Finance & Economics

US Overtakes China as South Korea’s Top Export Market

In December, shipments of goods produced by South Korean companies to the United States exceeded exports to China.

US Overtakes China as South Korea’s Top Export Market

The mentioned result in terms of the ratio of the scale of Seoul’s trade interaction with other countries was recorded for the first time in two decades. These indicators are evidence that changes are taking place in the economic space due to the tension in the sphere of geopolitical relations. In the current reality, many countries are striving to ensure financial security. The unfavorable state of affairs in the international political arena also contributes to changing technological supply chains.

The total value of goods from South Korean manufacturers, that were sold in the United States in December, was $11.3 billion. The same indicator of Seoul in the Chinese market is equal to $10.9 billion at the end of last month. The relevant information was published on Monday, January 1, by the Ministry of Trade, Industry and Energy of South Korea.

The total volume of exports from the mentioned country increased by 5.1% year-on-year in December. This indicator shows a positive dynamic for the third month in a row.

Also, some changes in the main export directions in the activities of South Korean manufacturers are partly due to the problems in the Chinese economic system. Against the background of the negative situation, Beijing was forced to take incentive measures. At the same time, it should not yet be argued about a steady change in the main export direction of manufacturers from South Korea. Data for one month may be a signal not of the beginning of a new trend, but of what can be described as a short-term phenomenon. If the volume of supplies from this country to the United States exceeds export data for other international destinations in the next few months, there will be sufficient reason for statements about a steady change in Seoul’s trade structure.

Despite the December result, China continues to be South Korea’s largest trading partner. It is also important that Seoul imports many goods from the world’s second-largest economy. The leadership of South Korea declares that the volume of supplies of goods to China continues to demonstrate positive dynamics.

Trade relations between Seoul and Washington are also improving. Exports of goods from South Korea to the United States have shown growth for the fifth month in a row.

Seoul’s total imports decreased by 10.8% year-on-year in December. South Korea’s trade surplus increased last month to $4.5 billion.

Washington is currently taking measures aimed at reducing the level of dependence on Beijing in the global supply chain. The United States is also trying to contain China’s technological potential. These efforts have already been implemented in the form of restricting the access of companies from the Asian country to advanced semiconductor technologies.

The specified actions of the United States create a negative situation for Japan and South Korea, which are forced to observe the tension in relations between Washington and Beijing, their main trading partners. If the current state of affairs worsens, Seoul and Tokyo will face the costs of a geopolitical confrontation. It should also be noted that Japan and South Korea are military allies of the United States.

Seoul is currently strengthening cooperation with Washington. South Korean President Yoon Suk-yeol visited the United States last year, where he held meetings with American President Joe Biden and Congress, declaring closer ties with the US.

Washington and Seoul signed a free trade agreement, which came into force in 2012. South Korea benefits from the fact that the United States restricts the use of batteries and other products manufactured in some countries, including China.

Beijing, against the background of Washington’s actions, is increasing domestic production. China is currently focusing on making smartphones and semiconductors. These efforts have already led to a significant increase in sales of products from local manufacturers in the market of this country and a decrease in consumer interest in goods from companies from other countries.

As we have reported earlier, South Korea’s Nand Flash Memory Chip Exports Show Growth.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.