Seoul: South Korean companies anticipate that China could surpass Korea in all of its top 10 export industries within the next five years. This forecast comes from a survey conducted by the Federation of Korean Industries, indicating a potential shift in global economic dynamics.
According to Yonhap News Agency, Korea has already been overtaken by China in five of its top 10 export sectors, namely steel, general machinery, secondary batteries, displays, and automobiles and auto parts. The remaining sectors-semiconductors, electrical and electronics, shipbuilding, petrochemicals, and bio-health-are also expected to fall behind China soon. This potential overtaking by China poses a significant threat to Korea's export markets and overall economic growth.
The survey further reveals that Korea currently holds a branding advantage over China in six industries. However, this advantage is projected to diminish over the next five years. The surprising nature of these forecasts stems from the wealth of information and experience Korean companies have gained through intense export competition over the years.
In the petrochemicals industry, for instance, Korea's lead is minimal, with China rated closely behind. The Korean petrochemical sector is experiencing restructuring, influenced by China's expansion and the mass production of affordable products. This has led to a decrease in Korea's factory utilization rate to the 60 percent range.
The semiconductor industry also faces stiff competition. During the third quarter, China's Semiconductor Manufacturing International Corporation (SMIC) secured third place globally, posing a challenge to Korea's Samsung Electronics. Additionally, in the emerging artificial intelligence sector, China's advancements are significant, as illustrated by the success of Moonshot AI's Kimi K2 Thinking model.
Moreover, Korea's standing in the World Digital Competitiveness ranking has dropped significantly, falling from sixth to 15th place within a year. This decline is attributed to a decrease in talent ranking and regulatory framework, emphasizing the urgent need for Korea to develop digital and AI capabilities.
In the Federation of Korean Industries survey, 62.5 percent of respondents identified China as South Korea's biggest competitor in the global market. The United States and China are expected to widen their lead over South Korea in corporate competitiveness, with Japan also closing in on Korea's position.
China's ascent is propelled by substantial government-led investments in strategic industries, contrasting with South Korea's challenges of anti-business regulations and labor market rigidity. To ensure future economic growth, Korea needs to address these systemic obstacles and enhance its industrial competitiveness.
The next five years, leading up to 2030, are crucial for Korea's future. It is imperative that the government and political leaders implement necessary changes to safeguard Korea's standing in the global market.