[Editorial] Hope rekindled

South Korea’s annual exports topped $700 billion for the first time on Monday, making it the world’s sixth country to reach the milestone after the United States, Germany, China, Japan and the Netherlands.

The achievement came seven years after the country became the world’s seventh to post annual exports of $600 billion in 2018.

The outcome is encouraging, as it was achieved despite tariff pressure from the United States and the US-China trade conflict.

Fueled by stronger-than-expected demand tied to the global transition to artificial intelligence, semiconductors played a leading role, accounting for 24 percent of exports. Market diversification helped Korea overcome automobile tariff barriers and sustain strong car exports to Europe, particularly in hybrid vehicles. Riding the popularity of Korean cultural content, food and cosmetics have emerged as new export growth engines.

Samsung Electronics projects a record fourth-quarter operating profit exceeding 20 trillion won ($13.8 billion), sending a message of hope for the new year. Experts expect the semiconductor supercycle of robust demand to persist this year. For South Korea, a global memory chip powerhouse led by Samsung Electronics and SK hynix, it is a critical opportunity that must not be squandered.

The strong export performance brings a sense of relief, suggesting that Korea has successfully steered through mounting global trade challenges, but this is no time to let down its guard.

To build on its landmark export achievement, South Korea must navigate formidable competition from China.

As seen in the struggles of Korea’s petrochemical and steel industries under increasingly aggressive competition from China, sustained growth in semiconductor and automobile exports is far from assured. Moreover, Japan’s drive to reclaim its former status as a global leader in semiconductor supply poses a formidable challenge, while Taiwan shows no sign of loosening its grip on its foundry stronghold.

A business survey by the Federation of Korean Industries last month offers a troubling forecast: China could eclipse South Korea in corporate competitiveness, including price competitiveness and productivity, across all of Korea’s top 10 export items by 2030.

The world is now in the midst of rising economic nationalism and an intensifying struggle for technological dominance. Major economies are effectively staking their futures on the development of domestic industries, backed by aggressive support and deregulation. If Korea alone is left mired in excessive regulation, its global competitiveness will inevitably suffer.

The so-called Yellow Envelope Act, criticized for disproportionately favoring labor unions, is set to take effect on March 10. The government and the ruling party are considering measures such as reducing the workweek and extending the retirement age — policies that would add to corporate burdens.

China is reportedly weighing a massive policy package worth up to 104 trillion won — including subsidies and financial support — for its semiconductor industry, while Korea offers little beyond tax deductions.

If Korea is to avoid falling behind in the race for semiconductor hegemony, the government must act decisively to strengthen support for research and infrastructure, including power supply.

The landmark export performance last year reflects the tireless efforts of private companies. In their New Year messages, leaders of major business groups representing domestic companies called for a more growth-oriented environment to propel the Korean economy into its next leap.

The government and the National Assembly must not turn a deaf ear to the business community’s calls. Exchange-rate stability is the most urgent priority. The weakness of the Korean won against the US dollar has driven up the cost of imported materials, squeezing companies.

At a June meeting with leaders of six major economic groups, President Lee Jae Myung said companies are central to the nation’s economy and vowed to sweep away unnecessary regulations. More pro-business measures are needed to back the companies that have rekindled hope among Koreans with their remarkable export performance.