The Korea Herald


BOK-KCCI seminar explores impact from US-China rivalry

Korean businesses urged to reduce reliance on China for exports, diversify target markets

By Song Seung-hyun

Published : Nov. 1, 2023 - 15:54

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Chey Tae-won, chairman of the Korea Chamber of Commerce and Industry, delivers opening remarks at the Bank of Korea and KCCI's joint seminar held at the Bank of Korea's conference hall in Seoul on Wednesday. (Yonhap) Chey Tae-won, chairman of the Korea Chamber of Commerce and Industry, delivers opening remarks at the Bank of Korea and KCCI's joint seminar held at the Bank of Korea's conference hall in Seoul on Wednesday. (Yonhap)

Korea Chamber of Commerce Industry Chairman Chey Tae-won, who also doubles as SK Group chairman, called for Korean companies to explore new markets beyond the US and China during a seminar jointly hosted by the Bank of Korea and the KCCI.

"The conflict between the US and China, upon which our country heavily relied, is significantly disrupting our exports," Chey said in his opening remarks.

"It is imperative for us to now turn our attention to smaller markets that we previously overlooked," he added.

Chey further emphasized that these new markets possess their own distinct characteristics, and that the same products which were traditionally exported to major markets like China may not be effective.

Over 200 attendees from the business, academic and government sectors attended the seminar, including BOK Gov. Rhee Chang-yong, KCCI Chairman Chey and Trade Minister Ahn Duk-geun.

During the seminar, Rhee, who acted as the moderator for a discussion session with Lee Jong-hwa, a professor of economics at Korea University, addressed the shift away from heavy reliance on China for exports.

Rhee conveyed to Trade Minister Ahn the importance of government assistance for domestic businesses seeking to exit China.

"There are numerous legal issues, including tax-related matters, that need to be resolved when Korean firms try to exit China," Rhee stressed.

Rhee also emphasized that one of his major concerns revolved around international oil prices.

"We had initially predicted international oil prices to be around $84 per barrel, so any increase to $90 could lead to significant changes in our forecasts," Rhee said.

Rhee added that there is particular concern regarding the extended occupation of the Gaza Strip by Israel, as this situation could potentially have adverse effects on the domestic economy.

As keynote speaker, Professor Lee also delved into the multitude of challenges confronting the Korean economy.

"Korea's economy is grappling with a trio of issues -- namely low growth, income and wealth inequality, and inflation and financial instability,” Lee said.

He further highlighted that international factors, such as high interest rates, geopolitical divisions and the specter of war, have compounded Korea's challenges.

In particular, Lee underscored the vulnerability of the Korean economy, which has deep economic, political and diplomatic ties with the US and China.

To mitigate risks, Lee stressed the importance of securing a robust supply chain for components and raw materials, diversifying export markets and fostering the high-value-added services industry. The professor also emphasized the pivotal role that business leaders and policy authorities must play during this tumultuous and uncertain period for the Korean economy.

"This is a moment that demands comprehensive reforms across the realms of human resources, technology, institutions, and policies," Lee said.

Kim Kyung-hoon, a researcher of KCCI think tank Sustainable Growth Initiative, presented an analysis of the impact of the US-China trade dispute on the Korean economy.

It was revealed that if the domestic production rate of intermediate goods in both countries -- the US and China -- were to increase by 1 percent, Korea's intermediate goods production rate would decrease by 0.14 percent annually, Kim said.

In particular, to bolster the competitiveness of the Korean semiconductor industry, it is important to establish a competitive position within the US-led chip alliance known as "Chip 4" or "Fab 4," comprising the US, Japan, Taiwan and South Korea.

“Especially in the face of strong competition from Taiwan, proactive measures are essential,” Kim said.

Meanwhile, Park Yang-su, head of the KCCI Sustainable Growth Initiative think tank, hinted at the possibility of a similar seminar being held next year.

"In the upcoming year, we will put our efforts into transforming the BOK-KCCI Seminar into a platform for collaboration and synergy aimed at fostering a national sustainable development strategy,” Park said.