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South Korea’s largest export destination, China, has experienced a downturn in its economy, leading to a drop in Korea’s exports below $30 billion for the period of August 1 to 20. The export value for this period reached the $20 billion range, marking the first time since January 1 to 20, 2021 ($282.15 billion), a gap of 31 months.
The Korea Customs Service announced on the 21st that exports from August 1 to 20 amounted to $27.856 billion, a 16.5 percent decrease compared to the same period last year ($33.355 billion).
Amid China’s sluggish real estate market, exports to China have decreased by 27.5 percent to $5.868 billion for the same period compared to last year. Exports to the People’s Republic of China, which account for 20 percent of Korea’s exports, are unlikely to rebound this month following a 14-month decline (year-on-year) from June last year. Semiconductor exports, a major driving force of South Korea’s exports, have also decreased by 24.7 percent compared to a year ago, raising the possibility of a 13-month consecutive decline.
China’s economy has heavily relied on the growth of the real estate market since the 2000s. However, the market is currently facing a slowdown due to the default crisis of major real estate companies such as Evergrande, Country Garden, and Wanda. There are even predictions that the collapse of China’s real estate bubble could lead to a prolonged economic stagnation similar to that experienced by Japan.
“Since China is trying to solve the real estate problem with long-term measures by reducing housing supply, there is no reopening effect of money being released and consumption increasing, and it will be difficult for the Chinese economy to recover within this year,” said Seok Byoung-hoon, a professor of economics at Ewha Womans University in Seoul.
From August 1st to 20th, the import amount decreased by 27.9 percent to $31.421 billion compared to the same period last year ($43.579 billion). The trade deficit reached $3.566 billion. The country recorded a trade surplus of $1.146 billion and $1.652 billion in June and July, respectively, but it is likely to turn into a trade deficit in three months.
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