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The Sunday Paper – The Recent Slump in South Korea’s Exports to China: Analysis of Causes and Implications

Whilst the proportion of goods imported by Korea from China has been steady the proportion of goods imported by China from Korea has been falling.

This development is highlighted in a short brief from Jung Min Han and Jeong-Hyun Kim writing for the Korea Institute for Industrial Economics and Trade.

They note Korea’s proportion of exports to China peaked in 2018 at 26.8% but since has fallen to 19.7% in 2023. Moreover, China’s proportion of imports from Korea has fallen from a high in 2015 of 10.9% to 6.2% in 2023.

This development seems to be affecting Korea especially as the chart below highlights.

The researchers identify four factors at work:

  1. China is increasing its self-sufficiency in intermediate goods
  2. Korea has experienced an overall ‘structural’ weakness in exports to China
  3. The China market in general has been weak, reducing demand for all goods
  4. The global downturn in the I.T. sector has particularly affected the China-Korea dynamic

The report concludes Korea should try and cultivate more non-China business to replace the China losses.

That’s a great idea, but I wonder with whom they might progress such a strategy?

You can read the report in full via this link Korea’s Export Slump to China.

Happy Sunday.

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