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ABSTRACT
The article examines the structural changes of China’s import market for domestic demand and the corresponding structural changes of Korea’s exports to China for Chinese domestic demand. Using 8-digit HS code data covering the period 2006–2014 and analyzing the processing steps as well as by industry, this study reveals that while the share of ordinary trade in total China’s imports has increased rapidly, the share of processing trade has decreased continuously since the mid-2000s. The article also shows that Korea’s exports to China is still processing trade-oriented. The slowdown of Korea’s exports to China is because of the concentration on processing trade, intermediate goods, electronics and chemistry.
Notes
1. Processing trade includes processing with supplied materials and processing with imported materials. Under processing with supplied materials, the imported materials and parts are supplied by the foreign party which is also responsible for selling the finished products. The business enterprise does not have to make foreign exchange payment for the imports and only charges the foreign party a processing fee. Under processing with imported materials, the business enterprise makes foreign exchange payment for the imported materials and parts and exports the finished products after processing.
2. The import growth rate of metal mining and basic metal products, which accounted for 68% and 8.6% of primary industrial supplies imported into China for domestic use, fell sharply from 31.6% and 25.0% in 2006–2009 to 12.0% and 2.1% in 2009–2014. And the growth rate of imports of chemicals and chemical products, which accounted for 3.3% of primary industrial supplies, decreased slightly from 13.7% to 11.2% over the same period.