South Korean Exports to the US Surpass Those to China

In a landmark development, South Korea’s exports to the United States have overtaken its shipments to China for the first time in two decades, in December 2021. The shift in trading dynamics is indicative of the changing global equations amid increasing concerns over economic security and tech supply chain reliability.

According to data released by the Korean trade ministry, goods valued at $11.3 billion were exported to the U.S., outpacing the $10.9 billion worth sent to China. This significant shift has come to the forefront as South Korea observed a third consecutive monthly increase in overall exports by 5.1%, bouncing back after enduring a year of downturn.

The trading scenario change can be partly attributed to China’s economic woes, prompting the introduction of a slew of stimulus measures. However, it’s important to understand that a single month’s data does not necessarily infer a long-lasting or deliberate alteration in trade practices. Despite the shift, China continues to be South Korea’s most substantial trade partner by a wide margin, predominantly because of Seoul’s significant imports from the world’s second-largest economy.

South Korean exports to the U.S. have marked an increase for five consecutive months, while export performance to China also reflects signs of improvement. Meanwhile, South Korea’s overall imports have shrunk by 10.8% from a year ago, leading to a wider trade surplus of $4.5 billion.

The reshaping of trade dynamics comes as the U.S. is actively seeking allies for its initiative to decrease reliance on China for global supply chains and restrict China’s access to sophisticated semiconductor technology. This places nations like South Korea and Japan in a tricky position between their two largest trade partners, with their diplomatic and military alliances with Washington, adding another layer of complexity amidst Beijing’s growing territorial assertiveness in the Indo-Pacific region.

Under the leadership of President Yoon Suk Yeol, South Korea has been strengthening its relationship with the U.S. Last year, Yoon, accompanied by top Korean executives, visited Washington, where he advocated for bolstering ties with America in meetings with President Joe Biden and members of Congress. Thanks to a free-trade agreement with the U.S. in 2012, South Korea stands to gain from U.S. laws that progressively limit the usage of batteries and other products manufactured in China and other nations.

On the other hand, China is amping up its domestic production across various sectors, moving up the value chain. Focusing particularly on semiconductor and smartphone manufacturing, China’s efforts have led to a dip in sales of goods produced by Samsung Electronics Co., amongst other businesses.