China’s reopening stirs hopes that South Korea can turn around a record trade deficit

South Korea logged a US$12.69 billion trade deficit in January, with the total value of exports falling by 16.6 per cent from a year earlier

Exports to China decreased by 31.4 per cent in January year on year, due primarily to economic disruption from Covid outbreaks

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Trucks used to transport containers are seen at the Hanjin Shipping container terminal at the Busan New Port in Busan, South Korea. Photo: Reuters

Published: 10:00pm, 1 Feb 2023Updated: 3:26am, 2 Feb 2023

China’s reopening will help improve South Korea’s trade balance over time, the Korean finance minister said on Wednesday, as Seoul announced its biggest trade deficit ever in January.

A recovery, however, could be compromised by heightened American tech containment against China, which would weigh on South Korean semiconductor exports to its neighbour, analysts said.

South Korea recorded a US$12.69 billion trade deficit in the first month of the year, with the total value of exports falling by 16.6 per cent from a year earlier, bringing up four consecutive months of declining exports.

“The export and import data for January released today indicate that our economy is still in the middle of a severe cold wave,” said Choo Kyung-ho, South Korea’s deputy prime minister and Minister of Economy and Finance.

“The future trade balance will be influenced by many variables, but it is expected to gradually improve as seasonal factors diminish as January passes and the effect of China’s reopening is reflected with a time lag.”

Choo said disruption to China’s economic activity due to the pandemic was one of the main reasons why South Korea’s trade balance deteriorated in January.