South Korea Experiences Trade Deficit with China After Three Decades

December 15, 2023

South Korea Experiences Trade Deficit with China After Three Decades

In the first 11 months of this year, South Korea exported $114 billion to China and imported $132 billion from China, resulting in a trade deficit of $18 billion. Excluding the first year of diplomatic relations with China in 1992, South Korea’s trade with China has shown a deficit for the first time in 31 years, with the scale once accounting for a quarter of South Korea’s total exports. The trade pattern with China, which has been a pillar of the South Korean economy, has undergone dramatic changes.

The rapid development of various industries in China has gradually reduced the market share of South Korean products in China. In 2019, South Korean petrochemical products were the third-largest export to China, following semiconductors and displays. At that time, China’s self-sufficiency rate for petrochemical raw materials was only 60%, but it has now reached 90%–100%, leading to a 21% year-on-year decrease in South Korea’s petrochemical raw material exports.

Another major reason is the change in the export structure. In the past, South Korea exported intermediate materials to China, which were then manufactured and processed for export to the global market. However, with most raw materials now being self-sufficient in China, the demand for imports from South Korea has decreased; conversely, South Korea’s rapidly developing secondary battery market requires the import of a large amount of essential materials and minerals from China. Coupled with the downturn in the market for semiconductors, which are South Korea’s main export products to China, the trade balance has seen a deficit for the first time in 31 years.


Ministry of Commerce: Taiwan Region Identified as Creating Trade Barriers

Following applications by the China Chamber of Commerce for Foodstuffs and Native Produce, China Chamber of Commerce for Import and Export of Metals Minerals, and China Chamber of Commerce for Import and Export of Textiles, and in accordance with the “Foreign Trade Law of the People’s Republic of China” and the “Regulations on the Investigation of Foreign Trade Barriers,” the Ministry of Commerce issued Announcement No. 11 of 2023 on April 12, 2023, deciding to initiate an investigation into trade barriers concerning the measures enacted and being implemented by the Taiwan region that prohibit the import of mainland products.

Given the complexity of this case, the Ministry of Commerce issued Announcement No. 35 of 2023 on October 9, 2023, deciding to extend the investigation period by three months, making the deadline for this investigation January 12, 2024.

Now that the investigation has concluded, based on the results and in accordance with Article 31 of the “Regulations on the Investigation of Foreign Trade Barriers,” the Ministry of Commerce has determined that the trade restrictions imposed by the Taiwan region on mainland trade constitute trade barriers as defined by Article 3 of the “Regulations on the Investigation of Foreign Trade Barriers.”


China Brokers Temporary Ceasefire in Northern Myanmar

On December 14th, Foreign Ministry Spokesperson Mao Ning presided over a regular press conference. Mao Ning stated that China has always firmly supported the peace process in northern Myanmar and has consistently provided support and convenience for dialogue and contact among all parties involved in Myanmar.

Since the outbreak of the “10·27” conflict in northern Myanmar, China has persistently worked with all relevant parties to halt the fighting and promote talks, pushing for a de-escalation of the situation. Recently, under the mediation and promotion of China, the Myanmar military and the armed groups Kokang, Ta’ang, and Arakan Army conducted peace talks within Chinese territory and reached an agreement on a temporary ceasefire and maintaining dialogue among other matters.

At present, the conflict and exchange of fire in northern Myanmar have significantly decreased. This not only aligns with the interests of all relevant parties in Myanmar but also helps to maintain peace along the China-Myanmar border. China hopes that the parties involved in Myanmar will accelerate the implementation of the agreements and consensus already reached, maintain the utmost restraint, actively de-escalate the situation on the ground, promptly manage emergent cases, and jointly promote a soft landing for the situation in northern Myanmar.

Share This Post