South Korea's share in the Chinese import market is weakening, likely to fall to under 10 percent this year despite strong exports to the neighbor country led by semiconductors and petrochemicals, trade data showed Tuesday.
Statistics from the Korea Center for International Finance, data firm CEIC and the trade industry said South Korean products accounted for 9.4 percent of China's imports in monetary terms for the January-August period this year.
South Korea's market share in Chinese imports had increased from 9.3 percent in 2011 to 9.4 percent in 2013 and to 9.7 percent in 2014. It passed the symbolic 10 percent mark in 2015 to reach 10.4 percent and hit 10 percent in 2016. Trade analysts say that given this year's data so far, the market share is unlikely to maintain the 10 percent level.
Economic relations between the two countries have been shrinking from a diplomatic fallout as China retaliates against South Korea's deployment of a U.S. anti-missile defense system on its soil. China insists that the deployment threatens regional security and worries that the system will monitor its missile movements.
China last year accounted for 25.1 percent of South Korea's exports. The figure for the January-August months this year was 23.5 percent. If Hong Kong is counted, the fall is even greater, from 31.7 percent to 25.6 percent, according to the data.
The data goes against the umbrella statistics that show South Korea's exports to China gained 12 percent in the first eight months of this year, pushed by semiconductors and petrochemicals, whose exports prices rose nearly 20 percent. Analysts say the increase is mostly from the base effect of exports to China dipping for the past three straight years. This year's exports, despite the gain, would be lower than that of 2014 if the current pace continues, the data indicates.
According to the analysts, the contractions are due to China's growing self-sufficiency and a move away from processing trade. The proportion of Chinese companies in China's exports rose to 57.3 percent in the January-July period this year from 44.7 percent for the whole of 2008. Comparatively, the proportion of processing trade has been falling every year since 2005.
"Chances are slim that South Korea's exports to China will maintain double-digit increases," Lee Chi-hoon of KDIF said. "Key exports to China are heavily concentrated in certain items like semiconductors. If trade conditions for these items change, then the risks become bigger." (Yonhap)