South Korea has misgivings about its deep dependence on Chinese supply chains.

(Reuters)

[Compilation of Wei Guojin/Comprehensive Report] South Korea experienced a trade deficit for seven consecutive months in October, and its largest trading partner, China, has experienced a trade deficit for two consecutive quarters for the first time since the two countries established diplomatic relations in 1992.

South Korean President Yoon Suk-yue held a trade strategy meeting recently, and put reducing the dependence of private enterprises on China as the top agenda.

The meeting was attended by key South Korean officials and industry leaders, the South China Morning Post reported.

Yin Xiyue emphasized, "Although the government believes that the country's economic growth should be led by the private sector, the problem of export growth cannot only be left to private companies, but also requires the support of the government's active and advanced deployment."

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The report said that Seoul is vigilant that South Korea is producing many of the same products as China in terms of exports, while at the same time, South Korea is increasing its dependence on China for raw materials.

Sung Jin Kang, professor of economics at Korea University, said, "Because of the high trade dependence on China, the government wants to diversify imports and exports. The purpose of diversification is to reduce risks, because high dependence on a specific country will weaken political autonomy. nature, and in trade disputes, it is difficult to gain a favorable position.”

The South Korean government stated that it will stabilize and diversify the local supply chain by promoting an early warning system for key raw materials and supporting companies to reserve products from different countries.

At the same time, an additional US$100 million will be allocated next year for R&D in industries such as materials, components and equipment.

Instead of reducing reliance on China, the South Korean government will also help companies expand supply chains in the Association of Southeast Asian Nations (Asean) as part of a larger strategy to reverse South Korea's trade deficit.

The South Korean government announced the "Vietnam plus" (Vietnam plus) strategy. Since the current deployment of Korean companies in Southeast Asia is too concentrated in Vietnam, the South Korean government hopes to promote the diversification of the supply chain of enterprises in the Association of Southeast Asian Nations and expand the supply chain to Indonesia and Thailand.

The South Korean government also stated that companies that wish to withdraw from China, transfer to a third country, or return to South Korea will also receive government support.

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