Exports from South Korea to China Fell for the 15th Consecutive Month

According to the Korea International Trade Association, South Korea’s exports to China totaled US$10.961 billion last month, down 9.0% from a year ago, and continued to decline year on year for the 15th consecutive month. In addition, the ratio of South Korea’s exports to China to South Korea’s total exports fell from 26.0% to 24.7% between last year and this year while South Korea’s trade surplus with respect to China dropped from US$17.296 billion to US$9.787 billion between the last quarter of 2013 and the third quarter of this year.

Last month, semiconductor exports from South Korea to China fell 13.4% from a year earlier to US$2.2669 billion. The figures were negative 5% and US$1.704 billion when it comes to flat panel displays and sensors and negative 44.8% and US$657.17 million in the case of wireless telecommunications devices.

These days, a large number of South Korean engineers and technicians are moving to Chinese companies with the Chinese government providing various incentives for them. This is accelerating the transfer of South Korea’s intermediate goods industries. At the same time, the production of advanced and high value-added materials in China is soaring based on a combination between China’s capital and South Korea’s technological strength. For instance, South Korea’s terephthalic acid exports to China plummeted from 3.16 million tons to 0.67 million tons between 2010 and last year.

South Korean companies’ relocation to Vietnam is affecting the exports to China as well. Last month, South Korea’s exports to Vietnam, which has become its third-largest export destination, increased 16.9% from a year ago to US$2.796 billion.