[The INVESTOR] Korea’s exports to China will continue to decline on account of a change in China’s economic structure, a Bank of Korea report said on July 15.

The central bank report noted that Korea needs to adjust its own economic structure to meet changing demands in the world‘s second-largest economy.

The country’s exports to China are expected to shrink by an average US$5 billion per year over the next five years, it estimated.

Such an outlook comes as China is increasingly focusing on its domestic market as a source of growth.

Assuming China’s domestic consumption will continue to grow, accounting for 57.3 percent of its gross domestic product in 2020, up from 52.3 percent in 2015, the report estimates Korea’s exports to China will shrink $23 billion over the 2016-2020 period.

An additional $2 billion will be lost in shipments to third countries via China over the cited period as China’s own exports are expected to shrink to 20.1 percent of the GDP from 22.1 percent in 2015, the report said.

The anticipated cut in shipments to China raises alarm for Korea as China is the world’s largest importer of Korean goods, meaning a drop in shipments to China may hurt the country’s overall exports.

In the first six months of the year, Korea’s total exports plunged 10 percent from the same period last year as its shipments to China dropped every single month, tumbling 9.4 percent on-year in June alone, the trade ministry said earlier.

“The country must actively seek to explore China‘s fast growing consumer market that will increasingly make up a greater part of China’s economy,” the report said.

(theinvestor@heraldcorp.com)