Korea seeks 'pragmatic' economic strategy amid Sino-US rivalry: industry minister

Industry Minister Bang Moon-kyu, right, poses with U.S. Commerce Secretary Gina Raimondo in San Francisco, Nov. 15, in this photo released by the Ministry of Trade, Industry and Energy. Yonhap

Korea will further strengthen trilateral ties with the United States and Japan for supply chains of advanced industries while cooperating with China as key trade partners to navigate the intensifying Sino-U.S. technology competition, Seoul's industry minister has said.

Industry Minister Bang Moon-kyu stressed the need for such "pragmatic strategies" in an interview with Yonhap News Agency in Seoul on Friday, as Korea is facing challenges in striking a balance between the two global giants for security, industry and the broader economic security realms.

"The competition for technology hegemony between the U.S. and China is likely to continue. We need to seek utility by prioritizing national interests while adhering to our principles," Bang said.

"Our basic stance is boosting the trilateral cooperation with the U.S. and Japan to ensure stable supply chains of the semiconductor industry, in particular. Given our economic structure, continued cooperation with China is also a must, which should come along with efforts to diversify our trade portfolio," he added.

China is the No. 1 trading partner for Korea, accounting for 19.7 percent, the largest share, of Seoul's total exports during the first nine months of this year.

Korea is also heavily reliant on the neighboring country for key industry materials, such as lithium and nickel, though the Seoul government has sought to reduce its dependence on China amid the Sino-U.S. rivalry and global uncertainties.

In the latest front of the technology war with the U.S., China began imposing exports restrictions of graphite on Friday, a key raw material in electric vehicle batteries and other electronics.

"Given major impacts of such moves on our trade and industry, we want to build multiple communication channels with China for information exchanges and prior consultations and that is what I've requested during last month's meeting with my Chinese counterpart," Bang said.

During a meeting between Bang and China's Commerce Minister Wang Wentao last month in San Francisco, the two nations agreed to establish a working-level discussion channel on such restrictive moves and to hold talks of a joint free trade agreement committee this week.

Speaking of a yearlong deficit in trade with China, Bang called for new strategies to respond to changes in the two-way trade structure.

"China has rapidly achieved technology advances, and it has outstripped Korea in display, artificial intelligence and quantum technologies, among other sectors. Such development has led to the fall in our exports of components and intermediate goods to China," Bang said.

"It is an urgent task for us to speed up efforts to secure technology prowess in advanced fields, diversify our trade portfolio by tapping into Vietnam, India, Indonesia and other nations, and expand our presence in the Chinese market with premium goods and other high value-added consumer items," Bang said.

Korea enjoyed a surplus of $62.82 billion in trade with China in 2013, but the figure fell to $1.2 billion in 2022. Since October last year, Korea has suffered a monthly deficit in trade with China.

Intermediate goods accounted for about 80 percent of the bilateral trade, and consumer items took up less than 10 percent, government data showed.

Next year, Korea is expected to enjoy marked growth in exports, which will lead the country's overall economic growth amid weak consumption and investment, the minister said.

"Exports could rise around 6-9 percent on-year in 2024, as shipments of semiconductors are forecast to log double-digit growth," Bang said. "If the Chinese economy makes a turnaround, the figure will rise further."

After a yearlong decline, exports rebounded in October and further accelerated to a 7.8 percent on-year expansion last month.

The Korean economy is forecast to grow over 2 percent next year, compared with about 1.4 percent this year, according to major economic institutions.

This year marks the 60th anniversary of designating the Day of Trade, as the government in 1964 celebrated the country's achievement of $100 million in exports for the first time ever.

Since then, exports have expanded exponentially to surpass the $1 billion mark in 1970, the $10 billion level in 1977 and $100 billion in 1995.

The country achieved a $500 billion milestone in exports in 2011 and reported a record level of $683.9 billion last year, according to government data.

"Our economy has been driven by exports over the past decades. Export was like a relief pitcher for our economy as we've been able to overcome crises through overseas sales, and the strategy still works," Bang said. (Yonhap)