Korea posts record current account deficit with China in 2022

Containers piled up at a port in Busan on May 1. [JOONGANG PHOTO]

Korea posted a record current account deficit with China in 2022 on a plunge in chip exports, and a record surplus with the United States helped by strong auto exports, showed preliminary data by the Bank of Korea (BOK) Thursday.

Korea posted $7.78 billion in current account deficit with China last year, down $31.20 billion from a year earlier. A decrease in exports of semiconductors, machinery and petroleum products and a jump in imports of raw materials attributed to the deficit. It was the first deficit with China since reporting negative $760 million in 2001.

“The current account deficit is due to poor exports of machinery, petroleum products and semiconductors,” said Kim Hwa-yong, head of the balance of payments team at the BOK. “Exports for memory chips went into the red on an annual basis as it swung into minus from the second half. Chips attributed to the large portion of weak exports to China.”

Kim projected demand for semiconductors to recover when the production of electric products, like cell phones and PCs rises.

Direct investment in China from Korea expanded by $1.78 billion to $7.29 billion on year.

Korea’s total current account balance last year was $29.83 billion, down $55.40 billion on year, also due to weak exports.

Current account balance is a record of a country’s international transactions.

The deficit with the Middle East reported a nine-year high at $88.05 billion. The deficit expanded by $40.07 billion from a year earlier on global oil prices.

The annual Dubai crude oil price soared 41 percent on year to trade at around $97 a barrel last year.

The deficit with Japan narrowed by $4.42 billion to negative $17.78 billion in the same period, despite a growth in blasting agents and petroleum products.

The current account surplus with the United States posted a record high on growth of vehicle exports and dividend income. The balance expanded $22.25 billion on year to $67.79 billion, the largest since relevant data was first compiled in 1998.

Balance of goods with the United States reached a record high of $56.38 billion, the highest since $46.97 billion in 2014. Service balance reported negative $2.02 billion in the year, the smallest deficit since $3.30 billion in 2005, on a rise in shipping fees. The transportation balance also reached a record high of $3.38 billion, breaking the last record set a year earlier.

The balance with the European Union swung back to $7.04 billion in surplus, up $7.67 billion on year, on increased exports of petroleum products and blasting agents.

BY JIN MIN-JI [jin.minji@joongang.co.kr]