Insignificant effect of resuming economic activity in China Exports to China have declined for 10 consecutive months
In the first quarter of this year (January to March), exports to the United States increased by more than 3%, while exports to China decreased by nearly 30%. It is analyzed that the reason why the effects of China’s reopening (resumption of economic activity) are not showing yet is because the Chinese economy is recovering centered on domestic demand such as services.
According to the Ministry of Trade, Industry and Energy on the 17th, exports to the US in the first quarter of this year were 26.861 billion dollars, up 3.5% from a year ago. Exports to the US decreased by 6% in January compared to the previous year, but increased by 16.5% in February and continued to increase by 1.6% in March. However, exports to China in the first quarter were $29.47 billion, down 29.9% from the same period last year. Exports to China have been declining for 10 consecutive months since June last year. Even this month, exports to the US increased by 32.1% through the 10th, but exports to China decreased by 31.9%.
As a result, it is predicted that trade with China, which has been in the black for about 30 years since the establishment of diplomatic ties, will turn into a deficit for the first time this year. In the first quarter, trade with China showed a deficit of $7.84 billion. The trade balance with China, which was a surplus of $24.285 billion in 2021, plunged to $1.213 billion last year. Trade with the US in the first quarter was a surplus of $7.195 billion.
The Bank of Korea, in its report titled “Inspection of the Impact of China’s Reopening on the Domestic Economy” released on the same day, said, “The recent delay in the ripple effect of China’s reopening is mainly attributable to the recovery of the Chinese economy’s domestic demand and high inventory levels in the information technology (IT) sector. And China’s rising self-sufficiency rate is also a factor.” According to the Bank of Korea, when China’s growth rate rises by 1 percentage point, mainly in the service sector, Korea’s growth rate only increases by 0.08 percentage point.
Sejong = Reporter Park Hee-chang ramblas@donga.com
Reporter Park Min-woo minwoo@donga.com
