China's Digitalization and its Implications for China-South Korea Economic Cooperation

As the second largest economy in the world, China is experiencing a new wave of digitalization with new drivers. This paper identifies the complementarities in digitalization between China and South Korea in order to provide policy suggestions on how the two countries should cooperate in the digitalization journey to achieve quality-oriented and innovative economic growth. To that end, a digitalization matrix is developed as a framework to capture the elements of digitalization and analyze the gap of digitalization between China and South Korea by measuring the matrix. The analysis can show the strength and weakeness of digitalization between the two countries in absolute gap and exibit the relative gap among all elements across the matrix. Based on the result of the analysis, this paper investigates whether and to what extent the two countries can tap into the complementary assets. As a conclusion, this paper suggests four ways for China-South Korea economic cooperation in digitalization: enhancing the policy coordination in digitalization, sparking up multi-level collaboration on smart city initiatives, screening areas with high complementarity to boost industrial digitalization, and sharing the experience of promoting digital economy governance.