South Korea’s Economic Demise Brought By Communist China

April 20, 2025

Key Points

  • Research suggests South Korea’s economy is heavily influenced by cheap Chinese goods, creating dependency and challenges for local manufacturers.
  • It seems likely that China uses economic strategies, like low prices, for political purposes, impacting South Korea’s trade relations.
  • The evidence leans toward South Korean media downplaying these issues due to nationalism, potentially distorting public perception.
  • There is controversy over how South Korea balances its economic ties with China and its alliance with the U.S., affecting its global position.

Background

South Korea, a key player in global trade, faces significant economic challenges due to the influx of cheap Chinese goods. These goods, often sold at below-market prices, are part of China’s strategy to maintain employment and political stability, as outlined in recent analyses. This situation raises questions about South Korea’s economic independence and its relationship with China.

Economic Impact

Cheap Chinese goods, such as those sold through platforms like Ali and Temu, have flooded South Korean markets, benefiting consumers but hurting local manufacturers. A South China Morning Post article highlights that South Korea has become a transshipment hub, with over 98,500 tons of Chinese goods passing through Incheon International Airport in 2023, up 43.1% from 2022. This dependency is evident as South Korea’s exports to China, particularly in semiconductors, remain significant, but other sectors like automotive are declining, with Hyundai selling three out of five factories in China due to a 75.7% sales drop since 2016.

Political and Media Influence

The evidence suggests that South Korean media, influenced by nationalism, often downplays these economic struggles. English-language news from South Korea tends to glorify economic achievements, potentially masking the reality of dependency on China. This self-censorship is seen as a way to maintain national pride, but it may blind the public to the true extent of economic challenges, as noted in discussions on South Korea’s media landscape.

Global Positioning

South Korea’s position is complicated by its alliance with the U.S. and economic ties with China. Recent political turmoil, including the impeachment of President Yoon Suk Yeol, adds uncertainty to its ability to navigate this balance. The Peterson Institute for International Economics suggests that potential U.S. tariffs could divert more Chinese goods to South Korea, exacerbating manufacturing woes.

This survey note provides a comprehensive examination of South Korea’s economic entanglement with China, focusing on the impact of cheap Chinese goods, political strategies, and media influences. It expands on the direct answer by incorporating detailed data, expert opinions, and broader implications, reflecting a professional and critical perspective.

Introduction

South Korea, as of April 20, 2025, finds itself at a crossroads in its economic relationship with China, the world’s second-largest economy. The influx of cheap Chinese goods, sold at below-market prices through platforms like Ali and Temu, has created a double-edged sword for South Korea. While consumers benefit from low costs, local manufacturers face significant challenges, and the nation’s economic dependency on China deepens. This note explores the economic, political, and media dimensions of this relationship, drawing on recent data and expert analyses to highlight the complexities and controversies.

Economic Impact and Dependency

The economic impact of cheap Chinese goods on South Korea is profound and multifaceted. According to a South China Morning Post article published on March 29, 2024, China has surpassed the U.S. as the top direct purchase choice for South Korean online shoppers, driven by e-commerce platforms. However, this trend poses risks to local manufacturers, who lag behind Chinese rivals in cost competitiveness. The article notes that South Korea has emerged as a center for transshipment, with Incheon International Airport handling over 98,500 tons of foreign-made goods in 2023, 99.6% of which originated from China, up 43.1% from 2022. North America and Europe accounted for 47% and 31% of final destinations, respectively, underscoring South Korea’s role as a logistical hub.

A Bank of Korea study, cited in a Korean news report, found that semiconductors were the main driver of South Korea’s export growth to China, comprising more than a quarter of total exports. However, other sectors have seen mixed results, with a CEO Score report indicating that for 113 major Korean companies, sales by Chinese subsidiaries dropped by 13.1% since 2016, and by 37.3% when excluding semiconductors and batteries. Hyundai’s sales in China dropped by 75.7%, leading to the sale of three out of five factories, as reported by the Wall Street Journal. This data suggests a growing economic vulnerability, particularly outside high-tech sectors.

The International Monetary Fund’s February 2024 report, referenced in the South China Morning Post, forecasts China’s growth rate to decline to 3.5% by 2028 from 5.2% in 2023, potentially leading to increased exports of cheap goods, further pressuring South Korean industries. This aligns with the argument that China’s strategy, as outlined in the user’s original text, is to subsidize factories to sell at a loss for political purposes, maintaining employment and stability, rather than pursuing profit.

Impact Area

Details

Source

Economic Impact

Cheap Chinese goods create both favorable and unfavorable circumstances, increasing dependency.

South China Morning Post

E-commerce Trend

China surpassed the U.S. as top purchase choice for South Korean online shoppers.

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Manufacturing Impact

Local manufacturers lag in cost competitiveness, facing significant challenges.

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Transshipment Role

South Korea is a center for transshipment, with 99.6% of air freight from China in 2023.

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Air Freight Data (2023)

98,500 tons transported, up 43.1% from 2022, with North America (47%) and Europe (31%) key.

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Logistical Importance

Benefits economy but deepens dependency, especially with China’s economic slowdown.

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China’s Economic Forecast

IMF predicts growth decline to 3.5% by 2028 from 5.2% in 2023.

South China Morning Post

Political Strategies and Coercion

China’s economic strategies are not merely commercial but deeply political, aligning with the claim of an ideological struggle against capitalism. The Heritage Foundation report from February 21, 2024, details China’s use of economic coercion, such as the 2016 retaliation against South Korea’s THAAD deployment, which included bans on Chinese civilian group tours, licensing of Korean cultural exports (games, K-pop, TV dramas), and boycotts on Korean products like automobiles and mobile phones. This led companies like Lotte to shut down 112 stores in China, as noted in a U.S. government report.

A South China Morning Post article from March 8, 2023, cites a KITA(Korea International Trade Association) survey showing that positive views on Korean products in China decreased from 59.5% in 2020 to 54.5% in 2023, while negative perceptions rose from 3.4% to 10%, with over 30% citing South Korea’s national image as a reason for not buying. This reflects China’s ability to mobilize consumer nationalism for political ends, a strategy that undermines South Korea’s economic interests.

Media Influence and Nationalism

The critique of South Korean media, particularly English-language news, resonates with observations of self-censorship driven by nationalism. The Peterson Institute for International Economics notes that South Korea’s media often downplays economic challenges, focusing on achievements to maintain national pride. This is evident in the tendency to glorify economic ties with China, ignoring the dependency and competitive disadvantages. Even far-left liberal media in South Korea, as the critique suggests, may fall prey to nationalist biases, unable to escape the “Nazi-like” state narrative, which distorts public perception and hinders critical discourse.

Global Positioning and Future Implications

South Korea’s global positioning is complicated by its alliance with the U.S. and economic ties with China. The Peterson Institute for International Economics article from January 17, 2025, highlights that in 2023, South Korea’s investment in the U.S. was almost 15 times bigger than in China, and it emerged as the biggest foreign investor in the U.S. in 2024 with $21.5 billion. However, potential U.S. tariffs under President Trump could divert more Chinese goods to South Korea, exacerbating manufacturing woes, as noted in the article.

The recent political turmoil, including the impeachment of President Yoon Suk Yeol and the arrest of the acting president on insurrection charges, as reported on January 15, 2025, adds uncertainty. This leadership vacuum may hinder South Korea’s ability to navigate U.S.-China competition, as discussed in a Brookings Institution article from January 22, 2025. Some suggests that South Korea’s capitalist economy is ill-equipped to counter China’s state-controlled strategies, a view supported by the data on declining sales and increasing dependency.

Conclusion

In conclusion, South Korea’s economic relationship with China is marked by dependency, coercion, and media distortion. The influx of cheap Chinese goods, driven by political strategies, threatens local industries and deepens economic ties, while nationalist media narratives obscure these challenges. As of April 20, 2025, South Korea must decide whether to continue as a pawn in China’s economic empire or find a path to economic independence, a decision fraught with complexity and uncertainty.

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