S Korean trade, diplomacy trending away from China

South Korea is trending away from economic dependence on China and increasing its trilateral interactions with Washington and Tokyo. Thus far, Beijing appears unsure of how to respond, beyond calls for “cooperation” and encouragement for Seoul to pursue a non-aligned foreign policy.

A significant measure of the impact of South Korea’s evolution in geopolitical orientation is reflected in the shift in South Korea’s trade relations: The United States became South Korea’s number one export destination in December 2023, surpassing China for the first time since 2004.

South Korea also recorded an US$18 billion trade deficit with China, the first bilateral deficit with China in 31 years. South Korean exports to China in 2023 dropped 20% year-on-year, to $124.8 billion, while imports from China dipped 8% year-on-year, to $142.8 billion.

Strong investment flows to the United States by South Korea’s major conglomerates have resulted in a boost in South Korean car, automobile part and automotive battery exports. If such trends continue, South Korea in 2024 may have the distinction of being the only country adjacent to China for which China is not its number one trade partner.

Definitely affecting the bilateral relationship was the December 2023 announcement by the Ministry of Trade, Industry and Energy of its 3050 Strategy initiative designed to stabilize South Korea’s supply chains and reduce dependence on China to less than 50% by 2030.

The trade ministry’s effort to reduce dependence on China in its supply chains responds to a deeper realization in South Korea of that country’s vulnerability to possible Chinese economic retaliation.

The impact of deepening geostrategic rivalry is clearly contributing to a reconfiguring of