Korea's Exports to China on the Decline
South Korea’s exports to China, which form a key part of the South Korean economy, are on the decline as the Chinese economy is slowing down. Exports to China decreased year on year in each of June, July, August and September and South Korea posted a trade deficit with China in each of May, June, July and August.
China became the biggest market for South Korean exporters in 2009. The ratio of South Korea’s exports to China to its total exports stood at 7 percent in 1997 but jumped to 23.9 percent in 2009. In that period, the ratio of exports to the United States fell from 17.2 percent to 10.4 percent.
This increase in China’s presence was because the Chinese economy entered a boom in the early 2000s. It became a WTO member in 2001 and its annual GDP growth rate topped 10 percent over and over. In 2010, China’s GDP topped Japan’s. China began to pursue qualitative rather than quantitative economic growth in the early 2010s, and yet an annual growth of more than 7 percent continued for years.
The growth rate, however, dropped to 2.2 percent in 2020. Although it rebounded to 8.1 percent in 2021, the 2022 and 2023 estimates are gloomy. For example, the OECD lowered its estimates by 1.2 and 0.2 percentage points to 3.2 and 4.9 percent last month. Likewise, the IMF recently lowered its estimates to 3.2 percent and 4.4 percent. This slowdown of the Chinese economy is likely to seriously affect the South Korean economy, which relies heavily on exports to China.