25% Dependence

 

Concerns are rising over the possibility of a decrease in Korea’s exports attributable to the continuation of the slow growth of the Chinese economy. For Korea, China is the largest trade partner, accounting for 25% of its total exports.

According to the National Bureau of Statistics of China, the country’s international trade volume totaled 24.5849 trillion yuan last year, down 7% from a year ago. The exports declined by 1.8% to 14.1357 trillion yuan while the imports fell 13.2% to 10.4492 trillion yuan. It recorded 3.6865 trillion yuan in trade surplus, which can be attributed mainly to the decline in imports exceeding that in exports.

This situation is affecting the Korean economy. According to the Ministry of Trade, Industry & Energy, Korea’s exports fell 7.9% from a year earlier to US$527.2 billion last year and its annual exports to China recorded a decrease of 5.6%. The latter decreased in each month except for June, when the amount edged up by only 0.6%, and showed the largest decrement, 16.7%, in December.

This is why the Korean government is putting the slowdown of the Chinese economy before an interest rate hike by the Fed in trying to deal with the so-called G2 risks. Unfortunately for the government, though, the sluggish growth of the Chinese economy is likely to continue for the time being.

Copyright © BusinessKorea. Prohibited from unauthorized reproduction and redistribution