Out of Balance
The Ministry of Trade, Industry and Energy announced on April 3 that South Korea’s trade surplus with the United States was US$7.19 billion in the first quarter of this year, while at the same time its trade deficit with China was US$7.9 billion.
But as recently as in 2021, the surplus with China (US$24.3 billion) exceeded the surplus with the United States (US$22.7 billion). In the first quarter of 2022, the figures were US$5.84 billion and US$5.89 billion. In 2022 as a whole, the surplus with China stood at US$1.21 billion whereas the surplus with the United States was US$27.98 billion. South Korea’s current deficit with China has lasted for six months.
This change has to do with industrial cycles. South Korea’s main export items in trade with the United States, automobiles, are doing well because the automotive industry is active now. With China, the items include semiconductor chips and the industry is near the bottom now.
The change is structural as well. China is reducing intermediate goods imports and this is affecting South Korea’s exports to China. In 2019, intermediate goods exports accounted for 45.9 percent of China’s total exports. The ratio rose to 49.6 percent in 2022.