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This study explores the impact brought by political relation between South Korea and China on economic cooperation between South Korea and Shandong Province of China from regional view. Based on the data over 1998–2017 periods, ADF test, LS methods and Granger Causality Test are employed. The results indicate improved political relation is beneficiary to both the increase of export of Shandong province to South Korea and the import of Shandong province from South Korea. But there is no evidence that the bilateral political relation has effected on the FDI from South Korea to Shandong province. There is no evidence that more close economic connections between two regions are likely to be less influenced by political relation.

An Empirical Study on Impact of Sino-South Korea Political Relations to Trade and FDI – Based on Data from Shandong Province of China