An analysis report says that Korea's competitive edge in memory semiconductors is weakening in China. Korea benefited little from the trade dispute between the United States and China which continued throughout 2019, said the Korea Institute for International Economic Policy (KIEP) on July 7.

The report said Korea’s memory semiconductor exports to China fell 30.4 percent from US$63,719 million in 2018 to US$4,444 million in 2019. Korean memory semiconductors’ share in the Chinese market contracted by 4.89 percentage points from 51.8 percent in 2018 to 46.9 percent in 2019.

Korea's exports to China continued to decline in 2020 as they did in 2019. KIEP attributed the decline to the weakening of Korea's competitiveness in high-tech products including memory semiconductors. It noted that 77.9 percent of the decline in exports to China in 2019 was attributable to a drop in exports of high-tech products to China.

In fact, Korea's exports to China dropped 16.0 percent in 2019, larger than the 10.4 percent decrease in exports to the world. Korea’s exports to China in the January-May period of 2020 also decreased 9.4 percent from the same period of 2019.

Overall ICT exports fell 19.8 percent in 2019 from a year ago. The decline for major items were 70.5 percent for electronic devices, 22.7 percent for electronic components, and 4.9 percent for telecommunication equipment.

The ASEAN and Taiwan took market shares from Korea, the KIEP report said. In fact, Korea's share of China's ICT product imports fell from 21.0 percent in 2018 to 17.5 percent in 2019, while those of ASEAN and Taiwan rose by 6.0 percentage points and 1.4 percentage points, respectively.

While the shares of Taiwan, the ASEAN and the EU in China's high-tech product imports rose, those of South Korea, Japan and the United States slid, it said.

In addition, it said that while the U.S.-China tariff war was expected to increase exports of Korean products to China as Korean products compete with U.S. products in the Chinese market, the actual effect was minimal. Korea's share of China's import market for items subject to additional U.S. tariffs decreased by 0.4 percentage point from 8.4 percent in 2018 to 8.0 percent in 2019.

"ASEAN and EU countries are enjoying benefits in China's import market as China imposes additional tariffs on U.S. products," KIEP explained. “But Korea partially benefited in items subject to the first regulation.”