（Adjunct Distinguished Professor of Diplomacy and Director, Center for WTO Studies College of International Affairs National Chengchi University To-hai Liou ）
Recent trade interactions between the Global South and Global North reveal noteworthy new trends, with services trade emerging as a fresh engine driving bilateral engagement. At least three primary factors underpin this shift. First is the China factor: China's 15th Five-Year Plan (2026-2030) prioritizes boosting domestic consumption as a core strategy, aiming to reorient the economy from investment/export-driven growth model to one driven by domestic demand. This shift prioritizes boosting domestic consumption and improving people's livelihoods through trade in services. The plan includes expanding service consumption in areas like cultural tourism, elderly care, and childcare. The goal is to significantly increase consumption's share of GDP over the next five years.
On the other hand, while Western developed nations still view China's formidable export penetration as stemming from manufacturing overcapacity that threatens their economies, they find Trump's extreme political and economic pressure intolerable. Consequently, they now seek to leverage their own advantages in services trade to negotiate with Beijing for opening its services market. This approach is designed to alleviate pressure from both the United States and their domestic stagnant inflation. Meanwhile, they also ease restrictions on Chinese imports in exchange. The representative examples are recent trips of South Korean President Lee Jae Myung and British Prime Minister Keir Starmer’s trips to Beijing.
The third factor came from India. Compared to other developing economies, India's most distinctive feature lies in its strength being the service sector, which accounts for 60% of its GDP, rather than manufacturing, which contributes only about 17%. Exports constitute approximately 22% of India's GDP. India is dubbed the world's office precisely because it possesses many Information Technology (IT) software engineers capable of digitizing office work. After taking office in 2014, Prime Minister Narendra Modi deemed previous free trade agreements (FTA) unfavorable to India's interests. He insisted on incorporating Mode 4 of the four service categories defined by the World Trade Organization's General Agreement on Trade in Services (GATS) into FTAs. This requires partner countries to ease visa restrictions for Indian professionals, such as IT technicians, accountants, and engineers seeking employment abroad and to streamline licensing procedures. This is seen as a key condition for India in exchange for tariff reductions on industrial goods.
This article aims to explore these new trends between developing economies in the Global South and developed economies in the Global North via three cases, Lee Jae Myung’s Beijing trip, Keir Starmer’s trip to Beijing and the conclusion of India-EU FTA.These trends are likely to significantly reshape the global trade landscape.
Lee Jae Myung’s Beijing trip
Both Lee Jae-myung and the progressive Democratic Party he leads prioritize relations with China, even being perceived as pro-China. However, after assuming the South Korean presidency, Lee decided to visit China only after traveling to the United States and Japan, mindful of persistently high negative perceptions of China domestically. According to the Pew Research Center's survey on global perceptions of China, negative attitudes toward China in South Korea surged from around 30% in 2001 and 2015 to 80% in 2022. This shift is primarily attributed to China's restrictions on South Korean products and services following Seoul's deployment of the THAAD missile defense system in 2016. Consequently, Lee Jae-myung must avoid hasty moves in his China policy, proceeding cautiously while prioritizing economic interests over political and security objectives as medium-to-long-term goals. Meanwhile, South Korea-China economic relations have undergone a significant transformation, shifting from past vertical division of labor cooperation to the current landscape of horizontal competition.
In manufacturing, South Korea retains a competitive edge in only one sector, semiconductor, while China has surpassed it in nearly all other industries. South Korea's Ministry of Trade, Industry and Energy states that China is comprehensively overtaking South Korea—whether in traditional heavy industries like steel, petrochemicals, and shipbuilding, or in future industries such as autonomous electric vehicles, batteries, artificial intelligence (AI), robotics, and renewable energy. In emerging industries and markets, China has achieved full vertical integration—from R&D and commercialization to mass production and sales—leaving “virtually no room for latecomers to catch up.” This means China controls the entire value chain in future industries like electric vehicles, batteries, and renewable energy, effectively shutting out latecomers like South Korea. Against this backdrop, the Lee Jae-myung government’s approach to economic cooperation with China focuses on the services sector which South Korea maintains an edge. For example, in the first half of 2024, Chinese students accounted for 55.2% of all international arrivals in South Korea, numbering around 112,000. Another report indicated 86,179 Chinese students were present as of late 2025. Tourism is another sector favorable to South Korea. Due to President Lee’s Beijing trip amid the sour Sino-Japanese relations, as China’s Lunar New Year holiday approaches, South Korea now emerges as the top overseas destination for Chinese travelers during holiday, Beijing signals hope for more exchanges.
For South Korea, what they expect most from China now is allow K-pop concerts, Korean artists and cultural content may enter the Chinese market. Since South Korea deployed the US-made THAAD anti-missile system in 2016, although the Chinese government has never officially acknowledged the existence of a "Hallyu ban," China has implemented a strict, but largely informal, ban on South Korean entertainment content, including K-dramas, movies, and K-pop music. The eight-year ban on Korean cultural content has rendered K-pop concerts in China virtually non-existent, with losses estimated at approximately US$15.3 billion.
Following the signing of the Korea–China FTA in 2015, the two sides launched follow-up negotiations on services and investment in March 2018 in accordance with agreed guidelines. To date, they have held 12 rounds of formal negotiations along with multiple working-level meetings. Momentum for the talks has been reinforced by the Korea–China summit held in Beijing on the 5th of this month, where the two leaders agreed to work toward achieving meaningful progress in the follow-up negotiations within the year. Against this backdrop, the current round will focus on three working groups—services, investment, and finance—aiming to refine the text of the agreement and advance discussions on market opening. The 13th round of follow-up negotiations on services and investment under the Korea–China FTA was held in Beijing last month. The year 2025 marked the 10th anniversary of the China-South Korea Free Trade Agreement. According to China's General Administration of Customs, bilateral trade volume reached 298.9 billion US dollars during the January-November period last year. By expanding cooperation into emerging sectors such as artificial intelligence, biopharmaceuticals, green industries and the silver economy, both sides can align economic transformation with sustainable development.
Keir Starmer’s trip to Beijing
The China–Britain Business Council, headquartered in London, is dedicated to assisting UK organizations in establishing successful operations in China, collaborating with Chinese companies in the UK, and supporting Sino-British relations in third markets. According to Sebastian Wood, Chairman of China–Britain Business Council, China-UK services trade set for fresh growth over the next five years. Against the backdrop of increasingly fragmented global trade, the UK is actively seeking new sources of economic growth. Strengthening economic cooperation with China will help enhance the UK's international competitiveness, open up new business opportunities, and drive innovative development and productivity gains in the UK economy. In contrast to the £52 billion goods trade deficit with China as of the end of June last year, the UK achieved a £10 billion surplus in services trade. According to the Chinese Service Centre for Scholarly Exchange (CSCSE), there were 366,380 returned Chinese students in 2023. Accounting for 25.75 per cent of the total, the United Kingdom replaced the United States (14.73 per cent) as the largest producer of graduates returning to China, followed by Australia at 11.02 per cent, with the US experiencing the largest decline. Based on 2025 reports, the UK has overtaken the US as the top study abroad destination for Chinese students for the first time since 2020. The UK has become the preferred choice, with 33,870 Chinese applicants by mid-2025.
As Professor Bi-rong Liu of the Department of Politics at Soochow University correctly points out that Prime Minister Keir Starmer's visit to China has provided an opportunity for a fresh start in Sino-British relations, which had cooled over the past eight years. A significant difference compared to former Prime Minister Theresa May's visit eight years ago is that while the businesses accompanying the Prime Minister on that occasion were predominantly from industrial manufacturing and technology sectors, this time the delegation comprises mainly financial services, legal services, pharmaceuticals, and creative industries. Following Stammer's visit to China, the UK service sector is pinning its hopes on a boost from China. Chris Torrens, chair of the British Chamber of Commerce in China, described a "real opportunity” for U.K. services. "
In addition, several multinational corporations have welcomed the cooperative signals sent during Stammer's visit to China. British pharmaceutical company AstraZeneca's decision to invest more than 100 billion yuan ($14.39 billion) in China by 2030 marks a new chapter for the British drug-maker in a market it increasingly sees as central to global pharmaceutical innovation and a vital component of its global strategy. As China continues to expand its investment in life sciences and pharmaceutical innovation, substantial opportunities for future collaboration remain in R&D, production, and supply chain synergy. With the newly added investment, AstraZeneca’s workforce in China will grow beyond 20,000 employees, with thousands of additional jobs expected across the broader healthcare ecosystem. These investments build on AstraZeneca's expanding R&D footprint in China. Given that China is a fundamental part of its global R&D system, the company operates two global strategic R&D centers in the country — one in Shanghai and one in Beijing — placing China alongside Europe and the United States as a core pillar of its global research network. There are the two centers in China that collaborate with more than 500 hospitals and have led a large number of global clinical trials over the past three years. On the manufacturing side, AstraZeneca has production sites in Wuxi and Taizhou, with facilities planned or upgraded in Qingdao and Beijing. Medicines produced in China are supplied domestically and exported to more than 70 markets worldwide.
The China–Britain Business Council stated that as the world's second-largest economy, China is emerging as a global leader in 21st-century technology, demonstrating strong momentum in solar and wind energy, electrification and battery technology, robotics, and artificial intelligence applications. The automotive industry serves as a key pillar of British manufacturing. The Society of Motor Manufacturers and Traders (SMMT) noted that China, as both the world's largest automotive market and the largest vehicle producer, holds critical significance for the UK automotive sector. The SMMT highlighted that the current decline in UK vehicle production is placing significant pressure on domestic supply chains. Against this backdrop, attracting new Chinese investors to the UK to collaborate with local supply chains and establish production capacity at scale would help alleviate industry pressures and enhance the sector's overall competitiveness. British business leaders widely recognize that China's vast market scale and comprehensive industrial system hold tremendous potential for cooperation in advanced manufacturing, life sciences, green development, and modern services. A stable and constructive UK-China relationship enables companies to formulate long-term development plans and drives sustained growth in bilateral trade and investment.
India-EU FTA
By the end of March 2025, bilateral service trade between India and the EU exceeded $83 billion. One-third of India's IT service demand originates from the EU. The newly concluded bilateral FTA streamlines temporary entry procedures for professionals and enhances the mobility of Indian corporate employees in Europe. It provides temporary entry and residence safeguards for Indian business visitors, intra-corporate transferees, and contract service providers, while simplifying mobility for employees, spouses, and dependents of Indian companies establishing operations in the EU across all service sectors. Indian technical personnel can now access 37 sub-sectors—including IT, business, and professional services—to provide services to EU clients through commercial entities. For the EU, talent shortages—particularly in information technology engineers—not only hinder Europe's ambitions to compete with the US and China in the AI race but are also a key reason why EU AI-related industries currently lag significantly behind the two superpowers. Additionally, the agreement opens opportunities for Indian students seeking to study in Europe, including participation in the forthcoming India-EU Innovation Hub, India's involvement in Horizon Europe's €100 billion public research program, and the launch of the first EU legal office in India. As U.S. visa restrictions tighten, this agreement offers a viable alternative. Both sides anticipate accelerated development in digital services, green technologies, and technical talent exchange—a mutually beneficial outcome. Moreover, retaining these students post-study will bolster Europe's global technological standing. As Amitendu Palit, Senior Research Fellow and Research Lead at the Institute of South Asian Studies, National University of Singapore identified that the true worth of the FTA is in enabling both India and the EU to enhance their economic securities. By diversifying with a purpose, both India and the EU can ignore “red eyes” threatening them with random tariffs and export restrictions from the two superpowers. And that is a strong guarantee for collective economic security. Political leaderships in both sides have understood the criticality of enhancing economic securities through the FTA at one of the most geopolitically turbulent junctures in the modern era.
Conclusion
The three examples above highlight the emergence of three distinct trade frameworks globally. The first is a U.S.-centered economic system, the second is a China-centered economic system, and the third comprises small and medium economies beyond the U.S. and China seeking to reduce their dependence on these two superpowers. Some nations are forming mutual support networks, such as India and the EU through their FTA. Others are seeking to balance between the two superpowers to alleviate pressure, exemplified by South Korea's Lee Jae-myung and the UK's Starmer's China trips. All three cases are linked to countering Trump's tariff pressure. To date, the U.S. government has only voiced dissatisfaction or issued warnings regarding the UK and India-EU cases. Trump even announced that India's tariffs would be reduced to 18% because India pledged not to purchase Russian oil. However, he claimed India would buy $500 billion U.S. goods (Modi later denied making such a commitment). Undoubtedly, India has emerged as the biggest winner.
In contrast, South Korea faced Trump's threat to raise tariffs on its exports to the U.S. back to 25% because its National Assembly delayed approving the investment agreement with the U.S. This is not related to Lee’s Beijing trip but more likely represents Trump's negotiation tactic. He has repeatedly asserted that South Korea is wealthy, yet was dissatisfied with its US$350 billion investment commitment. Now, Taiwan has pledged US$500 billion in investments. Compounding this, South Korea's benchmark KOSPI index recently surged to close above the record 5,000-point threshold for the first time (On the 22nd, KOSPI broke 5,000 points intraday; by the 26th, Trump tweeted about raising tariffs). This indicates Trump is seeking an excuse to pressure South Korea into investing more in the U.S.—at least matching Taiwan's level, given that South Korea's nominal GDP (estimated to be approximately US$1.87 trillion) is more than double Taiwan's (US$884.39 billion). Moreover, the U.S. is pressuring South Korea's SK Hynix and Samsung to establish memory chip production facilities in America. Recently, at Micron's memory chip factory opening in Clay, New York, U.S. Commerce Secretary Howard Lutnick threatened that companies failing to set up U.S. memory chip production lines would face 100% tariffs—a clear jab at South Korea,whereas SK Hynix and Samsung collectively hold 70% of the global memory chip market share.
