Some Korean Industries Likely to be Affected by Growth of China’s Service Sector

The Korea Development Institute (KDI) said in its report on Sept, 22 that the focus of the Chinese economy is currently shifting towards the service industry and the domestic market of China is losing steam, continuing to say that this can result in a slowdown of the South Korean economy in the form of an exacerbated supply glut in, for instance, the heavy and chemical industries. 

Domestic consumption in China, which had stood at six trillion yuan in 1995, grew at an annual average of 9.4 percent and reached 62.3 trillion yuan in 2014. During the period, the ratio of demand for non-durable goods dropped whereas that of that for durable goods showed a significant increase. 

More recently, the ratio of the manufacturing industry of China to its economy as a whole is on the decline with its manufacturing sector slowing down and its service industry showing a rapid growth. As of the end of last year, the growth rate of the service sector exceeded that of the manufacturing sector by approximately two percentage points. 

According to the KDI, the computer and electronic equipment manufacturing industry of South Korea is likely to be the sector that most affected by those situations in China. “This industry’s total output and added value growth rate is estimated to fall 1.02 percentage points to 1.44 percent,” it explained, adding, “The figures are likely to fall by 0.29 to 0.44 percentage points in the machinery, metal, electrical equipment and automobile industries, by 0.39 percentage points in the petrochemical industry and by 0.1 percentage point or so in the others.”