SEOUL: South Korea’s shipments to China grew for a second consecutive month in December last year, data showed Tuesday, with short-term recovery expected.
Exports to China account for more than 25 percent of the country’s total exports. They had declined for 16 consecutive months since July 2015, until inching up 0.4 percent in November last year.
The pace of recovery picked up in December last year, with a 9.6 percent increase on-year, according to data from the Ministry of Trade, Industry and Energy. The second straight month of growth was the first since January 2015. The amount was also the largest since October 2015, with $12 billion worth of goods shipped to China in December last year.
Backed by the increase in exports to China, South Korea’s total exports in December last year grew 6.4 percent to $45.1 billion compared to the same period in 2015.
The rebound in exports to China was backed by the manufacturing sector in the world’s second-largest economy.
China’s official purchasing managers’ index, an indicator of the economic health of the manufacturing sector, was 51.7 in November last year, the highest in 28 months. The official PMI stood at 51.4 in December last year. A reading above 50 indicates expansion when compared to the previous month, while one below 50 represents contraction.
A preliminary tally showed that shipments of wireless devices, including the organic light-emitting diode, jumped 36.5 percent on-year in the first 20 days of December last year.
Shipments of petrochemical products also rose 23 percent on-year to reach $1.01 billion in December last year, while those of flat displays increased 10.6 percent to reach $1.12 billion.
The recovery is likely to be short-lived, as fundamental changes are taking place in the economic structure of China.
“A longer term prospect is gloomy, but outbound shipments to China could see a recovery in the short and mid-term, along with increasing prices of oil and raw materials,” Moon Byung-ki, a researcher at the Korea International Trade Association, said.
Amid sluggish economic growth, China has put increasingly more emphasis on its domestic markets rather than exports. As a result, South Korea’s exports to China — nearly 70 percent of which are intermediate goods — have been hit. In addition, South Korea’s conglomerates have moved their production plants to other countries, such as Vietnam.
With structural changes in trade with China, experts call for diversifying trade strategy, such as increasing the exports of consumer products.
Products related to health care, well-being, children and women could be good alternatives to the decreasing exports to China, said Kim Eun-young, a senior researcher at the Institute for International Trade.
In the first 11 months of last year, South Korea shipped cosmetics worth $1.42 billion to China, up 35 percent from the same period in 2015.
