Korea looks to Europe to diversify trade partners as China's growth slows

President Yoon Suk-yeol poses with U.S. President Joe Biden and other leaders of countries participating in the 2022 NATO Summit during a gala dinner event at the Royal Palace of Madrid in Spain, Tuesday. Yonhap

By Nam Hyun-woo

MADRID ― The Yoon Suk-yeol administration has begun looking to Europe as a market that can offset Korea's decreased economic opportunities from its largest trading partner, China, amid a pessimistic outlook for the Chinese economy.

"China's economic growth is slowing down and the country is now refining its strategy to focus on its domestic demand," senior presidential secretary for economic affairs, Choi Sang-mok, said during a press briefing on Tuesday (local time).

"So the era of an export boom with China we have been enjoying for the past 20 years is seeing its end. That is why we need to find alternative markets and diversify our trade partners," Choi added.

Choi made the remarks amid Yoon's attendance at the 2022 NATO Summit in Madrid, Spain. The president is scheduled to have summits with the leaders of the Netherlands, Poland, Denmark, France and the U.K., as well as having brief bilateral meetings with the heads of Canada and Romania on the sidelines of the summit.

"Along with the changing circumstance in China, Korea also faces an urgent need to explore and find new growth engines and expand economic security," Choi said. "And Europe meets all of these conditions."

Senior presidential secretary for economic affairs, Choi Sang-mok, speaks during a press conference at the Puerta America Hotel in Madrid, Spain, Tuesday. Yonhap

Korea has been heavily reliant on China for trade over the past two decades. According to the Korea International Trade Association, China accounted for 10.7 percent of Korea's total exports in 2000, and the number jumped to 25.1 percent in 2010. Since then, Korea's reliance on China for exports has been hovering just above 24 percent, reaching 25.3 percent in 2021.

Although a quarter of Korea's total exports are heading towards China, uncertainties are growing for Asia's fourth-largest economy as Beijing is now promoting a new strategic concept of "Dual Circulation," which is aimed at promoting its domestic demand to counter shocks from the global economic slowdown and its protracted trade conflict with the U.S.

"As a result of this strategy, the benefits we have been enjoying are now declining," an official at the presidential office said. "So that's why we need to strengthen our partnership with Europe, for our own survival."

According to the official, the Yoon government considers European nations as optimal partners due to the size of the market, adaptability to future industry trends and the reciprocal industrial structure between Korea and European nations.

During his summits, Yoon is expected to pitch Korea's civilian nuclear technology to the Czech Republic and Poland as the two countries are looking to procure nuclear power plants. He will also emphasize Korea's ability in nuclear technology during summits with the U.K., the Netherlands and Romania, as these countries are planning to build nuclear power plants. Also, the president plans to discuss defense, renewable energy, battery, semiconductors and other future industries with those countries.

The official, however, denied that Korea's partnerships with European countries could signal efforts to join the U.S.-led campaign to contain China.

"We are not saying that our economic relations with China are not important," the official said. "China is pursuing the Dual Circulation strategy due to its own reason. … We are also pursuing partnerships with European nations for our own interests, not because of China."

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