The Korea International Trade Association (KITA) advised in its report on July 17 that South Korea’s trade strategies should be based on an assumption that the ongoing trade war between the United States and China is a constant rather than a variable.
“The war is likely to last long, even in the event of some agreements, because the fact that the Chinese economy is led by the Communist Party will not change in the near future,” it said, adding, “The United States is likely to focus on thwarting China's attempts to access the U.S. market via bypass routes or direct investment in third countries, and this means South Korea needs to correct the U.S. view that South Korea is one of China’s bypass export routes.”
The association also said that Chinese steel products and investments can flock to South Korea if the United States keeps checking the steel industry of China. “In that case, the United States will see South Korea as China’s bypass export route and South Korean companies and job seekers will be negatively affected,” it explained. Recently, Tsingshan Steel Group submitted its letter of intent to Busan City to build a cold-rolled stainless steel sheet manufacturing plant jointly with a local company. South Korean steelmakers are opposed to the Chinese group’s plan for the reason mentioned by the association.
KITA also pointed out the need to upgrade the Korea-China trade models in keeping with China's industrial development. “Although South Korea’s and Japan’s respective intermediate goods exports to China totaled US$128.9 billion and US$85.1 billion last year, the figures become US$73.3 billion versus US$73.9 billion once semiconductor is excluded, which means China is importing an increasing amount of intermediate goods from Japan instead of South Korea with the only exception of semiconductors,” the association said, continuing, “In this regard, South Korea should concentrate on exports of high-end intermediate goods, which are expected to show increasing demands in China, and export to various non-Chinese markets such as Vietnam, India and Indonesia.”
In the meantime, KITA Chairman Kim Young-ju held a news conference that day and said concerning Japan’s export restrictions that South Korea and Japan have made a significant joint contribution for decades to the development of the global manufacturing sector and their constructive economic relations are being threatened by political and diplomatic disputes. “One of the possible solutions is to work more closely with countries such as Germany and Russia as alternatives to Japan, which have a large number of original chemical technologies,” he said, adding, “In fact, more and more South Korean manufacturers are already creating opportunities to do so.”