80% of Export Companies to China Say "Export Recovery Difficult Within This Year"

"Only After 2-5 Years" 40%... "Only Next Year" 27%

As the trade deficit with China has continued for seven consecutive months, export companies have expressed the view that 'it will be difficult for the downward trend to reverse within this year,' citing concerns over the weakening competitiveness of domestic products due to China's improved technological self-reliance as a fundamental issue.

The Korea Chamber of Commerce and Industry recently conducted a survey on 'Perceptions of the sluggish exports to China among 300 Chinese export companies.' Half of the export companies (50.7%) responded that 'they have felt a contraction and sluggishness in exports to China since the beginning of this year.' This figure is three times higher than those who answered 'do not feel it' (‘do not feel’ 15.7%, ‘do not feel at all’ 2.3%).

Regarding the 'timing of export recovery,' the largest group of companies (40%) predicted that 'recovery will only occur 2 to 5 years later,' followed by 'recovery possible next year' (27.3%), 'recovery to previous levels will be difficult due to China's industrial structure advancement and technological improvement' (17%), and 'recovery possible within this year due to visible effects of China's reopening' (15.7%). Overall, 84.3% of companies anticipated that recovery of exports to China within this year would be difficult.

The Korea Chamber of Commerce and Industry stated, "The sluggish exports to China are due to a combination of short-term factors such as semiconductor price declines and increased inventory levels of Chinese companies, along with structural factors like the rise in self-sufficiency of intermediate goods previously imported from Korea," adding, "Rather than relying solely on semiconductor price increases and the effects of China's reopening, attention should be paid to the stagnation trend in exports to China observed over the past decade."

In fact, companies felt threatened by China's rapid technological growth. Regarding the 'technological competitiveness gap with Chinese companies as perceived by companies,' 40.3% answered 'similar level' (36.6%) or 'lagging behind' (3.7%). The response that China is ahead was more common within '3 years' (38.7%) than the combined responses of 'within 5 years' (15%) and 'more than 5 years' (6%), totaling 21%. This reflects a sense of crisis that the golden time to maintain or widen the technological competitiveness gap with China is only three years left.

Regarding the 'expected technological growth speed of Korea and China over the next five years,' many companies predicted that 'China's growth speed will surpass Korea's (41.3%) or be similar (35%).' Only 23.7% responded that Korea's growth speed would surpass China's.

Companies also expressed concerns about the recent 'Guochao (國潮, patriotic consumption)' trend sweeping China. When asked whether they felt a decrease in preference for Korean products and intermediate goods due to the Guochao trend, one in three responding companies answered 'yes' (‘strongly yes’ 7.7%, ‘yes’ 25%). Those who answered 'do not feel it' (‘do not feel’ 28%, ‘do not feel at all’ 3%) accounted for 31%, and those who answered 'neutral' were 36.3%.

When asked which country is the most attractive export market to replace China, the responses were 'ASEAN' (37.3%), 'India' (31.7%), 'United States' (12.7%), and 'Middle East' (9%), in that order.

Woo Tae-hee, Executive Vice Chairman of the Korea Chamber of Commerce and Industry, emphasized, "With the intensification of US-China conflicts and experiences of COVID-19 lockdowns, the shift of global production bases away from China is accelerating, and China's self-sufficiency is expanding to advanced industries and high value-added items," adding, "Alongside short-term policies that can expedite the transition to a trade surplus, structural measures that can revamp overall export and industrial competitiveness?such as upgrading core manufacturing industries and sharing risks in technological investments in advanced industries?must be prepared simultaneously."

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