hankyoreh

South Korea's direct investment accounted for the largest portion of foreign direct investment in China last year as companies, such as POSCO and LG Electronics Inc., relocated plants to Asia's second-largest economy, the central bank said Thursday.

South Korea's direct investment in China amounted to US$10.1 billion in 2005, or 26.2 percent of the total foreign direct investment last year, the Bank of Korea said in its report on international investment data for 2005.

The United States, previously the No. 1 destination for South Korea's direct investment, dropped to second place in terms of South Korea's foreign direct investment. The investment in the U.S. reached $10 billion, or 26 percent of the total.

"Mostly, the result came as large businesses such as POSCO and LG Electronics Inc. relocated their manufacturing plants to China," said Park Chung-won, an official at the central bank's economic statistics bureau. "Individuals' investments also increased, but their contribution was very small."

Top South Korean businesses have increasingly relocated their plants to China to benefit from cheap labor and manufacturing costs there. Some local market observers, especially labor unionists, have voiced concerns with the trend, arguing that those moves cuts away at payrolls.

China's direct investment in South Korea, however, was relatively small. The figure reached $1.9 billion last year, up from $1.7 billion a year earlier. In 2005, China's investment made up 1.8 percent of total foreign direct investment in South Korea.

U.S. direct investment in South Korea reached $23.4 billion last year, up from $19 billion a year earlier, the central bank said.

Seoul, Nov. 30 (Yonhap News)