Key View
- South Korea’s 2023 trade deficit with Mainland China, the first in 30 years, marks a historic shift in its trade relationship with its largest trading partner, culminating from a decade-long decline from a peak surplus in 2013.
- The changing trade patterns underscore China’s decreased reliance on South Korean exports and South Korea’s heightened need for Chinese manufactured imports. These dynamics also reflect South Korea’s strategic efforts to diversify its export partnerships and enhance market resilience amid growing trade protectionism and regional competition.
- Although there are indications of a recovery in South Korea’s semiconductor exports as of early 2024, a near-term return to a trade surplus with China appears unlikely. This is due to China’s increasing industrial self-sufficiency and rising export competition from Taiwan, China, which is the global leader in chip production.
