South Korea reported a trade deficit for the 13th straight month in
March, the first time in 25 years, as exports remained weak due to
the sluggish chip industry and shipments to China declined.
According to data released by the Ministry of Trade, Industry and
Energy on Sunday, Korea’s exports fell 13.6 percent on year to
$55.12 billion in March. The decline continued for the sixth month
since September last year.
The sharp plunge came as outbound shipments of mainstay chips fell
34.5 percent in March from the same month a year ago on weak demand.
Imports dipped 6.4 percent on year to $59.75 billion in March,
resulting in a trade deficit of $4.62 billion.
Korea’s exports to China, in particular, came to $10.4 billion in
March, down 33.4 percent from a year ago. Its deficit with the
largest trading partner reached $2.77 billion in March, totaling $7.9
billion in the first three months of the year, the largest quarterly
trade deficit since the establishment of diplomatic ties between the
two countries in 1992.
Exports of mainstay items like chips and petrochemicals fell sharply
in March. Exports of chips, the largest export item to China, fell
49.5 percent as of March 25 compared with the same period a year ago.
The decline was mainly due to a fall in the prices of chips such as
Korea’s dependence on China is growing not only for chips but also
for key materials for secondary batteries.
According to the Korea International Trade Association (KITA), China
is rapidly increasing its exports to Korea by strengthening its self-
sufficiency in technology and intermediate goods. Last year, China’s
lithium hydroxide exports increased by a whopping 518 percent to $3.9
billion, of which 76 percent were shipped to Korea. Also, 44 percent
of its lithium carbonate exports also came to Korea, up 387 percent.
Experts note that China has been carrying out efforts to lower its
dependence on Korean products while Korea has been increasing imports
of secondary battery raw materials, such as lithium, and intermediate
materials from China.
According to an analysis released by the Korea Economic Research
Institute, Korea’s exports are highly concentrated in specific
countries, such as China. The level of concentration in Korea’s
export items is the highest among the world’s top 10 exporting
countries, with its average concentration level over the past three
years reaching 779.3 points, far exceeding the average of the
world’s top 10 exporting countries at 548.1 points.
Korean exporters are calling for measures to resolve labor shortages
and ease interest burdens. KITA Vice Chairman Jeong Marn-ki noted
that a survey in March of exporters showed 25 percent of the polled
failed to pay interest with their operating profits, a significant
increase from 15 percent in December last year.
“There is a need to defer interest payment and expand surety
insurance services to ease the burdens on companies,” he said.
By Park Dong-hwan and Yoon Yeon-hae