South Korea’s annual trade volume passed $1 trillion for the first time Monday, making it the ninth country in the world to break the mark.
Only the United States, Germany, China, Japan, France, Britain, the Netherlands and Italy have logged an annual trade volume of over $1 trillion so far. Two of them ― Britain and Italy ― failed to maintain it last year.
The eight countries account for half of the world’s total trade, and excluding China, they are all advanced economies with per capita income of over $40,000. Korea’s figure of $1 trillion is made up of $515 billion in exports and $485 billion in imports.
“Achieving $1 trillion in trade means that Korea has entered the world’s center stage as a major player,” said Lee Woon-ho, director general of trade at the Ministry of Knowledge Economy.
President Lee Myung-bak called on his government to ensure the brisk exports continue.
“As we move into the era of $1 trillion won in trade, we must closely analyze the situation and draw up strategies to continue the growth,” Lee was quoted as saying by his spokesman Park Jeong-ha during his weekly meeting with senior aides.
A state-funded think tank said Korea should foster more small but strong businesses to diversify exports as it greatly relies on six major items ― ships, petrochemicals, semiconductors, liquefied crystal displays, automobiles and mobile phones.
Each item takes up between six and 10 percent of the nation’s exports, according to the Institute for International Trade under the Korea International Trade Association.
Korea should also diversify its export markets and prepare for China’s rise as China has the most similar export structure to Korea, the IIT said in a report.
China is moving fast from an export structure in the 1990s focused on light industries ― apparel, toys and footwear ― to one that depends more on computers, electronic appliances and ships.
“To brace itself for China’s growth, Korea should secure core technologies, preoccupy overseas markets through free trade agreements and marketing strategies, and draw up win-win strategies based on its trade relations with China and Japan in different industries,” the IIT said.
The think tank noted that Korea should diversify export destinations beyond its overseas production bases to regions with a strong growth potential in domestic demand to ride on emerging economies’ steady growth.
Exports of intermediary goods and parts to overseas production units of Korean companies, especially those in China, have continued to grow faster than that of completed products since 2005.
Korea’s export destinations are highly varied compared to the European countries, which export mostly to other members of the European Union, keeping the country’s exports relatively protected from the global financial crisis. More than 60 percent of Korea’s exports are made to developing nations.
By Kim So-hyun (email@example.com