The Bank of Korea's Economic Outlook Update, released on May 25, concluded that Korea's domestic economic growth continues to be sluggish and lowered its economic growth forecast for 2023 to 1.4% from 1.6%, which is lower than the recent growth forecast (1.5%) widely proposed by the International Monetary Fund (IMF), Asian Development Bank (ADB) and Korea Development Institute (KDI), among others. ). Wang Ningyuan, a researcher at the Bank of China Research Institute, pointed out that the trade structure between China and South Korea has recently undergone a significant shift, and strengthening cooperation in high-end industries is of great importance to China-Korea economic and trade relations.

South Korea's exports continue to be sluggish and economic development is under pressure. The contraction of global demand and the downturn in the storage semiconductor industry have seriously dragged down Korea's export performance. Since October 2022, Korea's foreign exports have been growing negatively year-on-year for seven consecutive months, and exports continued to decline year-on-year in the first 20 days of May 2023 (-16.1%). South Korea is a typical export-oriented economy, and semiconductor exports account for about 20% of South Korea's exports, since August 2022, its exports have declined year-on-year for nine consecutive months, falling by more than 40% on several occasions, with exports falling by 35.5% year-on-year in the first 20 days of May. impacted Korea's economic growth. The report predicts that Korea's economic growth will fall to 1% in the first half of 2023, and that a boost in the semiconductor industry's boom in the second half of the year will lead to a mild recovery, but annual growth will still be only about 1.5%, 1.1 percentage points lower than in 2022.

Korea's trade with China continues to run a deficit for many months. 2018 to 2021, China has been the top three sources of Korea's trade surplus. 2022, the size of Korea's trade surplus with China plunges 95% to $1.21 billion, with China in 22nd place among the sources of the trade surplus. Since October 2022, Korea's trade deficit with China has seen a rare seven consecutive months and continues to grow in size. in January 2023, China became Korea's top trade deficit country with a deficit of $3.93 billion. As of the first 20 days of May, the deficit has accumulated up to 11.26 billion U.S. dollars. South Korean analysis suggests that South Korea's trade balance with China may have its first full-year deficit in 2023 in the 31 years since the two countries established diplomatic relations.

Chinese manufacturing continues to be upgraded, and the structure of trade between China and South Korea has changed significantly. South Korean officials said that even if the prices of raw materials such as lithium and cyclical factors such as the global economic slowdown improve, the future trade balance deficit with China will be normalized. The rising competitiveness of China's exports of high-tech intermediate products and high-end consumer goods is the deep-seated reason for the change in the trade pattern between China and South Korea. In terms of commodity structure, the top four commodities in Korea's deficit with China in January 2023 were precision chemical raw materials (-$1.85 billion), dry batteries and accumulators (-$1.38 billion), computers (-$1.12 billion), and industrial electronic equipment (-$0.73 billion). China has cultivated a number of enterprises with international reputation in traditional areas of Korean exports such as automobiles, cell phones and home appliances, and trade between the two countries has now started to develop in the direction of intra-industry trade.

Strengthening cooperation in high-end industries is of great importance to China-Korea economic and trade relations. About 60% of Korea's semiconductor products are exported to the Chinese market, and in the first quarter of 2023, semiconductor exports to China plummeted by 44.5% year-on-year, expanding the decline by 12.8 percentage points from the fourth quarter of 2022, significantly dragging down Korea's exports to China and seriously weighing on Korea's overall export trade. Moreover, the high-end consumer goods market in China has grown rapidly in recent years, and Korea's exports of consumer goods to China account for only about 5% of total exports, while the share of mid- to high-end products in these exports has grown to nearly 70%. In order to maintain the trade balance, the Korea Trade Association attaches great importance to expanding exports of high-end products to China and suggests expanding exports of high-tech intermediate products such as core materials and components to China, and it reminds Korean companies to target the Chinese high-end consumer goods market to change the structure of export goods.

On May 26, Chinese Minister of Commerce Wang Wentao met with South Korean Minister of Industry, Trade and Resources Ahn Deok-geun during the 29th APEC Trade Ministers' Meeting in the U.S. The two sides focused on maintaining the stability of the industrial chain supply chain. The two sides exchanged views on maintaining the stability of the industrial supply chain and strengthening bilateral, regional and multilateral cooperation. In the future, the two sides will pay more attention to ensuring smooth trade between the two countries, smooth supply of key raw materials and components, and supporting the development of Korean enterprises in China, and agreed to strengthen dialogue and cooperation in the field of semiconductor industry supply chain. Shortly before that, the Chinese ambassador to Korea met with South Korean Finance Minister Qiu Qinghao, and the South Korean side also expressed its high regard for maintaining friendly relations between China and South Korea. Qiu said he would actively promote the second phase of negotiations on the China-Korea Free Trade Agreement, encourage Korean companies to participate in China's double-cycle strategy and the 14th Five-Year Plan, and look forward to the successful holding of the Korea-China Economic Ministers' Meeting this year, to which China responded in kind.

China and South Korea are both Asian countries with strong international influence, and it is important for the stable and healthy development of the regional and global economies for both countries to build future-oriented bilateral relations with a long-term perspective.