Gov't to reduce supply chain reliance on China by 2030

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Gov't to reduce supply chain reliance on China by 2030

Published: 19 Dec. 2024, 18:00

SHIN HA-NEE
[email protected]

Audio report: written by reporters, read by AI

Container ships are docked at a port in Busan on Dec. 16. [YONHAP]

Korea aims to reduce its heavy supply chain reliance on specific importers, such as China, for key materials from the current 70 percent to below 50 percent by 2030 amid escalating uncertainties over the U.S.-China tensions and rising protectionism ahead of the second Donald Trump presidency.

The Ministry of Economy and Finance announced the goal on Thursday as part of the government’s first basic plan for supply chain stabilization, spanning from 2025 to 2027.

The government will pour more than 55 trillion won ($37.9 billion) in financial support and incentives to diversify import channels and increase self-sufficiency of crucial raw materials and components in strategic sectors, such as semiconductors and EV batteries.

The initiative comes as Korea remains highly dependent on a single importer for specific materials, especially China, leaving the resource-strapped nation vulnerable to supply chain disruption risks.

Last year, Korea relied on China for 96.6 percent of its anhydrous hydrogen fluoride imports, according to the Korea International Trade Association. China also represents 97.9 percent of natural graphite and 95.3 percent of artificial graphite imports, as well as 84.7 percent of rare-earth magnets.

Minister of Economy and Finance Choi Sang-mok speaks during the third Supply Chain Stabilization Committee meeting at the government complex in central Seoul on Dec. 19. [MINISTRY OF ECONOMY AND FINANCE]

"Uncertainties surrounding the global supply chain have been escalating with the U.S.-China conflict entering a new phase and the rise of protectionist policies including higher tariffs," said Finance Minister Choi Sang-mok during the third Supply Chain Stabilization Committee meeting held at the government complex in central Seoul on Thursday.

"With the implementation of the Framework Act on Supply Chain and the launch of the Supply Chain Stabilization Committee in June, the government already established an institutional foundation, and with the basic plan finalized today, we will complete a system to weather the global supply chain risks."

As part of the plan, the government will allot more than 25 trillion won to support research and development of technologies with strategic significance for economic or security purposes.

The government is also considering pursuing joint projects with nearby nations such as Japan and Singapore, including producing key materials in third-party nations through joint initiatives or collaborating to purchase key items together.

BY SHIN HA-NEE [[email protected]]