In a report Wednesday, KITA researchers said, “We need to take action,” claiming that if the US unilaterally imposes trade sanctions against China -- and if a full-scale trade dispute is sparked, the economic battle between the two economies is likely to have an indirect impact on the Korean market.
Korean companies that export a bulk of their intermediate goods to China for re-export to other destinations could experience negative backlash if China’s exports to the US decline, the report said.
US President Donald Trump on Monday authorized the US trade representative to investigate allegations regarding China’s decadeslong intellectual property infringements against the US and its allies.
The Trump administration claims that the monetary sum behind China’s intellectual property theft could be as high as $600 billion.
Pending the results of the US Trade Office’s investigation, KITA’s report states that the US could choose to enforce Section 301 of the US Trade Act, which allows the president to take any appropriate action against a foreign government that violates an international trade agreement, in order to retaliate against China and slap additional duties and restrictions against its imports.
According to the Bank of Korea, if China’s export to the US declines by 10 percent, Korea’s total exports will also fall by 0.25 percent due to the decline in demand for intermediate goods in China.
If China’s trade with the US falls, China’s economic growth will hit a downturn, which will result in a mass decrease in exports not only for Korea, but all countries that are highly dependent on exports to the US and China.
China is one of Korea’s largest overseas markets, with trade experts here saying Korea is over-dependent on the country. KITA researchers say the only way for Korea to combat this issue is for it to further diversify its export markets.
However, Korea is already in the middle of its own political and economic battle with China, with a continuing spat over the deployment of the US’ Terminal High Altitude Area Defense anti-missile system here.
According to data compiled by KITA earlier this month, Korean products accounted for 9.4 percent of China’s import market in the first half of the year, the lowest in three years amid China’s continued blacklisting of Korean companies and goods.
By Julie Jackson (email@example.com)