Jew World Order

The Chinese market, including Hong Kong, accounts for 33% of Korea’s total trade, but several distinct trends can be identified in the two countries’ economic relations.

The first trend is the development of economic cooperation in several areas.

For example, on December 22, 2021 South Korea’s SK Hynix received Chinese approval to buy Intel’s NAND memory chip division in Dalian, China.

On July 13, 2022 the ROK and China held talks on strengthening cooperation in services and investment under the bilateral Free Trade Agreement (FTA). The two sides discussed the possibility of opening up mutual markets for services and increasing investments.

On July 26, 2022 LG Energy Solutions said it had signed a joint venture agreement with Chinese mining company Zhejiang Huayou Cobalt Co. The joint venture will build two plants to recycle used and damaged batteries to recover key components and raw materials for reuse.

On August 24, 2022, during a business forum in Seoul to mark the 30th anniversary of diplomatic relations, Chinese Premier Li Keqiang called for rapid progress in talks with South Korea, describing the two countries as inseparable neighbors who must “maintain mutual trust and be at peace with each other” to protect supply chain stability.

In 2021 South Korea’s semiconductor exports to China reached the highest level in two decades, with mainland China and Hong Kong accounting for 60% of the total of $128 billion.

The second trend is that China is overtaking the ROK in some areas and the percentage share of Korean exports to China is declining: from 26.8% in 2018 to 25% in 2021 and 23.2% in the first six months of 2022, the lowest figure since 2009.  Meanwhile, in absolute numbers, the volume is growing: according to the Korea Customs Service, Korea’s total exports to China will reach $301.5 billion by 2021, up from $6.3 billion in 1992.

This also includes the fact that for the first time since 1994 the ROK is running a trade deficit with China. In May 2022, it stood at $1 billion 100 million. The deficit results from the rising imports and stagnating exports.

In August 2022, South Korean shipbuilders ceded leadership of the global market to China. According to data provided by global shipbuilding market researcher Clarkson Research Service, orders received by shipbuilders in the South accounted for 41% of the global total. First place went to China, whose share was 54%.

South Korean manufacturers of batteries for electric vehicles are also losing ground to Chinese competitors. Between January and May 2022 the combined share of LG Energy Solution, Samsung SDI and SK On fell by 9.1% to 25.6%. LGES ranks second with a share of 14.4%. SK On took fifth place and Samsung SDI sixth. China’s CATL and BYD are ranked first and third.

The third trend is the fear that the PRC economy is slowing down and it will have an indirect impact on the ROK economy. For example, the Hyundai Research Institute estimates that if China’s growth rate falls by 1%, South Korea’s growth rate will shrink by 0.5% (). The Korea Times also expects that “not only large conglomerates, but also small and medium-sized local producers of semifinal and final goods relying on China for parts import are expected to feel the pinch of the acute disruptions to global value chains.” According to the newspaper article, “Korea should diversify trading partners and establish viable alternate supply methods to reduce the immense current dependence on China”.

Such considerations are quite often compounded by the idea that, amid a future inevitable clash between the US and the PRC, Seoul will have to look for options to replace supply chains when the ROK’s commitment to the US line will trigger another round of sanctions. This is very much the case for rare earth elements, as China accounted for 58.9% of South Korea’s imports in 2020, according to KITA.

The fourth trend is the problems for South Korean businesses due to China’s coronavirus policy, where at the first signs of the disease there is an immediate lockdown that hits South Korean companies’ operations in China. According to the Korea International Trade Association (KITA), 88.1% of Korean companies operating in China have been affected by strict anti-COVID measures: China’s quarantine measures have had a negative impact on their business, causing disruptions in transportation, sales, marketing and supply chains.

A typical example: on December 24, 2021 the Samsung Electronics Co. factory in Xi’an, China, went into emergency mode as the Chinese authorities imposed a lockdown. The company had relocated workers to a dormitory at the factory in advance, so the emergency measure had no effect on production, but the lockdown did not end until January 26.

In March 2022, several South Korean cargo ships were detained in the port of Shanghai because of a strict lockdown. Most businesses, markets and shops shut down and the residents of the city of 25 million were told to stay at home. Roads and railways leading to the port of Shanghai were also blocked. Following this, on April 29, ROK Minister for Trade Yeo Han-koo specifically asked Beijing to support the reopening of South Korean factories suspended due to quarantine.

However, political risks associated with the US-China conflict add to quarantine risks and, of 131 companies with more than 10 years of business presence in China, 85.5% said their investment conditions had deteriorated compared to a decade ago. The reasons include Chinese government regulations, discrimination in favor of local firms and a growing trade feud between the US and China. The consequence – according to a report by the Korea International Trade Association – is that some of South Korea’s biggest enterprises, including Samsung, LG and Hyundai Motor, have sold assets in recent years and moved production from mainland China to Southeast Asian countries such as Vietnam, Indonesia or India.

The bottom line is that the relationship can be characterized as “hoping for the best, preparing for the worst” and, judging from the two quotes below, Seoul is at a crossroads. On the one hand, during Yoon Suk-yeol’s visit to the NATO summit, Presidential Secretary for Economic Affairs Choi Sang-mok told reporters that “the era of booming exports of the past 20 years via China is coming to an end” and “we need substitute markets and diversification.” On the other hand, Chey Tae-won, chairman of the Korean Chamber of Commerce and Industry (KCCI), points out that China is a much larger market and it is too early to decide whether to stop doing business in China.

Apparently, the political situation will determine everything.

Konstantin Asmolov, PhD in History, leading research fellow at the Center for Korean Studies of the Institute of China and Modern Asia, the Russian Academy of Sciences, exclusively for the online magazine “New Eastern Outlook”.

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