South Korean products are losing their competitiveness against Chinese goods that could reduce their outbound shipments down the road, a central bank report said Tuesday.
According to the report by the Bank of Korea, the competitiveness of South Korean products somewhat improved over the 2005-2013 period, but that the rate of improvement in Chinese goods, partly measured in terms of global market share, outpaced that of South Korean products.
"The country's global competitiveness has somewhat improved since 2005, but the range of improvement is smaller than that of China, meaning the gap between the two countries' competitiveness is narrowing," it said.
South Korea's exports to the world's second-largest economy continued to increase at a steady pace over the 2010-2013 period, but the rate of increase lagged behind the increase in China's overall imports, indicating a drop in the relative competitiveness of South Korean products in the Chinese market against those of other countries, it noted.
South Korean products are also believed to be losing their competitiveness against Chinese goods.
Between 2005 and 2013, the increase in the global market share of most South Korean products fell behind the rise in the global market share their Chinese competitors, the report said.
Also showing a narrowing gap between the competitiveness of South Korean and Chinese goods, the revealed comparative advantage (RCA) of South Korean semiconductors only inched up to 3.39 points in 2013 from 3.13 in 2005 while that of Chinese semiconductors surged to 1.60 from 0.70 over the cited period.
The RCA, which shows the relative competitiveness of a product or an industrial sector over those of others, of South Korea's entire electronics sector slipped to 1.79 points from 1.85 points over the 2005-2013 period, while that of China advanced to 2.11 points from 1.88 points.
The slowing growth in exports to China was also attributed to South Korea's apparent failure to accommodate changes in China's economic structure and the tastes of Chinese consumers.
In the 2005-2013 period, products from four major industrial sectors -- the electronics, machinery, petroleum-petrochemical and steel industries -- accounted for 91.6 percent of South Korea's total exports to China, while the No. 1 economy in Asia continues to expand its imports of consumer goods.
The report said consumer spending was expected to account for 42.7 percent of China's gross domestic product (GDP) in 2020, up from 37.7 percent in 2014, while the proportion of China's exports to its GDP is expected to shrink to 17.5 percent from 38.9 percent over the cited period.
"South Korea needs to continue maintaining the competitiveness of its key products in China while realigning its economic structure to better complement that of China and thus utilizing China's future economic development as an opportunity for growth of its own," it said. (Yonhap)
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