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South Korea's surplus from trade with China fell for the first time in five years, with its trade deficit with Japan hitting an all-time high, officials said Sunday.

South Korea's trade surplus with China was US$20.9 billion in 2006, down 9.9 percent from a year earlier, as China lowered its imports of steel and oil products from South Korea and increased its investment in steel and oil sectors, the Commerce, Industry and Energy Ministry and the Korea Customs Service said. South Korea's greatest trade surplus was with China, followed by Hong Kong with $16.8 billion, the United States with $9.5 billion, Mexico with $5.5 billion and Taiwan with $3.7 billion.

The country's trade deficit with Japan stood at $25.3 billion last year, up 3.9 percent from the previous year due to South Korea's high dependency on technology, parts and materials from the neighboring country and a decline in its exports to Japan from the semiconductor and shipyard sectors.

The trade deficit with Saudi Arabia was second with $17.5 billion, followed by those with the United Arab Emirates, Kuwait and Australia with $10 billion, $7.5 billion and $6.5 billion, respectively.

South Korea's exports to the United States hit $43.2 billion last year, up 4.5 percent from the previous year, and its trade surplus with the U.S. fell below $10 billion for the first time in three years to $9.5 billion in 2006.

China is expected to become the biggest exporter to South Korea this year, replacing Japan, a trade promotion agency said earlier.

According to the Korea Trade-Investment Promotion Agency, China was the second-largest source of imports to South Korea in 2004, following Japan, but since August last year South Korea has imported more goods from China.

The United States had been South Korea's largest export market until 2002, but it was overtaken by China in 2003.

The ratio of the United States-bound shipments to the nation's total exports stood at 17.7 percent in 2003, 16.9 percent in 2004, 14.5 percent in 2005 and 13.3 percent in 2006.

The volume of direct investment from the United States showed a steep decline, posting $4.7 billion in 2004, $2.6 billion in 2005 and $1.7 billion in 2006, while direct investment from the European Union rose to $4.9 billion in 2006 from the previous year's $4.7 billion.

South Korea's top 10 export items last year were semiconductors, cars, wireless telecommunications equipment, ships, oil products, computers, flat-panel displays, synthetic resins, steel plates and auto parts. The items have remained unchanged since 2003.

Seoul, Jan. 28 (Yonhap News)