"China's Economy Explodes Over 30 Years... Surpassing Korea in GDP, Exports, and National Competitiveness"

[Asia Economy Reporter Su-yeon Woo] As China's economy has repeatedly experienced explosive growth over the 30 years since the establishment of diplomatic relations between Korea and China in 1992, it has surpassed Korea in most economic indicators. To effectively respond to China's rapidly growing economy following its opening to the outside world, it is advised that Korea actively discover new growth engines and strive to enhance its potential growth rate.

On the 23rd, the Federation of Korean Industries (FKI) announced the results of a comparative analysis of the changes in economic and competitiveness gaps between Korea and China over the past 30 years, marking the 29th anniversary of Korea-China diplomatic relations. Over the past 30 years, China has surpassed Korea in terms of gross domestic product (GDP), export-import trade volume, national competitiveness, manufacturing, and corporate competitiveness.

China Significantly Outpaces Korea in GDP, Trade, and Investment Growth Rates

First, in nominal GDP, Korea grew about 4.6 times from $356 billion in 1992 to $1.631 trillion in 2020, whereas China surged approximately 29.9 times from $492 billion in 1992 to $14.723 trillion in 2020. As a result, the nominal GDP gap between Korea and China widened significantly from 1.4 times in 1992 to 9 times in 2020.

Nominal GDP per capita also increased about 3.9 times in Korea from $8,126 in 1992 to $31,497 in 2020, while China’s rose about 25.0 times from $420 to $10,484 in 2020. In 1992, China’s nominal GDP per capita was only 5.2% of Korea’s, but last year it caught up significantly to 33.3%.

In external sector indicators, China’s trade and investment growth rates greatly surpassed Korea’s. Korea’s export value grew 6.7 times from $77 billion in 1992 to $513 billion in 2020, while China’s exploded 65.1 times from $86 billion in 1992 to $5.598 trillion in 2020. In terms of total trade (exports plus imports), Korea’s trade volume in 1992 was similar to China’s, but by 2020, Korea’s trade volume was $981 billion, whereas China’s reached $7.658 trillion, about 7.8 times larger than Korea’s.

The gap in foreign direct investment (FDI) inflows between Korea and China also widened significantly. Korea’s FDI inflows increased about 9.2 times from $1.02 billion in 1992 to $9.224 billion in 2020, while China’s rose about 13.6 times from $11.08 billion to $149.324 billion, showing a higher growth rate than Korea. Outbound foreign direct investment (Outflow) also increased 23.6 times in Korea during the same period, while China’s grew 33.2 times.

China Surpasses Korea in National Competitiveness Ranking This Year... Gap in National Credit Ratings Narrows

Looking at the International Institute for Management Development (IMD) World Competitiveness Ranking, which comprehensively evaluates national competitiveness by analyzing various fields such as macroeconomics and infrastructure, Korea ranked 32nd and China 34th in 1994, showing similar levels. However, this year, China ranked 16th and Korea 23rd, with China surpassing Korea.

Both countries recorded remarkable growth in manufacturing competitiveness, but China’s growth was ahead. According to the United Nations Industrial Development Organization (UNIDO), which analyzes manufacturing competitiveness and assigns rankings to countries, the Competitive Industrial Performance (CIP) index ranked Korea 17th and China 32nd in 1990, but by 2018, China was 2nd and Korea 3rd, with China overtaking Korea.

The gap between Korea and China has also narrowed significantly in national credit ratings assigned by international credit rating agencies. In 1992, S&P rated Korea as A+ and has raised it two notches to AA this year, while China improved four notches from BBB to A+, reducing the gap between the two countries from four notches to two. Moody’s raised Korea two notches from A1 to Aa2 during the same period, while China improved three notches from Baa1 to A1, narrowing the gap from three notches to two.

China Trails in Corporate Competitiveness and Number of Top Export Items

China has also surpassed Korea in corporate and export competitiveness. Indicators showing the competitiveness of companies in both countries, such as the number of Fortune Global 500 companies and the number of items ranked first in global export market share, show China overtaking Korea. In 1995, Korea had 8 companies and China (including Hong Kong) had 3 in the Fortune Global 500, but this year Korea has 15 and China (including Hong Kong) has 135, with China far ahead.

In terms of the number of items ranked first in global export market share, Korea had 96 items in 1993 and China 322, with Korea at about 29.8% of China’s level. However, in 2019, Korea had 69 items and China 1,759, with Korea at only about 3.9% of China’s level. Notably, Korea’s number of top-ranked items decreased from 1993 to 2019, while China’s increased significantly, confirming the strengthening competitiveness of Chinese companies.

In the number of global top 1000 R&D investing companies, Korea increased from 19 in 2006 to 25 in 2019, a 1.3-fold increase, while China surged from 4 to 168 during the same period, a 42.0-fold explosion.

Kim Bong-man, head of international cooperation at FKI, said, "Korea should take China’s rapid growth as a lesson and strive for sustainable growth through expanding economic exchanges with China and entering emerging markets such as Southeast Asia. The government and companies must work together to improve Korea’s potential growth rate by reforming regulations that hinder innovative industries, restructuring the labor market, and actively entering the Fourth Industrial Revolution sectors."

This content was produced with the assistance of AI translation services.