Exposure to Chinese Economy
The Hyundai Research Institute announced on April 9 that the degree of the South Korean economy’s exposure to the Chinese economy is 12.8%, second only to that of Singapore (23.6%).
It added that a one percentage point decline in the economic growth rate of China is likely to result in a 0.5 percentage point decline in South Korea’s economic growth rate while the decrement is estimated at 0.7 percentage points for Singapore, 0.6 percentage points for Indonesia, 0.3 percentage points for Germany, 0.2 percentage points for Japan and 0.1 percentage point for the United States.
According to the institute’s report, Singapore’s exports to China account for only 12.6% of its total exports but the country shows a high degree of exposure to the Chinese economy due to its export-to-GDP ratio of as high as 187.6%. When it comes to South Korea, the figures are 25.4% and 50.6%, respectively.
The South Korean economy’s high level of dependence on the Chinese economy is leading to a significant impact with the latter slowing down these days. China’s total import growth was 1.1% between 2013 and 2014 but fell to -18.4% between 2014 and 2015. Likewise, South Korea’s exports to China increased 6.1% in 2014 but dropped 8.4% last year. The amount fell 13.2% year on year for the first two months of this year, too.