Despite Trade Deficit... Strengthening Competitiveness of Korea's 13 Key Export Items

During the Pandemic, South Korea's 13 Major Export Items Market Share Increased by 0.22%p
Global Ranking Rises to 4th Place
"Need to Expand Technological Gap in Advanced and New Industry Sectors"

[Asia Economy Reporter Han Yeju] Despite the slowdown in exports this year, the export competitiveness of the '13 major key items' has been found to have strengthened. The 13 major key items refer to semiconductors, automobiles, steel, home appliances, and others.

The Korea International Trade Association (KITA) International Trade and Commerce Research Institute announced a report titled "Diagnosis of the Competitiveness of Korea's Key Export Items Before and After the Pandemic" on the 22nd.

According to the report, the global market share of Korea's 13 major key items increased by 0.22 percentage points during the pandemic period of 2020-2021, rising one rank to 4th place worldwide. Korea's 13 major key items account for 75% of Korea's total exports and 46% of global trade, representing major export product groups.

KITA analyzed that the expansion of the global market share of the 13 major key items during the pandemic was driven by the recovery of global import demand and the improvement of export competitiveness in some items.

By factor, it is estimated that exports increased by $47.6 billion due to global import demand, $11.3 billion due to strengthened export competitiveness, and $10.1 billion due to responses to global market product composition. The items with improved export competitiveness were six products: ships, computers, flat panel displays, petrochemicals, automobiles, and petroleum products.

After the pandemic, in 2022, Korea's export competitiveness was maintained in its two largest export markets, China and the United States. Based on data from January to August this year, Korea's 13 major key items maintained 2nd place (15.13%) in China's import market, rising 0.34 percentage points compared to 2021. In the U.S. import market, Korea's share of the 13 major key items has maintained 5th place for three consecutive years since 2020, with this year's U.S. import market share increasing by 0.14 percentage points from the previous year to 5.61%.

Analyzing exports of the 13 major items from April to August, when Korea's exports to China began to decline significantly, the export slowdown during this period was found to be more due to a contraction in import demand from the export destination countries rather than a weakening of export competitiveness.

Due to the sharp drop in China's import demand, exports of the 13 major items to China decreased not only for Korea but also for other major countries. According to the analysis, among Korea's export decrease to China from April to August ($4.48 billion), the decrease caused by changes in China's import demand was $5.65 billion, accounting for 126% of the total. The steady increase in U.S. imports acted as a positive factor for all major exporting countries, and Korea's export increase to the U.S. was also driven by U.S. import demand.

Jung Manki, Vice Chairman of KITA, stated, "The recent seven consecutive months of trade deficits are due more to the contraction of import demand from major export destinations such as China and the sharp increase in Korea's energy import costs than to a weakening of our export competitiveness," adding, "Korea, which depends on China for a quarter of its exports, must prepare for the possibility that China's import demand contraction may become structurally entrenched."

He continued, "To establish an export structure resilient to global external shocks, it is necessary to diversify the current export portfolio, which is concentrated with one-fifth of total exports in semiconductors, strengthen core technological capabilities in advanced fields such as semiconductors, and implement a super-gap strategy in new industries such as electric vehicles and secondary batteries," he emphasized.

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