Change in Balance
China’s trade deficit with South Korea is decreasing fast. The General Administration of Customs of China announced on March 12 that exports from China to South Korea totaled US$24.026 billion in January and February this year, when China’s imports from South Korea were US$24.313 billion.
The gap between the two, that is, the trade deficit, was US$5.113 billion in March last year. It dropped to US$1.133 billion in May last year and reached US$0.764 billion in June. Although it rebounded to US$2.489 billion in July, US$3.17 billion in August, and US$4.477 billion in September, it fell to US$1.414 billion in October and US$0.809 billion in December.
In January and February China’s trade deficit with South Korea was more than US$10.59 billion in 2020, more than US$9.28 billion in 2021 and more than US$10.57 billion in 2022. The figure dropped to US$0.287 billion this year.
This has to do with exports from South Korea to China rather than the opposite. Specifically, exports from China to South Korea increased 18.9 percent year-on-year in January and February 2022, 17.8 percent in June, and 11.8 percent in November. The year-on-year increase fell below 10 percent, 9.5 percent to be specific, in as recently as December. In short, exports from China to South Korea showed solid growth throughout last year.
Exports from South Korea to China increased 16.6 percent year-on-year in the first two months. However, the figure dropped to 1 percent in August, negative 0.3 percent in September, negative 6.5 percent in December, and negative 29 percent in the first two months of this year. In 2022, the figure continued to fall without any rebound.
This is because the Chinese economy is not recovering even after it resumed economic activities. As an example, China’s retail sales decreased for three months in a row until December last year. The sluggish consumption in China means, for example, a decrease in demand for semiconductor-based products. Semiconductors are South Korea’s most important export items in its trade with China. Semiconductor exports from South Korea to China dropped 22.7 percent year-on-year in January and February this year.