Exports Prospect of Next Year to China is Estimated at USD 27 Billion

As a trade pressure of Korea has been expanded, the exports to China of Korea will show a rising tendency of 15% for next year. According to a report of ‘Exports environment and prospects to China for 2003’ published by Korea International Trade Association (KITA) on December 22, it is forecasted that the exports to china for next year will reach USD 27 billion increased by 14.9% over the year. It shows the big decrease, compared with that the exports to China (USD 23.5 billion) of the year showed the increase rate of 29%.

It is because China joined the WTO, changed the existing trade policy into the aggressive trade policy and the new administration of China has emphasized on a balance of the foreign trade policy. Accordingly, items subject to an anti-dumping lawsuit are highly likely to be extended to textile products as well as a synthetic resin and steel which are major exporting items of Korea.

In terms of the items, the industries of a motorcar (48.1%), mobile phone (44.5%), precision machinery (38.3%) and semiconductors (30.1%) will seem to show a favorable tendency for next year. On the other hand, the industries of the steel (5.8%), petrochemistry (5.0%) and textiles (-4.8%) will show a small increase or decreasing tendency. A plastics (13.8%) and electric home appliances (12.3%) will show the increasing tendency of 10%.

The report said that the exports increase rate of China is estimated at 11.7%, and that the raw material parts and materials exports of Korean companies will have a bright future because the exports of China has basically an import-oriented structure. In particular, as China has become a production base station of electric home appliances, the report forecasted that the parts demand focused on the digital electric appliances would sharply increase.

As China will concentrate on a driving of a social overhead capital (SOC) and a construction of a sports stadium for the 2008 Olympics from next year, and a development business of the Western part has advanced, the exports of the construction materials will largely increase. China will execute a perfect tariff-free of IT products from next year on a condition of WTO joining and the Quotas of the motorcar and oil products will increase by 15% over last year. They will be the favorable factors of the exports to China.

Besides, to beat the competition with the existing competitors such as Taiwan and Japan and the new competitors such as Malaysia in all fields of major exporting items, it is desirable to turn interests to insufficient investment areas such as Hwanan.

Yang Pyeong-seob, researcher of Trade Research Institute said, “Because the exports increase rate to China was high this year, the somewhat decreasing tendency is inevitable. To prevent the issued below-cost exports of domestic companies, the self-regulation based on the industry of textile and steel is desirable.

Mi-Kyung Jung mickey@donga.com