2024-01-14 14:51:05
2024-01-14 22:51 United Daily News reporter Lin Maoren / real-time reporting
The latest import and export trend data released by the Ministry of Trade, Industry and Energy of South Korea show that in the first November of 2023, South Korea experienced a trade deficit of US$18 billion in trade with China. This is the first time a trade deficit has occurred in the 31 years since the two countries established diplomatic relations in 1992. China is still It is South Korea’s largest trading country. What changes have occurred in the industries of the two countries?
South Korea has always been regarded as a “barometer” of global trade. Therefore, whenever South Korea has an annual trade deficit, it often attracts attention, especially since the semiconductor chips, displays and refined oil produced by South Korea are key products for export. But the deficit with China has deeper meaning.
Among South Korea’s other major export markets, data from the South Korean Ministry of Industry, Trade and Energy also show that exports to the United States, the European Union, the Middle East, and the CIS increased. Among them, exports to the United States hit a record high of US$115.7 billion. As a result, the United States surpassed ASEAN to become South Korea’s second largest export market following 18 years. Exports to Poland (14.8%), the United Arab Emirates (11.9%), and Saudi Arabia (9.4%) also increased.
Historically, trade with China has accounted for nearly a quarter of South Korea’s external exports. Regarding China’s current transformation from South Korea’s long-term largest trade surplus country to a deficit country, Huang Fei, director professor of the Seoul Graduate School of Science, believed in an interview with China Business News that it was mainly the result of South Korea’s excessive reliance on the Chinese market in the past. , the weakening competitiveness of South Korea’s export industry is also one of the reasons. After the establishment of diplomatic relations between China and South Korea, although China maintained its division of labor by importing intermediate materials produced in South Korea for assembly and processing, it quickly caught up with South Korea in a short period of time and strengthened the competitiveness of its own manufacturing industry. China’s dependence on South Korea for intermediate materials needs is waning.
Huang Fei analyzed that over the past 30 years since the establishment of diplomatic relations between China and South Korea, the commodities traded between China and South Korea have changed from simple light industrial and heavy chemical commodities such as steel plates and fibers to high value-added intermediate materials such as semiconductors. This means that China The sophistication of manufacturing has intensified export competition between the two countries in the field of medium and high-tech industries.
The South Korea Industrial Research Institute explained in the “2024 Economic and Industrial Outlook” report that due to the improvement of the competitiveness of China’s manufacturing industry, the self-sufficiency rate of intermediate materials has increased, which has a negative impact on the import of intermediate materials produced in South Korea. According to statistics from the South Korea Trade Association, South Korea’s exports to China accounted for 19.5% of total exports in the first half of 2023, a significant decrease from 25.3% in 2021.
On the contrary, South Korea relies heavily on China for core raw materials in its rapidly developing power battery industry. According to statistics from the South Korea Trade Association, in the first half of 2023, the dependence on China for the main raw materials of power batteries such as lithium hydroxide, nickel sulfate, and cobalt sulfate reached 82.3%, 72.1%, and 100% respectively. For power batteries and lithium hydroxide alone, South Korea’s trade deficit with China will exceed US$10 billion in 2023.
Huang Fei believes that due to supply chain conflicts between China and the United States and the previous attitude of the South Korean government towards China, many popular South Korean exports to China have also been hit. South Korean products have gradually lost the attention and love of consumers in China. , but the trend of inevitable increase in resource and raw material imports from China still exists. However, South Korean industries have become more dependent on Chinese imports, leading to further deepening of trade imbalances.
The current consensus among South Korean political and business circles is that Chinese products are increasingly replacing South Korean products, and imports of Chinese raw materials and intermediate parts are unlikely to decrease in a short period of time. For example, raw materials for new energy batteries, a competitive industry in South Korea, The degree of dependence on China has reached more than 80%. South Korean industry generally believes that South Korea’s trade deficit with China is irreversible in a short time and will gradually expand. In this regard, South Korea can only actively seek to diversify supply channels and develop trade cooperation with other countries. But this is also not something that can be achieved in a short time.
How do Chinese products affect the lives of ordinary South Koreans now? Huang Fei said that with the improvement of the competitiveness of China’s industrial products, Chinese products are gradually entering the lives of South Koreans. For example, new energy buses were basically monopolized by Hyundai Motor. Now one-third of the new energy buses on the road in South Korea are BYD. .
Last year, Chinese cosmetics also became popular in South Korea. According to statistics from the South Korean Customs Service on the import data of seven major categories of Chinese cosmetics, including skin care products, the total import volume in the third quarter of 2023 increased by 5.8% compared with the previous year. In terms of subcategories, South Korea’s imports of basic skin care products from China increased by 8.4%, eye shadows increased by 187%, powders increased by 135%, and facial masks increased by 170%. Affected by factors such as shrinking consumer confidence, the performance of South Korean cosmetics companies, which regard high-end products as their main products, declined last year.
A South Korean citizen told China Business News on social media that when searching for Chinese cosmetics on South Korean shopping websites, they mainly focus on Chinese-style lip gloss, eye shadow, eyeliner, eyebrow pencil and other cosmetics, and their friends do not reject them.
Not just cosmetics, Huang Fei said that Chinese companies can now be found in fields such as LCD panels, smartphones, and electric vehicles where South Korea used to have a comparative advantage.
Huang Fei said that in the past two years, ordinary South Korean people’s impression of Chinese products has changed, and the reason is that more and more people have actually used them. South Korean people trust word of mouth more and have a herd effect. Nowadays, there are many videos introducing high-quality Chinese products on self-media, which has also influenced young people in South Korea to some extent.
She gave an example. Cross-border e-commerce has developed rapidly. Nowadays, you can see huge advertisements for ALI EXPRESS in South Korean subways. For South Koreans who have become very accustomed to online shopping, it is also a good new trend. platform. There are many cost-effective Chinese products on it.
Huang Fei believes that Chinese products with high cost performance and short shipping cycle have quickly won the favor of the South Korean local government; in addition, there is currently room for further opening up of the China-South Korea FTA, and we may see more and more products in the South Korean market in the future. Chinese products with high cost performance.
A report by the Central Bank of South Korea in December last year stated that as the technical level and competitiveness of China’s export products continue to improve, competition with South Korea in the global market will also continue to increase. South Korea must further improve the external competitiveness of its export products, and at the same time By diversifying the export market, we can improve the current export structure that is overly dependent on the Chinese market.
South Korea’s trade deficit with China is the first in 31 years.The picture shows Mainland China President Xi Jinping (right) meeting with the President of South Korea at the West Lake State Guesthouse in Hangzhou… Competitiveness South Korea Cosmetics Semiconductor
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