The Slowdown in Korean Exports to China : Causes and Outlook

Korea’s exports to China have explosively increased in the 2000s, recording annual average growth rates of 20.3% by 2010. These are outstanding results when compared to the 8.6% average annual growth in Korea’s overall exports to the rest of the world. Korea’s ability to achieve the 1 trillion dollar mark in trade last year has also been attributed to the significant increase in trade with China.However, an unusual trend began to emerge since 2011 in Korea’s exports to China. The increasing rate in exports to China has been lower than that in overall exports, and has even shown signs of decreasing in 2012. The prolonged economic instability in the advanced countries occasioned by the financial crisis in the Euro zone has started to impact the heretofore skyrocketing exports to China. The slowdown in China’s exports brought on by the stagnation of the global economy has started to gradually impact a Korea that utilizes China as its processing trade base.If the recent slowdown in exports to China can be attributed to the slowdown in the Chinese economy and China’s exports, then Korea’s exports to China can be expected to recover along with the global economy. However, it will be difficult to expect the kind of explosive increase in exports to China witnessed in the past if this situation is in fact the result of changes in China’s economic structure and policy, or of problems in terms of the trade structure between Korea and China. The status of China as Korea’s largest export market makes it necessary to conduct a review of the causes of the slowdown in Korean exports to the Mainland