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China trade
EconomyChina Economy

Why China-South Korea trade drop-off may persist as US influence weighs on chips and tech

  • Caught between trade superpowers, Seoul saw South Korea’s exports to China fall 20 per cent in 2023 while imports from China decreased 8 per cent, year on year
  • Analysts suggest South Korea’s trade deficit with China will persist as Beijing reduces dependence on foreign chips

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Analysts expect South Korea’s trade deficit with China to persist as Beijing reduces its dependence on foreign chips. Photo: AP
Mia Nulimaimaiti
Beijing’s easing up on restrictions of graphite exports to Seoul’s major battery producers could signal a potential upturn in bilateral trade from last year’s low levels, but analysts warn that their exchanges may continue to be haunted by China’s strained relations with the US.
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The approved shipment of two graphite materials since late December, as reported by South Korea’s Yonhap News Agency on Sunday, came as the country saw its first trade deficit with China in three decades.

Graphite materials are widely used in batteries, fuel cells, metallurgy, and as a crucial component in the manufacturing of electronic devices. About 93.7 per cent of the synthetic and natural graphite that South Korea imported in 2022 came from China. China also remains South Korea’s biggest trading partner by a large margin.

However, Beijing has stepped up its efforts to reduce external dependencies amid prolonged trade tensions with Washington. It tightened up exports of the key battery material in late October, affecting downstream buyers in Japan, the United States, India and South Korea.

But the tension that spilled over to South Korea has shown signs of easing since leaders from China and the US met in November.

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