Korea's status as China's import partner drops to 30-year low

Containers at Busan port for exports [YONHAP]

Korea's status as China's import partner dropped to its lowest level in 30 years as Beijing moved to indigenize the production of chips and electronics amid an economic downturn.

According to data from the Korea International Trade Association (KITA) on Sunday, Korea accounted for 6.3 percent of China's import market in 2023, a 1.1 percentage point drop from the previous year's 7.4 percent. This was the lowest level in 30 years since 1993 when the figure reached 5.2 percent.

Korea's rank also dropped to third place among China's import partners last year, after Taiwan and the United States. In 2022, Korea ranked second after Taiwan.

The shrinkage in trade value is partially attributed to the overall economic downturn in China.

According to the General Administration of Customs of the People's Republic of China, China's imports reached $2.5 trillion last year, a 5.5 percent drop from the previous year.

Korea has been dealt a bigger blow than other countries. China's imports from Korea plunged by 18.7 percent last year, while those of Taiwan or the United States dropped by 15.4 percent and 6.8 percent, respectively.

Lackluster demand last year in the IT segment, in which Korea excels, and China's continued efforts to achieve independence in chip and electronics manufacturing contributed to the drops, according to experts.

The statistics showed that the share of electronic integrated circuits among China's import items dropped to 13.7 percent by value in 2023 from 15.4 percent the previous year. The share has declined since 2020, when they accounted for 17.1 percent.

Korea's export of semiconductors to China nosedived by 30.6 percent in 2023 year-on-year to $36.1 billion.

"Korea used to export intermediary goods to China, and China made the end product with it, forming a tight collaboration relationship," Jo Sang-hyeon, head of the Institute for International Trade at KITA, told Yonhap.

"Since 2010, China's independence in manufacturing has increased, changing the dynamics of Korea-China's economic cooperation."

Experts say Korea must improve its competitiveness in items other than chips and electronics to regain its status in China's trade market as the country remains Korea's biggest trade partner — especially for exports.

"Although China is in an economic downturn, no country can replace China given that it logs 5 percent annual growth continuously," says Jung Man-ki, vice chairman of KITA.

"Korea should focus on raising its export competitiveness aside from sensitive areas affected by U.S.-China geopolitical issues."

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]