Korea to reduce export dependence on China
The government will mobilize utmost efforts to fine-tune export strategies, under a broader goal of fortifying Korea’s trade balance which is showing signs of a greater-than-expected deficit, according to nine economy-related ministries, Wednesday.
Chief among the objectives is strengthening the overseas expansion of 15 growth-driving local manufacturing industries, including a close and continued follow-up of the 26 memorandums of understanding (MOUs) signed between Korea and Saudi Arabia. The Middle Eastern country signed investment deals with Korean businesses amounting to about 40 trillion won ($29 billion), as reaffirmed by the country’s prime minister and Crown Prince Mohammed bin Salman during his visit to Korea last week. Infrastructure minister Won Hee-ryong said Monday that trillions of won in joint business projects will be announced before the year’s end.
Tailored strategies will bolster the country’s exports to key trade partners — the U.S., China and the Association of Southeast Asian Nations (ASEAN), a political and economic union of 11 member states in Southeast Asia. Combined exports to those regions account for 57 percent of Korea’s total outbound shipments.
Countries in the Middle East, Central and South America as well as Europe do not generate as much export income for Korea. However, the regions in need of high-tech and cost-efficient defense, energy and infrastructure building projects are of an even greater strategic importance to Korea, the ministries said.
Korea Customs Service data showed the country’s exports in the first 20 days of November stood at $33.1 billion, a 16.7 percent year-on-year decrease, pushing up the year-to-date trade deficit to $39.96 billion as of Nov. 20. The sustained grim developments in the country’s trade balance brought on by supply bottlenecks and surging energy prices will end up as a record-high trade deficit of $40 billion this year, the greatest since the trade deficit of $20.6 billion in 1996 shortly before the Asian financial crisis. Tailored approach
“Korea is best known for its heavy reliance on exports,” President Yoon Suk-yeol said during a meeting attended by nine economy-related ministers. “The government will provide all possible assistance to advance the efforts of the country’s exporters.”
Korea will diversify trade partners in the ASEAN region, away from consumer goods-centered Vietnamese markets to include Indonesia and Thailand.
A greater number of local firms will be able to seek growth opportunities in the U.S., mostly through large-scale green and supply chain projects.
The government will outline policy responses to help local firms better prepare against rapid and unexpected developments in trade conditions, as illustrated by the U.S. Inflation Reduction Act (IRA) and China’ export curbs on Korean-made parts and materials for semiconductor manufacturing.