KRIHS Research Monograph 2000-1 Inter-City Networking Strategy in the Yellow Sea Sub-Region Kim, Won Bae Editor Korea Research Institute for Human Settlements in Collaboration with Institute of Spatial Planning and Regional Economy, China Kyushu Economic Research Center Pusan Development Institute Inchon Development Institute Copyright ⓒ 2000 Korea Research Institute for Human Settlements All right reserved. Printed in the Republic of Korea. No part of this book may be reproduced in any manner without written permission except in the case of brief quotations embodied in critical articles and reviews. For information address Korea Research Institute for Human Settlements, 1591-6, Kwanyang-dong, Tongan-gu, Anyang-shi, Kyonggi-do, 431-712, Korea. Inter-City Networking Strategy in the Yellow Sea Sub-Region / Edited by Won Bae Kim - Anyang : Korea Research Institute for Human Settlements, 2000 p. cm Includes bibliographical references ISBN 89-8182-114-3 Preface Economic exchanges have rapidly grown across the Yellow Sea in the past decade. Political changes such as China’s open-door policy and the normalization of Sino-Korean relations obviously helped the rapid growth of economic exchanges. But economic complementarity, geographical proximity, and cultural affinity existent in the Yellow Sea Sub-Region were underlying factors in the deepening economic cooperation. With increasing volume of trade and travel across the Yellow Sea, there are now 11 air connections and 10 ocean routes among the cities in the Yellow Sea Sub-Region. Despite these achievements, cross-border economic cooperation in the sub- region faces a few constraints and potential problems. One of the most serious problems is high transaction costs, which stem from differences in social, institutional, and technical systems between China, Japan, and Korea. Furthermore, trade and investment across the border within the sub-region is constrained by the lack of formal agreements among the three countries. In addition to the lack of institutional infrastructure, the underdeveloped physical infrastructure constrains efficient flows of goods and movements of people in the Yellow Sea Sub-Region. Inter-city and inter-national competition for markets and investment is also rising, posing a threat to the co-prosperity of cities and nations in the sub-region. Recognizing the need to deepen economic cooperation across the border, all three nations and localities in the sub-region have been considering ways and means to promote economic cooperation and cultural understanding. Although inter-state relations still govern the scope and depth of cross-border cooperation, private and local initiatives play an increasingly important role in cross-border economic, technological, and cultural exchanges. The best approach to cross- i border cooperation in Northeast Asia would be a multi-tiered one, in which private, local, and national institutions pursue cooperation for the common interests at various sectors and levels. This monograph is a product of a year and half joint research among the three institutions—the Institute of Spatial Planning and Regional Economy under the State Development Planning Commission, the Kyushu Economic Research Center in Japan and the Korea Research Institute for Human Settlements. It is perhaps the first attempt to bring in local, national, and supra-national perspectives together on the cross-border cooperation in the Yellow Sea Sub- Region. Even though the joint study does not cover macro-issues of trade and investment and the constituent cities and provinces of the Yellow Sea Sub- Region in sufficient depth, it does shed light on the importance of the sub- region in Northeast Asia and provide some practical suggestions to improve cross-border economic cooperation at the level of cities. Rather than dwelling upon grand concepts of Free Trade Area or Customs Union, the study focuses on the logistics and tourism sectors, which will facilitate trade and investment in the sub-region. Apart from the substantive matter, it sets an example of trilateral research cooperation among China, Japan, and Korea, which is rarely seen in the research community of Northeast Asian countries. WBK June, 2000 ii Acknowledgement On behalf of the Institute of Spatial Planning and Regional Economy, the Kyushu Economic Research Center, and the Korea Research Institute for Human Settlements, research coordinators would like to thank the municipal government of Dalian and Qingdao for their support. The participation and support of Inchon Development Institute and Pusan Development Institute representing the two cities was a big boost for the study both substantively and morally. Research coordinators would also like to thank those who participated in the workshops held in Pusan in November 1999 and in Fukuoka in April 2000 as moderators, discussants, and presenters of special papers. They include Park Jae Yoon (President, Pusan National University), Ha Woong Soo (Pusan National University), Kim Chang Soo (Pusan National University), Lee Cheol Yeong (Korea Maritime University), Moon Seong Hyeok (Korea Maritime University), Park Myeong Sub (Pukyong National University), Song Gye Eui (Dongseo University), Kim Chang Nam (Dong-A University), Yhang Will Joo (Silla University), Choi Yeol (Pusan National University), An Young Myeon (Dong-A University), Tsumori Takyuki (Okayama University), Dai Erbiao (International Center for the Study of East Asian Development), Kabu Takayuki (Kyushu Economic Research Center), and Ogawa Yuhei (Seinan Gakuin University). Finally, the leadership provided by the head of the three aforementioned institutes was essential for the success of the joint study. iii iv Contributors CHINA Institute of Spatial Planning and Regional Economy, China Du Ping Gao Guoli Shi Yulong Shen Bing Wang Qingyun Wang Yanghong Yang Jie JAPAN Kyushu Economic Research Center Chen Shuang Imamura Akio Kabu Takayoshi Takaki Naoto KOREA Korea Research Institute for Human Settlements Kim Gyeong Seok Kim Won Bae Kwon Young Sub Lee Jeong Sik Pusan Development Institute Keum Sung Keun Lim Jung Duk Park Chang Ho Inchon Development Institute Hong Chul Kim Beon Uk v vi Contents Preface i Acknowledgement iii Contributors v Contents vii List of Tables ix List of Figures xi Ⅰ. Introduction 1. Background 1 2. Research Topics 3 3. Research Scope and Purposes 4 4. Research Methods and Collaboration 5 Ⅱ. Dynamics of the Yellow Sea Sub-Region Formation 1. Regionalization of the World Economy and Northeast Asia 7 2. The Emergence of Sub-Regional Economic Zones (Cross- Border Regions) and the Position of the Yellow Sea Sub- Region in Northeast Asia 12 3. Geographical Boundary and Major Characteristics of the Yellow Sea Sub-Region 14 4. Recent Development and Future Prospects for Economic Cooperation in the Yellow Sea Sub-Region 18 Ⅲ. Status of and Prospects for Inter-City Linkages between Major Port Cities in the Yellow Sea Sub-Region 1. Enlarged Spaces of Production, Distribution, and Travel 25 2. Cities as a Basic Unit for Networking and Regional Integration 26 3. Profile of Six Port Cities 28 4. Dalian 29 5. Qingdao 34 6. Inchon 40 7. Pusan 44 vii 8. Fukuoka 50 9. Kitakyushu 55 10. Prospects for Inter-city Linkages and Cooperation in the Yellow Sea Sub-Region 60 Ⅳ. Current Conditions and Issues of Logistics and Tourism Industry in the Yellow Sea Sub-Region 1. Transportation and Logistics Development in East and Northeast Asia 64 2. Inter-Port Competition and Linkages in the YSSR and Northeast Asia 66 3. Tourism Development in Northeast Asia 72 4. Opportunities for and Obstacles to Inter-Local Cooperation in Tourism Industry in the YSSR 79 Ⅴ. Inter-City Cooperation Strategies in the Logistics and Tourism Industry in the YSSR 1. Rationale for Cooperation in the Logistics and Tourism Industry 83 2. Measures to Promote Cooperation in the Logistics Industry 84 3. Measures to Promote Cooperation in the Tourism Industry 89 4. Inter-City Networking Strategy 94 Ⅵ. Conclusions and Policy Recommendations 1. General Conclusion 103 2. Policy Recommendations 106 Joint Policy Recommendations 109 References 111 Appendix : Workshops and Conferences 115 viii List of Tables Table 2. 1 Major Indicators of Northeast Asia Table 2. 2 Northeast Asia Compared with Major Regional Blocs Table 2. 3 Trade among China, Japan, and Korea Table 2. 4 Investment Trend in Northeast Asia Table 2. 5 Major Indicators of Yellow Sea Region Table 3. 1 Profile of Six Major Port Cities Table 3. 2 Situation of Tourist Source Markets for Dalian Table 3. 3 The Structure of Export Goods From Dalian (1997) Table 3. 4 The Geographical Distribution of Export and Import Goods from Dalian (1997) Table 3. 5 Foreign Capital in Dalian Table 3. 6 Sources of Direct Foreign Investment in Dalian (1997) Table 3. 7 Sectoral Distribution of Foreign Capital in Dalian Table 3. 8 Export Amount of Qingdao with Major Trade Partners Table 3. 9 Qingdao’s Utilization of Direct Foreign Investment Table 3. 10 Growth Trends of Trade in Inchon Table 3. 11 Trends of Incoming and Outgoing Cargo Volume at Inchon Port Table 3. 12 Trends of Container Cargo Volume at Inchon Port Table 3. 13 Export Records of Pusan with Major Trade Partners Table 3. 14 Outward Foreign Direct Investment of Companies in Pusan Table 3. 15 Inward Foreign Direct Investment of Pusan (June 30, 1996) Table 3. 16 Trends of Container Cargo Volume at Pusan Port Table 3. 17 Visitor Arrivals in Pusan by Nationality Table 3. 18 Foreign Companies in Fukuoka Table 3. 19 The Number of Kitakyushu’s Business Abroad Table 4. 1 Changing Places of the World Top 20 Ports Table 4. 2 Change of Trade Volume between NEA and Other Regions Table 4. 3 Container Cargo Volume of Three Nations in NEA Table 4. 4 Growth Trends of Container Cargo Flows in Asia Table 4. 5 Transport Volume between Port Cities of China and Korea (1998) Table 4. 6 Characteristics, Functions and Hierarchy of the Port System in East Asia ix Table 4. 7 Arrivals of Tourists from Abroad by Regions Table 4.