Who’s more dependent on the other?
The author is the head of the JoongAng Ilbo China Institute.
China is hard to comprehend. In his latest book “To Overcome China,” Chung Duck-koo, chairman of the North East Asia Research Foundation and a former minister of commerce, industry and energy, points out the “unique duality of China.” China is big and has many faces, and depending on where you look at it, it looks different.
It is easy to have a prejudice when trying to understand China. Most notably, some say that Korea is highly dependent on exports to China and has to please it. Last year, Korea’s export to China made up 25.8 percent of its total exports. With such a high dependency, we cannot be free from worrying that China would block imports as it had done to retaliate the Thaad antimissile system deployment. But it is only half right.
“Korea’s dependency on China for exports can be understood as a vulnerability in Korea’s trade structure, as exports are not diversified. But it also means that Korea supplies intermediate goods that China needs,” says Chung. China cannot have a stable supply chain without importing from Korea. So, it is more appropriate to say that China is actually dependent on Korea, rather than Korea is overly dependent on China. “It can be confirmed that the Chinese government is working hard to decrease imports of Korean intermediate goods,” Chung explains.
Just as China is an important economic partner, Korea, too, plays an important role in China’s trade. China’s major export destinations are the United States, Hong Kong, Japan and Korea. China also imports from Korea, Taiwan, Japan and the U.S. From China’s point of view, Korea has been its fourth largest export market since 1999 and its largest source of import since 2013. In the past, China imported the most from Japan. The change shows that Korea’s industrial competitiveness has surpassed that of Japan. In the end, China is importing Korean intermediary goods that it needs to play the role of “factory of the world.”
So, it can be concluded that China needs to keep Korea pleased just as much as Korea cares about China. The problem is that there are no talks in China to please Korea, while Koreans overly emphasize the importance of China. Some say that security is with the U.S. and economy is with China. China is a very important country economically, but there is no reason for Korea to be overly low-key. Korea’s high reliance on exports to China actually shows that Korea is competitive in producing intermediate goods China needs. Korea must stop caring excessively about China.