Many of the readers here are probably not familiar with the Korea JoongAng Daily. It’s a South Korean daily. I wanted to pass along this editorial:
The world’s most populous country saw its population decrease by 850,000 last year to total 1,411,750,000 for the first time since the Great Chinese Famine in 1961. The fall in population and working population will translate into that much of a decline in consumption and output. The phenomenon is a loss not just for the country but the world economy. South Korea relies heavily on external trade, especially with China. Exports to China made up 22.8 percent of total outbound shipments last year. Our 2,000 import items in raw materials and others rely on China for more than 80 percent. Outbound and inbound trade must brace for risks from China.
The economy must wean away from China. Government and corporate efforts must accelerate. Korea must pivot more aggressively towards India, rising as the next China, and Vietnam which was the largest surplus maker for Korea last year, as well as other Asean countries and the Middle East.
I found the editorial baffling. I simply don’t see a direct causal connection between a decline in China’s population and a decline in its trade with South Korea. If anything it might be the other way around.
South Korea runs a trade surplus with China. It doesn’t sell much in the way of consumer goods to China—most of its sales to China are integrated circuits, machinery, and refined petroleum. Even with a declining population it’s hard for me to imagine China’s demand for refined petroleum products declining in the near to medium term. If anything I expect China’s demand for ICs and machinery to rise. Just because it has fewer people doesn’t mean it will stop manufacturing for export.