Intermediate Goods Account for 81% of Korea's Exports to China
The Bank of Korea said in its report on Nov. 3 that South Korea’s exports to China revolve around intermediate goods and semiconductor products and thus the adverse impact of a slowdown of the Chinese economy on the exports will be rather limited.
According to the report, China’s real GDP growth rate fell from 18.3 percent to 7.9 percent and then to 4.9 percent in the first three quarters of this year. However, South Korea’s exports to China in July to October this year were approximately US$14 billion a month, somewhat higher than in the same period of 2018. In short, exports are going well although the Evergrande liquidity crisis, electric power shortage, and so on are increasingly affecting the Chinese economy.
“It can be said that South Korea’s exports to China are in a phase of stagnation, and this is because many South Korean companies have relocated to Southeast Asia with production costs rising in China and China’s demand for South Korean products have been decreased by Chinese products,” the central bank explained, adding, “Semiconductor products accounted for 15.1 percent of the exports in 2010 but the ratio jumped to 31.2 percent last year.”
“In 2020, consumer goods accounted for only 3.8 percent of the exports whereas the ratio of intermediate goods amounted to 80.6 percent,” it said, continuing, “In view of this structure, a slowdown of the Chinese economy is likely to have a limited impact on the exports.”