Home Business FKI “The ‘strategic value of the US’ in the Korean economy is rising again” – Cheonji Ilbo

FKI “The ‘strategic value of the US’ in the Korean economy is rising again” – Cheonji Ilbo

by news dir
overseas export. (Source: Getty Images Bank)

[천지일보=이우혁 기자] The strategic value of the US in the Korean economy appears to be rising again. The proportion of exports to the US out of total exports this year is expected to exceed 15% for the first time since 2004, and since 2017, the US has emerged as Korea’s number one foreign investor.

Another reason is that domestic companies’ sales to the U.S. are expected to surpass those to the public last year. The FKI announced the results of this analysis on the 24th and presented tasks for expanding trade with the United States.

Exports to the US this year to exceed 15% for the first time in 17 years

In the five years from 2017 to this year, cumulative exports to the US increased by 17.9% compared to 2012-2016, but exports to China only increased by 7.1%. In particular, exports to the US increased by 31.0% this year compared to the previous year, and the share of the US in total exports recorded 15.0%, the highest since 2004 (16.9%). 25.2%, 1.6%p lower than the peak.

This result is analyzed to be because Korea’s exports to China declined for two consecutive years in 2019 and last year due to a decrease in overall import demand from China due to US import regulations from China and a decrease in demand for Korean memory semiconductors by Chinese companies. On the other hand, Korea’s exports to the US are due to the fact that exports of semiconductors, computerized recording media, and rechargeable batteries have increased by more than 50% in the past two years due to the increase in demand for electric vehicle batteries in accordance with the eco-friendly policy of the Biden administration and the spread of the non-face-to-face economy due to Corona 19. am.

Export trends to China and the US.  (provided by the Federation of Korean Industries)
Export trends to China and the US. (provided by the Federation of Korean Industries)

The United States re-emerged as Korea’s No. 1 foreign investment country

In the four years from 2017 to last year, Korea’s accumulated foreign direct investment in the US increased by 75.1% compared to 2013-2016, while that of China’s outward direct investment increased only 23.5%.

The rapid increase in direct investment in the US during the Trump administration is analyzed as a result of the US requesting Korean companies to invest in the US and strengthening incentives to create jobs in the country. As overseas investment in the United States has soared, the United States has emerged as Korea’s number one investor since 2017 based on the investment balance.

In the future, major companies such as Samsung, Hyundai Motor, SK, and LG will continue to respond to the Biden administration’s 4 core item (battery, semiconductor, core minerals/materials, and pharmaceuticals) supply chain reconstruction strategy, and by 2025, a total of 39.4 billion won in foundries and batteries. As they plan to invest in US dollars (about 44 trillion won), the increase in direct investment by Korean companies in the US is expected to continue for the time being.

As such, since 2017, sales to the U.S. have steadily increased due to the increase in exports and direct investment to the U.S., but sales to China peaked in 2013 ($250.2 billion) and decreased to $140 billion due to reduced local demand and intensified competition in China. Sales to the US by domestic companies are expected to outpace sales to the public last year.

Mi-wook investment plan for major companies during the President's visit to the United States.  (provided by the Federation of Korean Industries)
Mi-wook investment plan for major companies during the President’s visit to the United States. (provided by the Federation of Korean Industries)

◆“The next government should strive to resolve trade difficulties with the US”

Kim Bong-man, head of the FKI International Cooperation Office, said, “The Biden administration is putting a strong drive on the rebuilding of the supply chain for four key items (battery, semiconductor, core minerals and materials, and pharmaceuticals) based on Made in America. It is highly likely that Korean companies’ direct investment and exports to the US will increase further,” he said.

He added, “The two countries must work together to respond quickly to the rapid movement to rebuild the global supply chain after COVID-19 and to further expand trade and investment between Korea and the United States,” he said. He emphasized the need for dialogue between Korea and the United States, providing business incentives to ensure voluntary participation of companies in supply chain changes, and protecting confidential business information of companies in this process.


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