South Korea’s economic growth rate has been on a steady decline since the Kim Dae-jung administration took office in 1998, with each successive five-year presidential term seeing a drop of about 1 percentage point. Under the current Yoon Suk-yeol administration, the country is expected to enter an era of “low growth,” with the average annual growth rate forecasted to fall into the 1% range.
Traditionally driven by a strong industrial sector, the national economy now faces significant challenges. Increasing competition from China—sometimes referred to as a “black hole” for global industry—is exerting downward pressure on S. Korea’s growth prospects.
A joint analysis by The Chosun Daily and the Federation of Korean Industries of global export market share across eight key industries over the past decade reveals the extent of the problem.
The data shows that S. Korea has either been overtaken by China in seven of these industries, including semiconductors, shipbuilding, and steel, or seen the gap in certain sectors widen so significantly that catching up has become nearly impossible. Only in petrochemicals has the country managed to maintain a slim lead, with a mere 1 percentage point advantage.
In strategic industries such as semiconductors, displays, and secondary batteries—considered the backbone of S. Korea’s high-tech economy—China has made remarkable gains. In 2013, China’s export market share in these sectors was roughly double that of S. Korea. Over the past decade, this gap has widened significantly, with China’s share now three to eight times larger. This shift reflects not only China’s rapid growth but also S. Korea’s decline in competitiveness.
Other industries that have historically underpinned S. Korea’s economy—shipbuilding, steel, automotive manufacturing, and petrochemicals—are also under pressure.
Ship and automotive exports, areas where S. Korea once held a competitive edge, have been surpassed by China over the past decade. The steel sector, facing fierce competition from China’s aggressive pricing strategies, has seen its market share gap with China grow by more than 10 percentage points, leaving the industry at risk.
An industry official said, “Even with facing significant trade sanctions from its conflict with the United States, China continues to lead, while S. Korea’s major industries are falling behind one after another under Chinese competition.”
The Bank of Korea recently forecast economic growth rates of 1.9% for 2025 and 1.8% for 2026, further reflecting the challenges ahead. If these predictions hold, the Yoon administration’s five-year average annual growth rate will fall to 1.98%, marking the first time for a S. Korean administration to record an average annual growth rate below 2%.
Experts highlight structural challenges, such as an aging population and heavy dependence on export-driven conglomerates, as the main reasons for the slowdown.
Lee Sang-ho at the Korea Economic Research Institute said, “South Korea’s manufacturing and export-driven growth model is no longer as strong as it once was, and the country still hasn’t found new ways to drive its economy forward.”
