China will remain an important economic partner for South Korea despite the election of a new “pro-American” president that has been critical of Beijing, experts said. In particular, South Korean companies could profit from the economic priorities China revealed during its agenda setting parliamentary meetings earlier this month, including infrastructure investment, information technology and clean energy, according to a report published by the Korean International Trade Association (KITA) on Monday. South Korean firms should take advantage of the opportunities and expand their presence in the Chinese market, it added. China has been South Korea’s largest trading partner for 17 consecutive years, snapping up 25 per cent of its total exports in 2021, helping push bilateral trade to a record US$362.3 billion, a 27 per cent jump from a year earlier. The world’s No 2 economy is the main destination for South Korean integrated circuits, intermediate goods and petrochemicals. A great deal of uncertainty will be brought to China-South Korea relations when Yoon comes into office Guo Hai But questions have been raised over the direction of relations between Seoul and Beijing following the election of conservative Yoon Suk-yeol , who has made it clear he plans to strengthen trade and security ties with Washington. Outgoing president Moon Jae-in placed considerable importance on ties with China and treated Beijing and Washington as “equally important”. But Yoon has expressed a harder stance towards China. “A great deal of uncertainty will be brought to China-South Korea relations when Yoon comes into office,” said Guo Hai, a researcher at the Institute of Public Policy at South China University of Technology. “On one hand Yoon is pro-American, on the other hand he is new to politics and has no parliamentary experience. Someone like him is prone to populism. “Personally, I think he is very likely to get carried away by anti-China sentiments. In the worst case scenario, Yoon will fully turn to the United States and end the diplomatic strategy of keeping equal distances between the two countries.” Still, given South Korea’s dependence on China as an export destination and a source of raw materials, it will be extremely difficult for Seoul to turn away from its larger neighbour, experts say. China-South Korea trade has long been susceptible to geopolitics. In 2016, Seoul enraged Beijing with its decision to deploy the Terminal High Altitude Area Defence System ( THAAD ), which it argued was needed to protect itself against possible missile attacks from North Korea. China claimed the American anti-ballistic missile defence system enabled the US to spy on its territory. Beijing subsequently implemented a series of punitive trade actions that saw bilateral trade sink by 8.4 per cent in 2016 compared to a year earlier. Under Yoon, relations between China and South Korea face a number of tests. The former prosecutor has already promised an additional deployment of THAAD to counter attacks from Pyongyang, and is expected to join the Indo-Pacific Economic Framework , a US-led trade grouping aimed at reorienting supply chains away from China. South Korea urged to rethink trade with China amid intensifying competition Diplomatic and security conflicts often appear in the form of trade action, which could happen more frequently in the future, Guo said. Even before the election of Yoon, South Korea announced its intentions to establish an independent supply chain. Seoul launched a “materials, parts and equipment 2.0 strategy” in 2020 that stressed diversification to reduce reliance on outside sources, including Japan and China. The government said the move was to redirect manufacturing back into the country to ensure supply chain stability and security. The Moon administration said it would invest a minimum of 5 trillion won (US$4.2 billion) through 2022 on securing next-generation strategic technologies, including future cars, biohealth and system semiconductors, according to a report from the Korea JoongAng Daily . “According to information in South Korea, they have made some progress,” said Zhang Huizhi, a professor of Northeast Asian studies in Jilin University. “But reconstruction of the supply chain is a long-term process, which would take at least a decade to take effect. To achieve its goals, nonetheless, it will continue to shift its investment to Southeast Asia and other countries to diversify its supply chain.” South Korea relies heavily on China for raw material imports, such as rare earths, that are needed for the manufacture of semiconductors and intermediate goods required by the electronics industries, according to reports from the Korea Institute for Industrial Economics and Trade. In a September 2021 report, KITA said South Korea’s reliance on China for essential raw materials was “dangerously high”. South Koreans side with US over China, especially on Covid-19, poll suggests For instance, South Korea imported 94.7 per cent of its tungsten oxide – required for producing semiconductors – and 100 per cent of magnesium ingot, which is used to make aluminium alloy required in car parts, from China. Despite the country’s desire to cut dependence on China, it is infeasible, Guo said. “A quarter of its exports are to China, its exports to Japan and the US also need imports of intermediate goods from China,” he said. “There’s no signs that Korean companies have found other markets and manufacturing hubs other than China, and it couldn’t possibly make everything it needs itself.” Overall, China-South Korea trade has remained stable through the years – despite a decline in 2016 over the THAAD deployment – and even increased during the two years of the pandemic. The close ties between the neighbours will not break easily even with Yoon’s more aggressive strategy towards China, said Zhang. South Korea has never thought about giving up on the enormous market in China Zhang Huizhi “South Korea has never thought about giving up on the enormous market in China, which is something it must value to maintain economic growth,” Zhang said. But China’s push to become a world leader in science and hi-tech industries points to heightened competition with South Korea. A KITA report published in December forecast the most intense competition to be in the semiconductor, petrochemical and display industries. “It is critical that South Korea-China relations are reestablished in line with changes in the world’s trading environment, such as China’s manufacturing competitiveness that is strengthening and the rivalry for hegemony between the United States and China,” the report said. Efforts to reduce reliance on China could be stepped up under the new president and competition between the two economies may increase as the Chinese economy becomes more refined, said Zhang Zhongyi, a senior research fellow at the Charhar Institute, a non-governmental and non-partisan think-tank focused on foreign policy and international relations. “But there is still enormous space and potential for China and South Korea trade,” he said. “Many experts contended that the China-South Korea relationship would not be affected significantly regardless of the political party in power. South Korea’s heavy economic dependence on China dictates the relationship won’t go too bad.” As China remains indispensable for South Korea, there will be new cooperation in infrastructure, new energy and climate change, among other areas. There is also a lot of room for collaboration under Regional Comprehensive Economic Partnership and other international trade deals and organisations, said Zhang, from Jilin University. “Trade relations are never zero sum,” she said. “China and South Korea should encourage healthy competition.”