As China has become South Korea’s largest economic partner almost overnight, it has also become a threat.
“For years, Korea has long been the low-cost, high-efficiency producer, but now Chinese labor is eating into the South Korean margins,” said Scott Snyder, Korea representative for the Asia Foundation, a research group partly financed by the United States government. “The Koreans have to run faster — they are starting to feel the warm breath of China on their backs.”
Korea’s leading exports to China last year were cellphones and computers, displacing steel and petrochemical goods. By 2010, the Korean government forecasts, China will be on a par with Korea in such major industries as cars, semiconductors and shipbuilding. In other industries, the gap is measured in months.
South Korea’s shipbuilders, the world’s largest, are turning to building liquefied natural gas carriers and other value-added vessels, since China’s shipbuilding industry is already focusing on the market for simpler vessels.
In 2000, Korea’s $53.4 billion in information technology production amounted to 5 percent of world production, below China’s 6 percent.