South Korea Sees Smallest Export Gap with China and U.S. Since 2003

The difference between South Korea’s exports to China and the United States narrowed to $5.2 billion last year, the smallest gap in 21 years.

Last year, the gap between South Korea’s exports to China and the United States narrowed to $5.2 billion, marking the smallest difference in 21 years. This significant shift in trade dynamics is attributed to decreased exports to China and increased exports to the United States, reflecting broader changes in the global supply chain and economic policies.

According to the Korea International Trade Association on Jan. 6, South Korea’s total exports to China last year amounted to $133.026 billion, ranking first among all countries. This figure represents a decrease compared to 2023. Meanwhile, exports to the United States increased by 10.45% to $127.791 billion, making it the second-largest export destination after China. The association noted, “Exports to the United States have set new records for seven consecutive years until last year and have continued positive growth for eight consecutive years.”

The gap between South Korea’s exports to China and the United States was calculated to be $5.235 billion, the narrowest gap since 2003, when it was $891 million. This is a stark contrast to the record high gap of $89.405 billion in 2018. Exports to China reached a peak of $162.9 billion in 2021 but then decreased to $155.7 billion in 2022, $124.8 billion in 2023, and $133.0 billion in 2024.

The decrease in exports to China is primarily due to sluggish domestic demand and an increase in the self-sufficiency rate of intermediate goods, which altered the trade structure between South Korea and China. On the other hand, exports to the United States have significantly increased, driven by the reorganization of the global supply chain and the expansion of South Korean conglomerates in advanced industries.

Notably, exports of major items to the United States such as automobiles (8.2%), semiconductors (122.8%), general machinery (3.6%), and computers (196.8%) showed significant growth. Domestic conglomerates like Samsung, SK, Hyundai, and LG have expanded their investments in advanced industries such as semiconductors, secondary batteries, and electric vehicles in the United States, leading to an increase in exports of related machinery and intermediate goods.

South Korea’s economic development has been heavily dependent on exports, which play a crucial role in its GDP. Since the normalization of diplomatic relations in 1992, China has become South Korea’s largest trading partner, characterized by the export of intermediate goods and components used in manufacturing finished products. However, the global supply chain has been undergoing significant changes due to trade tensions, technological advancements, and geopolitical shifts, leading countries to diversify their trade partners.

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