[30 Years of Korea-China Diplomatic Relations] ① 1·3·6·47·80... Korea-China Relations Seen Through Numbers

Korea's Top Trading Partner... Trade Deficit with China Continues Recently
China's Trade Share Increased Sixfold in 30 Years... Trade Volume Up 47 Times

Minister Park Jin Attends Korea-China Foreign Ministers' Meeting
(Seoul=Yonhap News) Minister of Foreign Affairs Park Jin is meeting with Wang Yi, State Councilor and Foreign Minister of China, on the 9th at the Jimo District, Jimo Goseong Gunran Hotel in Qingdao, China. August 9, 2022. [Provided by the Ministry of Foreign Affairs. Redistribution and DB reproduction prohibited]
Photo by Yonhap News
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[Asia Economy Sejong=Reporter Lee Jun-hyung] Over the 30 years since establishing diplomatic relations, South Korea and China have developed a close economic and trade relationship with remarkable growth, but have also experienced various conflicts due to geopolitical limitations. On the occasion of the 30th anniversary of Korea-China diplomatic relations, we have selected key figures symbolizing the still "close yet distant" relationship between the two countries. [Related Article] '30 Years of Korea-China Diplomatic Relations'

1st

China is South Korea's number one trading partner. Since surpassing the United States in 2003 to become South Korea's largest trading partner, China has maintained its position as the top trading partner and export destination until last year. From China's perspective, the trade volume with South Korea is also significant. According to China's customs authority, the General Administration of Customs, South Korea was China's third largest trading partner last year. The first was the United States, and the second was Japan.

3 months

The trade balance with China recorded a deficit for three consecutive months from May to last month this year. This is the first time in 30 years since August to October 1992 that a trade deficit with China has lasted for three months. This indicates that the recent Korea-China trade situation is quite serious.

There is also a possibility that the trade deficit with China will continue for a long time. According to the Korea Customs Service, the trade balance with China from the 1st to the 10th of this month showed a deficit of 890 million dollars. If the trade deficit with China continues through this month, it will be the first time since the establishment of diplomatic relations in 1992 that a deficit has lasted for four consecutive months.

6 times

Last year, trade with China accounted for about 24% of South Korea's total exports and imports (1.2596 trillion dollars), which is six times higher than the 4% share in 1992, 30 years ago. The share of China in South Korea's exports first exceeded 25% in 2010 and has remained between 24% and 26% until last year.

However, the share of exports to China has been declining for several years. The proportion of China in South Korea's total exports decreased by 3.6 percentage points from 26.8% in 2018 to 23.2% in the first half of this year. This is problematic because South Korea's export-driven economy has become vulnerable to China's economic slowdown. China's economic growth rate of 0.4% in the second quarter of this year is cited as one of the reasons why South Korea's trade balance recorded a deficit for four consecutive months for the first time in 14 years since 2008. The Bank of Korea estimates that for every 1 percentage point drop in China's economic growth rate, South Korea's economic growth rate could decrease by 0.1 to 0.15 percentage points.

47 times

Last year, the Korea-China trade volume was approximately 301.53 billion dollars. Considering that the trade volume between the two countries was 6.38 billion dollars in 1992 when the Korea-China diplomatic agreement was signed, the trade scale has increased about 47 times over the past 30 years. Last year's Korea-China trade volume exceeded the combined total of the second largest trading partner, the United States (169.12 billion dollars), and the third largest, Japan (84.7 billion dollars), by 47.71 billion dollars.

South Korea's investment in China also increased about 48 times from 138 million dollars in 1992 to 6.679 billion dollars last year. During the same period, China's investment in South Korea surged about 1,788 times from 1.056 million dollars to 1.88824 billion dollars.

80%

China is not only one of South Korea's major trading partners but also a representative "export base." The trade balance with China has recorded a surplus for 29 consecutive years from 1993, the year after diplomatic relations were established, until last year. At one point, about 80% of South Korea's trade surplus came from trade with China.

However, the size of the trade surplus with China has been declining since the THAAD (Terminal High Altitude Area Defense) incident in 2016. Last year's trade surplus with China was 24.3 billion dollars, which is more than a 50% decrease compared to 55.6 billion dollars in 2018.