and Busan region should improve their operation efficiency. In particular, they can promote night or early morning use through the introduction of 24-hour operations.
The features of 24-hour operation airports such as overnight delivery among the three nations should be maximized. For instance, late-night freight planes should be promoted by continuously using the Intact Transport System (transporting imported freights to receivers outside the airport without removing the unit load devices of the freights).
Other ways of improving the systems for strengthening international logistics are as follows:
Bond and customs system improvement such as the entry of imported freights in bonded regions
Provision of incentives such as the reduction of loading and unloading charges for late-night and early morning uses at ports or for outstanding logistics companies
Promotion of the mutual certification of security-related matters among the three nations
Chapter 5•Conclusion: Promotion of Inter-City Linkages and Cooperation 147 2) Measures for logistics cooperation
Strategic port alliance and creation of port logistics information network
Competition is generally becoming fiercer due to the expansion of port facilities in the Pan Yellow Sea Zone or Northeast Asia. Still, this does not necessarily translate into the enhancement of logistics efficiency in the entire region.
Strategic port alliance can reduce costs and promote common interests. These in turn make resource distribution efficient and improve logistics efficiency (Cheol-Hwan Han and Young-Tae Im, 2008).
Specifically, the reduction of port use charges, connection of routes, common use of port facilities, and common marketing among allied ports generate profits.
Development and use of common logistics complexes
Private sectors spearhead the mediation of lands and connection of railways. They are aided by infrastructure- related local authorities either with or without port alliance. These efforts enable the development and use of common logistics complexes.
This is a program that can be implemented immediately in ports in the Pan Yellow Sea Zone, especially between China and Korea. Note that Korea’s freight volume by sea has recently been increasing remarkably.
If the agreement on train-ferry networking between PyungTaek, Korea and WeiHei, China is concluded, the project can be implemented through a private consortium. This can form part of the exchange cooperation program between Gyeonggi Province and Shandong Province and between Pyungtaek and Weihai (Won-Bae Kim, Jung-Sik Shin, et al, 2008).
148 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities 3) Measures for inter-city environmental cooperation in Northeast Asia
Environment industry cooperation (from the manufacturers’ perspective): Inter-city cooperation and consulting on the conversion method of fuels in steel industries (Kitakyushu model), energy and resource conservation, and cleaner production shall be promoted. Such shall be driven by cooperation on production measures.
Cooperation on urban sewage and waste processing at the local government level is a must. This can facilitate the creation of a technical cooperation system related to urban environment infrastructure, such as sewage purification and wastewater treatment sites in Japan and Korea.
Pursuing exchange and cooperation can help nurture inter-city carbon markets. Transactions in OEAED cities where many industries are concentrated are also expected to be activated.
In association with the carbon point system of Korea, the common carbon point system of the Pan Yellow Sea Zone should be explored.
Experiences should be shared to activate resource-saving urban planning. Examples of such kind of urban planning include compact cities, expansion of green areas in the center of the city, and use of renewable energies in housing and commercial facilities. Opportunities for earning carbon credits should also be explored. This can be done by establishing modules for the design of cities in response to climate changes.
The scale and details of OEAED are not sufficient to promote environment industry cooperation and environmental awareness reform cooperation. Thus, a promotion system for expanding and reforming OEAED should be established.
For Northeast Asia’s inter-city industry-academe-research cooperation, Japan and Korea should cooperate first. This is because the two countries have already made considerable progress in the environment industry and developed environment technologies. Later, Japan and Korea should support the development of city enterprises and cities of China. Waste recycling programs should be promoted separately. These programs should consider the feature of each city in the three nations.
Detailed programs for inter-city environmental cooperation
Chapter 5•Conclusion: Promotion of Inter-City Linkages and Cooperation 149 Establish eco-standards, objectives, and assessment.
Inter-city movements focusing on the environment will be promoted through eco-tourism programs combining tourism and environment.
To generate financial resources, Eco card programs should commonly apply in Northeast Asia. Eco endowments should also be accumulated as financial resources for environmental cooperation in Northeast Asia. This can be done through the activation of the Eco card endowment system.
4. Direction of Territorial Policies for Strengthening Inter-City Linkages
The Three Northeast Asian countries need to lay down the physical foundation for economic cooperation. Specifically, they should share their common interests to create an open economy. Korea’s territorial policies should take the lead.
As a hub of economic cooperation and exchanges, Korea should establish models to maximize its comparative advantages.
Development of key areas for economic cooperation: Common key areas (strongholds) for exchanges should be spatially allotted.
Seoul and Inchon shall be nurtured as key areas with outstanding competitiveness in the capital region. The same goes for Pyungtaek, Dangjin, and Ahsan in the Yellow Sea Free Economic Zone.
Semangeum, Muan, Yeosu, and Gwangyang in the Jeon-Buk and Jeon-Nam regions
Busan and Ulsan in the southeast region
These areas should be developed by connecting with various types of major economic cooperation areas such as existing free economic zones, tariff-free zones, and free international cities.
150 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities Free economic zones can serve as the foundation for self- sufficient regional development. Likewise, development points with low to moderate entry barrier should be nurtured in free trade zones, tariff-free zones, and free international cities for linkages with free economic zones.
The development of major areas for infrastructure and resources development necessitates mutual cooperation on expanding infrastructure for exchanges and cooperation. This way, environmental and economic cooperation can be fostered.
Institutional infrastructure should be reorganized in preparation for the expansion of trade and investments in intra- regional countries. The physical infrastructure should also be constructed to expand the logistics and traffic sectors.
Common countermeasures of intra-regional nations for environmental issues such as GHG emissions after the Kyoto Protocol and serious issues such as yellow dust
Broad regional zones such as the Pan Yellow Sea Zone, Pan East Sea Zone, and Japan-Korea Strait Zone are established. Through these, regional development cooperation in Northeast Asia is expected to be fostered by phase and stage. Cooperation within these cooperation zones should be realized first.
Inter-city linkages and cooperation in each region should be strengthened focusing on port cities. Cooperation should also be expanded.
The internationalization of industrial regions having linkages with free economic zones and the advancement of their industrial structures should be supported. For regional internationalization in particular, specialized growth points with low to moderate entry barrier should be developed.
Cities and regions are considered more realistic and practical spatial cooperation units than nations. Thus, cooperative development by large cities and regions in each economic zone should be utilized as major tools for cooperation in Northeast Asia.
Chapter 5•Conclusion: Promotion of Inter-City Linkages and Cooperation 151 Seoul shall be developed as a core economic city connecting BESETO. Specifically, it shall be nurtured as a competitive financial hub.
The Inchon Free Economic Zone shall also be developed as a business hub in Northeast Asia, the Busan and Jin-Hae Free Economic Zone, as a marine logistics hub, and the Gwangyang Free Economic Zone, as an international logistics and production hub.
Logistics centers for export industries in the west coast region shall be nurtured, focusing on the Gunsan Free Trade Zone, Gunjang National Industrial Complex, Semangeum, and Muan Enterprise City.
As tariff-free zones, Busan Port, Gwangyang Port, Inchon Port, and Inchon International Airport shall be actively nurtured into international logistic hubs.
The Jeju Free International City shall strengthen its international exchange functions by establishing tourism infrastructure such as leisure complexes, cruise industry, and convention industry. It shall also develop a high-value air logistics industry connecting international and national ports and set up an offshore financial center to attract international financial institutions. This can serve as a long-term strategy for the city’s growth as a complex/free international city where logistics and finance are combined.
Strategies should be linked with the creation of region-wide economic zones that have recently been proposed as a new framework for territorial policies. This way, they can develop into those connecting with sub-regional zones in Northeast Asia. The internationalization of specialized industrial regions as well as the advancement of their industrial structures will also be realized.
In addition, local policies for the development of specialized hubs with low to moderate entry barrier should be actively supported. This in turn will facilitate the internationalization of local areas. As such, institutional complementation is necessary.
Creation of advanced environment for employment generation: The creation of advanced living environment such as housing, education, and medical services as well as a spatial/physical
152 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities environment shall be complemented and supported. Specifically, an advanced corporate environment in terms of labor-management relations and finance shall be created.
A comparatively favorable investment environment should be created vis-à-vis foreign special zones. Long-term stay for foreigners should also be allowed for the internationalization and opening of labor market. Moreover, liberalizing the movement and transaction of goods requires the designation of free zones. Finally, the movement of capital and liberalization of investment should be promoted after consulting with related ministries.
5. Role of Local Governments in Promoting Inter-City Linkages and Cooperation in the Pan Yellow Sea Zone
The Pan Yellow Sea Zone is the most crucial area that can practically foster economic cooperation in Maritime Asia.
Port cities cover adjacent areas in the exchange by sea through the promotion of exchanges among them. Thus, their role is critical.
The expansion of exchanges among port cities in the Pan Yellow Sea Zone for the last two decades can be said to have been led by private companies. In other words, the power of the market has been the driving force, not the international agreements as basis.
Accordingly, one of the most important roles of the local governments is to guarantee the role of the private sector and support them as much as possible.
The role of the local government has been limited to creating shared perception on the necessity of exchanges and cooperation to date. Thus, from now on, the focus should be the development of practical programs and infrastructure. Only then can concrete results be produced.
Due to their limited authorities and capabilities in the three nations, local governments tend to depend on the central government.
Chapter 5•Conclusion: Promotion of Inter-City Linkages and Cooperation 153 Nonetheless, many programs can be operated at the local level for inter-city linkages and cooperation.
The local government can mark road signs in multiple languages as in the case of Fukuoka, Japan.
Efforts should be made to remove the obstacles to inter-city travels. For example, the transport transfer system, payment, and common window service for foreigners may be considered.
The exchanges and interchange of information between the press in Busan and Fukuoka serve as a crucial factor in improving mutual understanding and cultural exchange in private sectors.
In addition, local governments can offer preferential agreements among the ports in the Pan Yellow Sea Zone and local tax reductions for foreign companies.
Seeking further ways of inter-city exchanges and various cooperation institutions
Prior to 2004, the City of Kitakyushu saw that the role of the East Asia City Mayor’s Meeting was limited to fostering friendly linkages. Thus, OEAED was established during the meeting in November 2004.
After 2004, the organization has made efforts to obtain practical results from the exchanges. Note, however, that it is currently plagued with issues such as the discrepancy in the common interests among member cities and insufficient funds.
Searching for projects that member cities are interested in will ensure efficiency. Inter-city cooperation focusing on such projects should also be promoted.
To deal with the issue of insufficient funds, institutional means should be explored so that the local governments can use a certain part of ODA funds in consultation with their central governments.
A small-scale secretariat should be established using the funds raised by member cities’ local governments. Likewise,
154 Inter-City Linkages and Cooperation Measures for Northeast Asian Cities projects that member cities are interested in should be identified. Visions for the Pan Yellow Sea Zone should also be established. These require research.
A voluntary participation system wherein only the interested member cities take part in the project should be introduced. This way, there will be no need for all member cities to participate in the same project.
Practical tasks such as the creation of the Busan-Fukuoka Supra-regional Economic Zone should be promoted by the local governments.
Efforts to establish the economic zone since March 2008 are the most progressive form of inter-city cooperation in Northeast Asia and Pan Yellow Sea Zone.
In ensuring the success of these efforts, the leadership of the local governments of Busan and Fukuoka is a deciding factor; at the same time, however, the support of the citizens, participation of enterprises, and political and financial support of their central governments are essential.
Once FTA is ratified in both countries’ National Assemblies, international linkages can be realized. Such linkages are expected to supplement the efforts of local governments. Thus, the required political and financial support should be clarified. Coming up with related provisions can be one of the efficient measures.
Chapter 5•Conclusion: Promotion of Inter-City Linkages and Cooperation 155
