BOK Says "If China's Economy Slows, Exports to China Will Be Negative"

Structural Characteristics and Implications Analysis of Mass Export

[Asia Economy Reporter Jang Sehee] An analysis has emerged that a slowdown in the Chinese economy would have a negative impact on South Korea's exports to China.

The Bank of Korea (BOK) released a report titled 'BOK Issue Note: Structural Characteristics and Implications of Exports to China' on the 3rd.

In the report, BOK stated, "In the short term, a slowdown in the Chinese economy will inevitably have a negative impact on our exports to China," adding, "The magnitude of the shock to our exports to China may vary depending on which sector experiences the slowdown in China's growth."

It also analyzed that "It is expected to be difficult for exports to China to drive rapid growth in our exports as they did in the past by expanding trend-wise."

This can be observed through structural characteristics such as stagnation in total export volume and the proportion of intermediate goods exports.

In the case of semiconductors, South Korean companies have maintained technological competitiveness, while demand for semiconductors in China showed a rapid increase. The share of semiconductors in South Korea's exports to China surged from 15.1% in 2010 to 31.2% in 2020.

By processing stage, most of South Korea's exports to China consist of intermediate goods. As of last year, the share of consumer goods in South Korea's exports to China was very low at 3.8%, while intermediate goods accounted for 80.6%. A significant portion of these intermediate goods is utilized in the production of China's final export products.

Regarding this, BOK analyzed that due to rising labor costs in China and the prolonged US-China trade conflict, multinational companies including South Korean firms are continuously relocating production bases from China to Southeast Asia, India, and other regions. Furthermore, it noted that China's efforts to improve self-sufficiency are spreading even to high value-added products.

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