Korea-China Trade
Korea’s exports to China are on the decline. The government comes up with joint measures with the private sector to cope with the situation.
According to the Ministry of Trade, Industry and Energy and the Korea International Trade Association, the exports from Korea to China decreased 9.4 percent from a year earlier to US$11.31 billion in May. Such a drop is for the first time since February 2013, when the year-on-year growth rate had been minus 1.1 percent.
The rate of increase was 3.6 percent and 4.4 percent in February and March this year, respectively. However, it dropped to 2.4 percent in the following month to limit the cumulative exports for the first five months of 2014 to US$58.19 billion, which is just 0.1 percent higher when compared to the same period of last year. In 2013, the exports to China had accounted for 26.1 percent of Korea’s total exports.
The sluggish export performance can be attributed to the recent slowdown of the Chinese economy and the Chinese government’s policy for the expansion of the domestic consumption. Under the circumstances, Korea’s export revolving around processing trade is being affected.
The Ministry of Trade, Industry and Energy is planning to reduce the ratio of processing trade while increasing the export of domestically consumed goods. At the same time, it is going to concentrate its resources on lowering the non-tariff barriers of China by means of earlier conclusion of the Korea-China FTA.