The purpose of this study is to review the recent changes in export structure between Korea and China by applying various analytic methods. The study also seeks to forecast future conditions surrounding the long-term trade structure between the two countries.
By looking into the analytic method used by Hummels and Klenow (2005) to identify Korea’s increasing export proportion in the Chinese market in terms of product diversity and concentration, during the period between 2000 and 2006, it is evident that product diversity had slightly decreased while product concentration increased by 19%. This indicates that Korea’s export products to China are mostly focused on components and capital goods, in which Korea has the higher competitive advantage in. Also, the study shows that parts and capital goods enjoy better durability than other products such as primary products and consumer goods. While around 75% of primary products, high-tech semi-manufactured-goods, and high-tech consumer goods were no longer exported after four years, exports on parts and capital goods continuously stabilized at around 15 % in 1992-2006.
Moreover, according to the product supplementary index, the complementary relationship between Korea’s export structure and China’s import structure was more favorable than that with Japan. Even though the growth rate of Korea’s export share in the Chinese market has been at a standstill, the complementary relationship between Korea’s export structure and China’s import structure still shows an increasing trend.
In conclusion, it appears tha China has served as a positive opportunity factor for the Korean economy through exports. When considering the highly complementary relationship between China’s import structure and Korea’s export relationship, there is potential for positive growth. However, it is expected that the rise in production cost will result in companies’ transferring their production bases and technology competitive advantage from Korea to China. It is recommended that in order to maintain Korea’s positive growth in exports to China, policy considerations should be made for consistently converting components and capital goods to high value-added products and enhancing the diversity and competitive edge of consumer exports goods that target the Chinese market.
대중국 교역구조의 변화 추이와 거시경제적 시사점(Changes in trade structure between China and Korea and macroeconomic implications)
|Series Title; No||정책연구시리즈 / 2008-15|
|Subject Country||China(Asia and Pacific)
South Korea(Asia and Pacific)
|Subject||Economy < Trade|
|Holding||KDI; KDI School|