A growing number of Korean exports to China are losing competitiveness with local products as the second stage of free trade talks with China approaches, a study shows.
The Hyundai Research Institute on Thursday said the number of Korean exports to China that had a strong competitive edge over local products fell from 349 in 2010 to 299 last year. As recently as 2005, the number was 371.
The institute analyzed 1,247 Korean products shipped to China based on data from the Korea International Trade Association and classified them into four categories: absolute superiority, relative superiority, relative inferiority and absolute inferiority.
The 50 Korean exports that lost their absolute competitive edges to Chinese products were mainly steel, machinery and textiles. Steel and steel-related products saw the largest number of products lose their competitive edge. Among a total of 55 steel products exported to China, 14 out of 28 are no longer absolutely superior to Chinese products.
Imports to Korea of cheaper Chinese steel products have surged, while exports of Korean steel to China have dropped.
Also, eight Korean textile exports to China are no longer absolutely superior to Chinese products, as well as seven each in machinery and heavy equipment, as well as precision instruments.
"If the Korea-China FTA is signed, areas of the economy that lack competitiveness could take a big hit," said Chon Yong-chan at the institute "We need to come up with measures to support the competitiveness of rapidly-weakening sectors like steel, electronics and machinery."