SOUTH KOREA has been urged to reduce its economic dependence on China as the latter may record its third slowest growth performance in 2022 since the late 1970s.
Economic experts said though South Korea has been diversifying its export markets, there seemed to be little progress.
Hyundai Research Institute senior economic researcher Joo Won said there don't seem to be any countermeasures for the short term if the Chinese economy gets worse.
According to a Korea Times report, economists have also stressed the need for the country to capitalise on the United States - China decoupling in supply chains.
They said South Korea should move away from an export pattern that was characterised with heavy sales of intermediate goods to China and instead concentrate on expanding sales of consumer goods.
"You can't give up on China, because it remains the world's most lucrative market, despite its rapid slowdown in growth most recently," said Jun Bo-hee, a senior researcher at the Korea International Trade Association (KITA).
She said the pullout of factories and other drastic measures to reduce dependance on China was unrealistic, and the country should move towards making adjustments on its investment infrastructure in China.
The KITA economist said the US-China decoupling in supply chains should help South Korean businesses restructure their China-centered factory operations.
The trade war between the US and China is one of the factors attributed to China's projected economic slowdown, after its growth hit a low of four per cent in the final quarter of 2021.
Other causes are attributed to a prolonged Covid-19 pandemic, the property crisis triggered by the collapse of the real estate giant Evergrande, the Chinese Communist Party's (CCP) tightening grip on tech start-ups and other promising private enterprises, the plummeting birthrate and deepening wealth gap.
According to the Times report, multiple international financial institutions have forecasted the world's second-largest economy to expand between four to five per cent, which will be the lowest in 32 years.
The figure in 1990 was 3.8 per cent and 2.3 per cent in 2020.
"Taking such background into account, forming a two track manufacturing structure abroad in line with two envisioned supply chains will be helpful, with one to be led by the US and the other by China," Jun said.
She said this does not mean supply chains infrastructure will be built in either of these two countries.
She explained that factories exporting to the US can be set up in West European nations, and the ones for export to China can be built in Southeast Asian or Latin American countries.
Lee Sang-ho, head of the Korea Economic Research Institute's (KERI) economic policy team said developing countries in Southeast Asia were being touted as South Korea's next manufacturing destinations in replacement of China.
"Vietnam and other Asean countries have been mentioned whenever issues of diversification of export markets was brought up. And for this reason, forming a two-track manufacturing structure can be helpful on our path to such a goal."
South Korean customs data showed China accounted for 25.2 per cent of the country export worth US$644.4 billion, last year.
The Hyundai Research Institute said that for every one percentage point fall in Chinese GDP growth, South Korea's economy will contract by 0.5 percentage points.