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China-South Korea trade reversal, what happened?
Oct 23,2023
Recently, according to the official data released by South Korea,From January to July 2023, China's surplus in China-South Korea trade reached $14.4 billion. In 2018, China's trade deficit with South Korea once reached 55.6 billion US dollars.
It took less than five years for China to reverse from the South Korea's largest source of surplus to a trade deficit. According to South Korea media reports, South Korea's long-running trade surplus with China has turned.
China-South Korea Trade Reverses
A few days ago, according to data from the General Administration of Customs, in U.S. dollars, the trade surplus from January to December 2022 is 877.6 billion U.S. dollars, which makes South Korea who rely on manufacturing feel more anxious.
In 2022, South Korea exports to China were $155.81 billion, down 4.4 percent from $162.91 billion the previous year.
Since October 2022, South Korea's trade with China has experienced a rare continuous deficit, and its scale has continued to expand. Combined with other factors, South Korea is running an overall trade deficit for the first time since 2008.
For example, in the chip sector, China's imports of South Korea semiconductors have fallen sharply in recent years.
In the first half of 2023, South Korea semiconductor exports were only $43.93 billion, down 36.8 per cent year-on-year, while exports to China fell 36.5 per cent.
Among them, the most serious decline was in memory chips, with exports falling 49.7 per cent in the first half of the year, followed by system chips, down 17.5 per cent.
Semiconductors account for about 20% of South Korea's total exports and have a significant impact on South Korea exports and the overall economy.
according to the data released by china's general administration of customs,In the first half of 2023, China's imports of integrated circuits (including semiconductors) from South Korea totaled about 210 billion yuan, down 19.6 percent from a year earlier.
The Rise of China's Scientific and Technological Power
In the past, South Korea had a relative competitive advantage in LCD panels, smart phones, electric vehicles and new energy batteries, and China needed to import related products from South Korea.
Nowadays, with the rapid improvement of the competitiveness of Chinese enterprises, the market competitiveness and market share of Chinese enterprises in these fields are significantly ahead of the South Korea.
Not only has China's demand for South Korea-related products fallen sharply, but it is also competing with South Korea in the global market.
In the field of liquid crystal panels, Chinese companies have occupied 36% of the global market share in the scale of display industries such as liquid crystal panels and OLED, ranking first.
In 2021, the market share of panel manufacturers in mainland China was 41.5, and it further increased to 43% in 2022. In February 2023, it soared to 70%, while Japan and South Korea together were only 9%.
In the field of new energy vehicles and power batteries, the advantages of Chinese companies are more obvious.China currently accounts for more than 60% of the global market share of new energy vehicles and power batteries, while the market share of South Korea companies continues to decline.
In the first five months of 2023, China exported 1.933 million cars, an increase of 80 per cent over the same period last year, with a value of 266.78 billion billion yuan, an increase of 124.1 per cent over the same period last year.
In the field of smart phones, Samsung Electronics, a South Korea company, still ranks first in the global mobile phone market share. But in the Chinese market, Apple and Chinese mobile phone companies by the strong challenge.
At present, Samsung's market share in China has fallen sharply, from a high of 20% to less than 2% today.
In addition, the market share of Chinese enterprises in other fields is also increasing.
According to the "Nihon Keisai Shimbun" survey and analysis of the global market share of 63 key products and services in 2022, the share of Chinese companies in 18 industries including cutting-edge materials, electric vehicles and LCD panels has increased.
Among these 18 industries, there are 13 industries where Chinese companies account for more than 30%.
As the competitiveness of Chinese enterprises increases, China's demand for South Korea products decreases and imports decrease.At the same time, Chinese enterprises continue to squeeze the living space of South Korea enterprises in the global market.
Reasons for the Great Reversal of Trade between China and South Korea
China's demand for South Korea products is declining, while South Korea's demand for imports of Chinese products is growing,This is the most direct cause of the South Korea rare trade deficit between China and South Korea.
Moreover, this trend will likely continue or even expand further in the future.
Another key factor in China's reversal of trade between China and South Korea is its large domestic market. the rapid development of china's economy and the increase in consumption levels have created a huge demand for attracting foreign products.
This large-scale consumer group provides huge consumption potential and demand for the domestic market.
At the same time, the popularity of digital technology and the rise of e-commerce have also provided a strong driving force for the development of the Chinese market.
the second key for china in reversing sino-rok trade is to strengthen cooperation with other trade partners. China has actively participated in multilateral trade cooperation. For example, it has signed a series of free trade agreements and cooperation agreements with ASEAN, the European Union, the United States and other regions and countries.
china's cooperation with other countries has prompted South Korea enterprises to cooperate more with chinese enterprises,The two sides have achieved closer ties in technological research and development, innovation and industrial development, thus improving the pattern of trade between China and South Korea.
In addition, China's success in reversing trade between China and South Korea is also due to its firm trade policy. China has implemented a series of trade policies aimed at protecting its own industries.
These measures provide more development opportunities for China's local industries and gain more advantages in the global market competition. China's firm trade policy has forced South Korea companies that rely on the Chinese market to reassess their strategic positioning.
In general, the key to China's successful reversal of China-South Korea trade lies in building a strong domestic market, strengthening trade cooperation and diversification, and adopting a firm trade policy.
Through the interaction of these subjective factors, China has achieved a more favorable position in trade relations, making South Korea re-recognize the importance of China's bottom line.
China's successful experience has provided useful enlightenment for other countries, that is, to establish their own bottom line and take strong measures to safeguard national interests.
Make global trade unimpeded
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