Korea pursues free trade agreement with China

China is Korea's no.1 export destination, amounting to 24.1% of their 2011 total.

Korea already has existing FTAs with three of its top five trading partners, the EU, US, and ASEAN. These FTAs brought in a total trade surplus of $61.7bn in 2011.

ASEAN is Korea's no.2 export market and its fastest growing one, climbing to 83.5% between 2007-2011. 

Korea's various EMs shield the country from developed market slowdown. Should growth in China slow down, other EMs can partly offset the impact on Korea.

Here's more from the Morgan Stanley Research:

Korea and China officially announced the start of bilateral free trade agreement negotiations. Korea is probably the most successful Asian nation in pursuing FTAs with the major trading economies in the world. It has signed FTAs with three of its top five trading partners - the EU, US, and ASEAN - which accounted for 33% of Korea's exports in 2011 and brought in a total trade surplus of $61.7bn, 5.6% of GDP.

Korean investors often eye China's growth because it is perceived as the most important factor in Korea's export growth prospects. China is Korea's no.1 export market, amounting to 24.1% of 2011 total.

...but other emerging markets are important too: ASEAN is the next biggest EM for Korea's exports. It has already surpassed the US and EU as Korea's no.2 export destination. Last year, ASEAN made up 12.6% of Korea's total exports, more than the US and EU. Over the last five years, China was not the fastest- growing EM for Korea. Exports to China climbed 64.6% from 2007-2011 - but those to ASEAN jumped 83.5%.

Latin America and the Middle East re also buying more Korean-made products: In fact, Latam is now as big an export market for Korea as Japan - it represented 7.2% of Korea's total exports last year. Exports to Latam grew 67% in the past five years. ME took up 5.9% of Korea's exports in 2011.

These four sources combined for almost 70% of Korea's total export growth from 2007-2011: This shields Korea from the developed market slowdown in this cycle. Yet again, it was not just about exports to China. The other EMs, especially ASEAN, are becoming more important to Korea - implying that if China slows, growth in other EMs can now partly offset the impact on Korea, if they have domestic growth stories.