China's trade with ROK increasingly competitive

The industrial business sectors of China and South Korea, once complementary a decade ago, have become increasingly competitive in mid — to high-end manufacturing, a trend that is expected to intensify in the coming years, said market watchers on Friday.

As China continues to expand its opening-up and make breakthroughs in areas such as shipbuilding, electric vehicle and foldable smartphone manufacturing, concerns are growing among South Korean business leaders about the country's widening competitive edge, according to a recent interview conducted by Seoul-based Korea International Trade Association (KITA), which represents 73,000 member companies worldwide.

In interviews conducted by KITA with 30 business executives operating in China, both South Korean and international, many noted that China has not only caught up with South Korea in most industries except for semiconductors, but has already surpassed it in several sectors. They also highlighted that the sense of urgency in China is significantly more intense than what is felt in South Korea.

KITA's report outlines the concerns raised by executives across a range of sectors, including automotive, components, batteries, petrochemicals, aviation, distribution, gaming, biotech and finance.

Hwang Jae-won, chief representative for China at the Seoul-headquartered Korea Trade-Investment Promotion Agency, said that until 2022, South Korea consistently maintained a trade surplus with China, as China's decades-long push for urbanization had led to strong demand across various industries for equipment, materials and components from South Korea.

However, with China's rapid technological advancement, Hwang said Chinese companies have gradually surpassed South Korea in many sectors, a shift that has reduced China's need to import from South Korea, resulting in the country's first trade deficit with China in 2023.

Hwang noted that South Korea is paying close attention to this development and recognizes that if it continues to place the future of its trade with China on traditional industrial products like industrial components and machinery, long-term growth will be difficult to achieve.

"As a result, South Korea is placing greater emphasis on exporting consumer goods such as cosmetics, clothing and food to China, while also exploring possibilities in the trade in services. This marks the first major adjustment in current South Korea-China economic and trade relations," he added.

Chen Bin, deputy director of the expert committee at the Beijing-based China Machinery Industry Federation, said, "Through several initiatives, China has focused on advancing sectors such as electronics, unmanned aerial vehicles, automotive, LNG (liquefied natural gas) carriers and new energy technologies, directly competing with South Korea's traditional strengths."

Recognizing these realities, Ni Yueju, a research fellow at the Chinese Academy of Social Sciences' institute of world economics and politics, said that competition between China and South Korea in the global automotive market is becoming increasingly fierce, especially after China gained notable advantages in the electric vehicle sector, fundamentally changing the competitive landscape.

She suggests that China and South Korea work on strengthening cooperation at both government and corporate levels to jointly promote innovation and development in the automotive industry, particularly in the fields of battery development, intelligent connected vehicles and talent exchange.

South Korea remained China's fourth-largest trading partner in the first eight months of 2024, with the total trade value of 1.51 trillion yuan ($215.3 billion), up 8 percent year-on-year, accounting for 5.3 percent of China's total foreign trade value for that period, data from the General Administration of Customs showed.