Share of Japanese imports in IT components falls, but Korea's reliance on China rises

South Korea has managed to lower its reliance on Japan for materials, parts, and equipment over the last three years since Tokyo removed the country from the “whitelist” for preferential trading and banned certain critical chemicals for wafer fabrication process, but its dependence on Chinese parts and materials have shot up.

According to the Ministry of Trade, Industry, and Energy’s data on Monday, the share of imports of materials, parts, and equipment from Japan has gradually come down from 17.2 percent in 2020 to 15.8 percent in 2021 and 15.3 percent this year.

But the value has increased. Imports in the area of materials, parts, and equipment from Japan amounted to $23.3 billion in the first seven months of the year, following full-year value of $39.3 billion in 2021 and $34.6 billion in 2020.

Trade deficit with Japan as result has widened.

It has incurred a deficit of $14.5 billion in trade with Japan as of July this year after a deficit of $24.4 billion last year and $21.3 billion in 2020.

The Japanese government hit South Korea with various sanctions and restricted exports of semiconductor and display materials after Korea’s Supreme Court ordered Japanese firms to compensate victims of wartime forced labor.

Korea’s imports from China in the sector has gone up sharply.

Imports of materials, parts, and equipment from China have surged from $54.2 billion in 2020 to $71 billion in 2021. During the first seven months of this year, imports have already recorded $45.1 billion and are expected to reach the $77 billion mark by the end of the year.

The share of Chinese imports in the materials, parts, and equipment sector has reached nearly 30 percent, recording 29.5 percent in July this year.

Korea’s surplus in the area in trade with China has fallen to $35.5 billion in 2021 from $36.3 billion in 2020. This year’s surplus is expected to stop at $23 billion as the black reached $13.5 billion as of July.

The increase in imports of materials and parts for secondary batteries and the operation of Samsung Electronics plants in China increased reliance on imports from China,” said Kim Jung-sik, an emeritus professor at Yonsei University’s School of Economics.

Meanwhile, the trade in the materials, parts, and equipment sector logged a surplus of $62.4 billion with exports coming to $215.1 billion and imports $152.6 billion during the January-July period this year despite widened deficit in the overall trade balance.

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