Korea’s export reliance on US, China still high despite diversification efforts: experts

Shipping containers are piled up for export at a port in Busan in this photo taken in September 2023. Yonhap

Korea is still heavily reliant on the United States and China regarding exports although the level of reliance has been reduced recently, according to experts.

The experts urged Korea to speed up the diversification of its export destinations, noting that trade protectionism in both the U.S. and China has been growing and that these actions add additional concerns regarding the increasingly fragile global supply chain.

In its recently published report containing summaries of various government policies and legislation, the National Assembly Research Service pointed out that the U.S. and China combined accounted for 40.4 percent of Korea’s total exports in 2020.

The rate dropped to 37.9 percent in 2023. Nevertheless, Korea is ranked second after Canada among the world’s top 10 exporting countries when it comes to dependence on a handful of countries for outbound shipments.

“In that regard, Korea is being urged to lower such a rate considering that the world’s two greatest economies are increasingly 스포츠토토존 advocating protectionism and that Korea is highly exposed to risks concerning the fragile supply chain,” the National Assembly Research Service said.

It suggested capitalizing on the popularity of Korean pop culture to further diversify its export markets in Southeast Asia, the Middle East as well as Central and South America.

Ku Ki-bo, a professor at Soongsil University’s Department of Global Commerce, echoed similar sentiments.

“Cosmetics and other beauty products used to rely on China too much in the past, and expanding other export routes is crucial considering China’s weaponization of trade,” the professor said.

Baek Chul-woo, a professor at Duksung Women’s University’s Department of Commerce, said “a closer link between the economy and national security makes securing a diverse set of export channels essential for a country’s sake.”

In the meantime, he favorably evaluated the higher level of sales concerning major export items such as semiconductors to the U.S. over China.

He noted that Korea’s ratio of exports to the U.S. went up from 14.5 percent in 2020 to 18.3 percent in 2023, while those to China went down from 25.9 percent to 19.7 percent over the same period.

“The shift from China to the U.S. on exports can be regarded as a part of broader export diversification efforts,” the professor said.

The Ministry of Trade, Industry and Energy deemed Korea’s reliance on the U.S. and China as not being too worrisome, arguing that it is the result of a search for bigger markets.

Exports and private spending are the twin engines of Korea’s economic growth. The outbound shipments in 2024 are anticipated to grow 9 percent as it is rebounding from sluggish performance last year when it shrank 7.5 percent.

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