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Lianhe Zaobao: South Korean Direct Investment in China Drops Sharply

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported on data released by South Korea’s Ministry of Finance showing that South Korea’s 2023 new direct investment in China dropped by 78.1 percent year-over-year, falling to US$1.87 billion. This is the largest decline in South Korean direct investment in more than 30 years, and it is the first time since 1992 that China has failed to rank among South Korea’s top five destinations for investment. The manufacturing sector  led the decline in investment.

The declining numbers reflect China’s changing role in South Korea’s economy as Washington seeks to reduce Beijing’s influence on global supply chains. The United States is about to replace China as South Korea’s largest export destination, importing products ranging from semiconductors to automobiles. South Korean companies have extensive exposure to key sectors in the U.S. and have been seeking to increase investment there to take advantage of the United States’ market scale and  government subsidies.

According to statistics from the Korea International Trade Association, China’s imports from South Korea last year were US$162.5 billion, a sharp drop of 18.8 percent from the previous year. This led to a US$18 billion trade deficit between South Korea and China, the first trade deficit seen during the 31 years since the establishment of diplomatic relations between China and South Korea.

Source: Lianhe Zaobao, March 15, 2024