South Korea’s supply chain reliance on China leaves it more exposed than the US, Japan: report

Some 29.3 per cent of South Korea’s material parts imports came from China in 2020, higher than Japan and the United States, a new report says

South Korea’s import reliance is most pressing in four areas: semiconductors, large-capacity batteries, rare earth metals and medical supplies

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South Korea’s dependence on China for imports of intermediate goods and material parts is too high, according to a major industry association. Photo: EPA-EFE

Published: 4:30am, 13 Jan 2022Updated: 5:29am, 13 Jan 2022

South Korea has a higher dependency on China for semi-finished goods and material parts than Japan and the United States, and Seoul must take action to mitigate associated risks, a new report said on Wednesday.

Some 29.3 per cent of South Korea’s material parts imports came from China in 2020, whereas the rate for Japan and the US was 28.9 per cent and 12.9 per cent respectively, said the Federation of Korean Industries (FKI), which represents South Korea’s major conglomerates and associated members.

South Korea’s import reliance is most pressing in four industries crucial to the 21st century, namely the production of semiconductors, large-capacity batteries, rare earth metals and medical supplies.

Its dependence on China in these four industries exceeded both other countries, but the risk was strongest for large-capacity batteries, because South Korea imported 93.3 per cent of its supply from the mainland in 2020, compared to Japan’s 66.1 per cent and 43.4 per cent in the US.

Nowadays, global supply chain issues have transcended from being just economic matters and are combined with the country’s security agenda

Kim Bong-man

The Biden administration last year said it was taking steps to diversify supply of these critical components, which are crucial to tech and defence, and the FKI urged the South Korean government to do the same.