The Korean economy has been significantly impacted by the emergence of China. It is now the largest market for Korean exports and a major supplier of its low-cost imports but has at the same time become a serious challenger of Korea in the global markets for manufacturing exports. This paper investigates changes in China's export structure and its effect on Korea and bilateral trade between the two. It also examines the motives for Korean investment in China and its effect on bilateral trade and cross-border production networks. Korean FDI in China has contributed to the growth of parts exports from Korea to China, and we provide evidence for this effect with regression analysis.