SEOUL, Sept. 3 (Yonhap) — South Korea’s dependence on China for exports and foreign investments has increased since the outbreak of the novel coronavirus, a report showed Thursday.
China accounted for 24.3 percent of South Korea’s exports in the first seven months of this year, up 1.5 percentage points from a year earlier, according to the report from the top business lobby, the Federation of Korean Industries (FKI).
The hike came despite a 10.6 percent plunge in South Korea’s overall overseas shipments in the wake of the coronavirus outbreak, which began in China in December last year and sent global trade tumbling.
In the seven-month period, South Korea’s exports to the European Union, Central and South America, and India sank 11.5 percent, 34.3 percent and 34.5 percent, respectively.
In contrast, Seoul’s exports to China swung to a 9.7 percent gain in June from a 2.5 percent contraction in May, marking the first positive growth in six months.
The FKI, or the lobby for South Korea’s family-controlled conglomerates, attributed South Korea’s greater export dependence on China to a recovery in the world’s second-largest economy.
Bolstered by massive fiscal spending, China’s industrial production increased 3.9 percent from a year earlier in April, a turnaround from a 1.1 percent fall in March.
China’s investment, consumption and production have been recovering rapidly after hitting nadirs following Beijing’s decision to spend big on 5G, artificial intelligence, the Internet of Things and other tech infrastructure, the FKI said.
The report also showed China’s direct investment in Asia’s fourth-largest economy surged in the first half of the year, despite a plunge in overall foreign direct investment (FDI) here.
China’s direct investment in South Korea rose about 2.6 times from a year ago to US$856 million in the January-June period. In the wake of the coronavirus pandemic, overall FDI in South Korea nose-dived 22.4 percent on-year to $7.66 billion.
China’s share of overall FDI in South Korea surged to 11.2 percent in the first half from 3 percent a year earlier, according to the report.