Government restructuring long-term strategy adversely affected by accelerating Chinese semiconductor trade deficit

While China and semiconductors are accelerating trade deficits, the government's export stimulus policy is focusing on long-term strategies prioritizing domestic restructuring, which is counterproductive.
Ahn Deok-geun, head of the Trade Negotiation Headquarters, revealed in an interview with Maeil Business News on the 21st that the introduction of a long-term export support policy model based on “expansion of total export volume,” “expansion of 360 trillion won in trade finance,” and “customized trade strategy” as a policy to resolve the trade deficit.
In the 20 days of February, exports of passenger cars increased by 56.6% year-on-year, while semiconductors decreased by 43.9% and wireless communication devices also plunged by 25.0%.
In terms of trade with China, exports this month decreased by 22.7% year-on-year to $6.66 billion, but imports increased by 5.1% to $7.45 billion, showing a growing trade deficit with China.
Export growth is mainly led by passenger cars (56.6%), auto parts (22.5%), petroleum products (16.3%), and ships (21.7%), followed by the United States (29.3%), the European Union (18.0%), and India (26.0%). limited
In January, exports of memory semiconductors such as DRAM and NAND flash plunged 44.5% ($4.81 billion), and exports to China plunged 31.4% year-on-year in January.
Ahn Deok-geun, head of the Trade Negotiation Headquarters, said in an interview with Maeil Business News about the export support policy by 'expansion of total exports', "Last year's trade deficit of $47.5 billion accounted for only 3.3% of the total trade volume." above is the record. In the future, in addition to the main manufacturing industry, we will diversify our export portfolio from winning large-scale projects such as nuclear power plants and defense to promising items such as bio and agricultural and fishery products,” said the long-term contract, the policy to focus on nuclear power in the defense industry.
Regarding the export expansion policy, Director Ahn said, “It is important to improve the industrial structure. to representative field agricultural products. “We need a strategy to import good raw materials from abroad through ‘K Food’ (omitted) and then process and export them,” he said. and early implementation of export subsidies” and announced ‘early investment of trade finance for long-term domestic industrial restructuring’.
Regarding the export diversification policy, Director Ahn continued, "The Middle East, such as Saudi Arabia and the United Arab Emirates (UAE), is a new export market." The introduction of a long-term trade platform policy'.
<Trade deficit doubled year-on-year, semiconductor exports plummeted by 40%, ‘neighboring countries negligent’, see February 10, 2023. 1st quarter growth plunged, Bank of Korea ‘strong tightening in May’ industrial restructuring, April 25, 2022>