ED Less reliance on Japanese parts
No time for complacency amid escalating US-China tensions
South Korea's dependence on Japanese materials and parts has hit an all-time low so far this year. This situation is the result of strenuous efforts by the government and enterprises to sharpen the country's industrial competitiveness in the wake of Japan's imposition of export controls on key products.
According to data from the Ministry of Trade, Industry and Energy, imports of Japanese materials and parts amounted to $9.69 billion in the January to April period, accounting for 15 percent of the country's total imports of these products. This figure represents a drop of 1.1 percentage points from the same period last year and the lowest since related statistics were first compiled in 2001. The percentage of materials and components imported from Japan peaked at 28 percent in 2003, before falling to 18.2 percent in 2014, and 15.9 percent in 2019.
In retaliation against a court ruling here that ordered Japanese companies to compensate victims of its forced wartime labor, Japan imposed export restrictions in July 2019 on chemicals vital to our semiconductor industry. Yet Japan's retaliation served as an occasion for us to awaken to the danger of our heavy reliance on Japanese products and redouble localization efforts, which had dragged on for decades. In a nutshell, Japan's export restrictions became a blessing in disguise.
Right now is no time for complacency, though. The trade deficit with Japan, in materials and parts, for the first four months of this year came to $5.4 billion, up $700 million from a year ago. And the percentage of such products imported from China exceeded 30 percent for the first time during the period, up from 29.1 percent a year ago. South Korea may be ahead of other countries in producing finished goods, but excessive reliance on a specific country ― whether it's Japan or China ― for materials and parts to produce them must be avoided. This situation is all the more important, considering that uncertainties over global supply chains remain high amid escalating tensions between Washington and Beijing.