China slowdown threatens to stunt growth here

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China slowdown threatens to stunt growth here

China’s lower economic growth will likely stunt Korea’s growth due to their close links, a report said yesterday.

According to the Hyundai Research Institute, Korea’s GDP declines 0.4 percentage points and its exports drop 1.7 percentage points, when China’s GDP falls 1 percentage point.

China said Friday its economic growth slumped to a three-year low in the second quarter of 2012 due to persistent global economic uncertainties.

China’s growth hit 7.6 percent on-year in the April-June period, sharply slowing from a 9.7 percent on-year increase tallied a year earlier.

“The China risk has become visible,” said Ju Won, an economist from the private think tank. “If China’s economy loses steam, it will lead to weaker exports from South Korea to China. Eventually, it will result in lower economic growth.”

During the first six months of this year, Korea’s exports to China fell 1.2 percent, with machinery shedding 20.2 percent, home appliances 18 percent and steel 11.4 percent.

Ju said that Korea’s heavy reliance on the Chinese market has amplified the risk.

“Korea should focus on developing new markets that can replace China’s demand,” he said.

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