• Korea’s Circumvention Export Via China Is 2nd Largest, following Taiwan
    2019-05-29 hit 292

    Koreas Circumvention Export Via China Is 2nd Largest, following Taiwan


    - Negative impacts on electronic equipment, textiles and chemicals are expected due to US-China

    trade war and additional tariffs -



    Since Korea is the second largest circumvention exporter via China to the third countries following Taiwan, the impact of the prolonged trade disputes between the United States and China will be significant.


    According to a report titled, Comparative Analysis of the Export Routes to China between Korea and Major Countries issued by the Institute for International Trade (President, Shin Seung-kwan) of the Korea International Trade Association report released on May 30th, the proportion of intermediate goods in Koreas exports to China decreased from 80.9 percent to 68.7 percent between 2007 and 2014 while that of final goods increased from 19.1 percent to 31.3 percent. In addition, the circumvention exports of intermediate goods to the third countries after processed in China fell from 38.6 percent to 24.9 percent and the circumvention exports targeting the United States demand also decreased from 8.9 percent to 5 percent.


    However, compared with Chinas top five importing countries such as Germany, the United States, Japan and Taiwan, Koreas exports of intermediate goods are more significant as Korea's final exports of final goods ranks 4th place (31.3%) behind Germany (53.4%), the United States (40.7%) and Japan (34.9%) whereas Koreas circumvention exports take 2ndplace (24.9%) following Taiwan (31.8%). In particular, the Koreas circumvention exports to the United States is the second largest taking up 5 percent, following Taiwan (6.5%) and it is expected that the impact of the additional tariffs imposed by the United States and China will be greater than in other countries. 


    By industry, it is expected that the exports to the United States will show a sharp decline mainly in electronic equipment (6.3%), textiles (5.4%) and chemicals (5.3%) that account for large shares of exports for the United States final demand.


    Kang Nae-young, a senior researcher at the Analysis and Forecasting Department of the Korea International Trade Association, said, China is increasing its self-sufficiency rate of intermediate goods focusing on high-value-added advanced industries while it is unlikely that the United States and China trade war will be resolved in a short period of time. The researcher also stressed, It is required for Korea to shift export strategies to China, such as expanding its exports of final goods to China and producing higher value-added intermediate goods.



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