S. Korea’s exports to China drop as US-bound exports climb

Posted on : 2023-01-03 16:42 KST Modified on : 2023-01-03 16:42 KST
Korea saw a record-breaking trade deficit in 2022
(Getty Images Bank)
(Getty Images Bank)

With South Korea recording its greatest ever trade deficit last year, exports to China fell by over 4% from the previous year, with China-bound exports accounting for less than 25% of total exports.

Exports to the United States, on the other hand, grew by double digits — 14.5% — surpassing US$100 billion for the first time ever.

Exports to the United States also climbed above 15% of total exports, a step up from the previous year.

According to the region-by-region export results in a report on trade trends in 2022 released by the Ministry of Trade, Industry and Energy on Monday, exports to China totaled US$155.8 billion dollars, falling 4.4% from the previous year.

China accounted for 22.8% of last year’s total exports of US$683.9 billion, a major drop from 2021, when China accounted for 25.3% (US$162.9 billion) of Korea’s total exports.

China had accounted for over one-quarter of South Korea’s exports even after 2018, when trade friction between the United States and China began in earnest.

It fell from 26.8% in 2018 to 25.1% in 2019 before climbing again to 25.9%, staying above the 25% line.

The Ministry of Trade, Industry and Energy believes the sluggishness of exports to China is largely due to slow economic growth in China since April resulting from Beijing’s “zero COVID” policy.

Clearly falling prices for semiconductors — a key export — in the second half of the year also played a role in the weak exports to China.

The dramatic change in the export share could be seen in Korea’s trade balance.

Last year, Korea recorded a trade surplus with China, but only barely, at US$1.25 billion for the year.

Korea recorded a string of red months from May (US$1.09 billion), except for September, when Korea recorded a US$660 million trade surplus with China.

Korea narrowly stayed in the black for the year thanks to trade surpluses in February (US$2.64 billion) and March (US$3.02 billion).

Last year’s trade surplus with China was just 5% of 2021’s figure of US$24.8 billion.

Korea recorded its biggest trade surplus with China in 2013, when it reached US$62.8 billion.

While China’s portion of Korea’s exports dropped, the United States’ share reflexively grew.

Exports to the United States recorded US$109.8 billion last year, accounting for 16.1% of total exports.

This was a step up from 2021, when the United States accounted for 14.9% of total exports (US$95.9 billion).

Korea’s trade surplus with the United States was over US$28 billion, more than 20% greater than the previous year, when it was US$22.69 billion.

Automobiles led the surge in exports to the United States.

Car exports to the United States last year hit US$21.73 billion through Dec. 25, up 29.8% from the same period the year before.

This was the result of rising factory prices for completed automobiles, as well as increased production and sales of high-end electrical vehicles.

Exports of general machinery (14.8%), automobile parts (16.9%) and oil products (33.8%) also grew relatively sharply.

Cho Sang-hyun, the head of KITA’s Institute for International Trade, predicted that the trends in exports to the United States and China would continue in 2023.

He said this was because Korea cannot export core semiconductor equipment or parts to China due to the conflict between Beijing and Washington, while the US market is demonstrating relatively healthy growth.

About the fall in China’s share of exports, Cho said that with Vietnam and other Southeast Asian nations accounting for a growing share of Korea’s exports, “there was a bright side of reducing Korea’s excessive dependence on China.”

Of the nine major regions including the United States and China, the country to which exports grew the most was India.

Korean exports to India reached over US$18.88 billion last year, up 21.0% from the year before and continuing 2021’s high growth (30.7%).

Export growth was also strong to Southeast Asian nations (14.8%), the United States (14.5%) and the Middle East (12.3%).

Exports to the Commonwealth of Independent States, including Russia and Ukraine, fell by 17.7%, recording a pronounced drop along with exports to China.

By Kim Young-bae, senior staff writer

Please direct questions or comments to [english@hani.co.kr]

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