Professor Gao noted that setting up a renminbi clearing hub in Seoul is a significant step for China-South Korea financial cooperation.

"Unlike establishing a renminbi trading center in London or Luxembourg, China and South Korea enjoy much closer trade relations and a large bilateral trade volume—their financial cooperation is thus strongly supported by real economies," said Gao. The new move is both helpful for promoting the economic status of South Korea worldwide and conducive for the internationalization of the renminbi, he added.

Promoting regional security

During Xi's visit, the two leaders reached important consensus on the Korean Peninsula issue, pledging that the two countries are firmly committed to pushing for a nuclear-free Peninsula, maintaining peace and stability in the region, as well as promoting the Korean Peninsula denuclearization process and facilitating resumption of the six-party talks.

In their meetings, President Xi responded positively to Park's proposal of a "Korean Peninsula trust-building process" and voiced his support for the improvement of relations between North Korea and South Korea to realize reconciliation and cooperation and ultimately achieve independent peaceful reunification.

Xi also pointed out that all sides should be treated in a balanced way to guide the nuclear issue into a sustainable, irreversible and effective settlement process.

Gao said the consensus has demonstrated the increasing mutual trust between the two countries over the highly sensitive Korean nuclear issue.

Naturally, China and South Korea are major stakeholders in the Korean Peninsula issue, as it concerns the core interests of both countries. Moreover, a nuclear-free and peaceful Korean Peninsula is crucial for all countries in the wider Asia-Pacific region.

Observers also claimed the latest mutual visits by Park and Xi show that both leaders have broken with the traditional mindset that has inhibited their bilateral relations. They attempted to eliminate the external factors limiting China-South Korea cooperation. Xi's Seoul trip even put an end to an unspoken diplomatic routine wherein China would first visit Pyongyang before moving on to Seoul.

In the meantime, observers noted that as Beijing and Seoul draw closer, Pyongyang has become more active in negotiations with Tokyo over the issue of its past abductions of Japanese nationals. The two sides had a meeting in Beijing on July 1. On July 3, Japanese Prime Minister Shinzo Abe announced that Japan would partially lift its sanctions imposed on Pyongyang.

In recent years, due to the rightward shift in Japanese politics, its attitude toward its war past has drawn criticism from both China and South Korea, the two major victims of Japan's war crimes. Most recently, despite pronounced international concern, Abe has gutted Japan's pacifist Constitution in order to allow Japanese forces to fight abroad. Given Abe's unrepentant historical attitude, the move poses a grave menace to regional stability.

During their meeting, Xi and Park expressed worries about Japan's continued historical revisionism and its attempt to expand the right to self-defense.

In addition, Anbound Consulting, an independent think tank in Beijing, claimed that Japan is also concerned about the China-South Korea FTA. Japan, which is currently engaging in the Trans-Pacific Partnership (TPP) negotiations, worries the China-South Korea FTA will have an impact on the TPP—an agreement that intends to enhance trade and investment among a host of countries but which, notably, does not include China and South Korea.

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