South Korea’s manufacturing sector remains disproportionately dependent on foreign demand—particularly from the United States and China. (Image courtesy of Yonhap)
SEOUL, May 22, 2025 (Korea Bizwire) — A new report warns that South Korea’s manufacturing sector remains disproportionately dependent on foreign demand—particularly from the United States and China—raising concerns about economic vulnerability amid ongoing global trade tensions.
According to data released Wednesday by the Korea Employers Federation (KEF), 58.4% of South Korea’s manufacturing GDP in 2023, or $282.4 billion out of a total $483.8 billion, was driven by external demand. This marks a steady rise from 52.7% in 2000, while the share linked to domestic demand declined from 47.3% to 41.6% over the same period.
By contrast, the foreign demand share for manufacturing GDP in the U.S. and China stood at just 24.1% and 29.9% respectively, with Japan at 40.6% and the global average at 42.4%.
South Korea’s manufacturing GDP showed the highest dependency on the U.S. (13.7%) and China (10.8%), with smaller shares linked to Japan (2.6%) and India (1.9%). While dependency on the U.S. slightly declined compared to 2000, reliance on China has more than doubled.
Combined, South Korea’s manufacturing reliance on U.S. and Chinese demand reached 24.5%—notably higher than Japan (17.5%) and Germany (15.8%), underscoring its exposure to geopolitical and economic shifts between the world’s two largest economies.
“The growing weight of U.S. and Chinese demand means that if trade tensions escalate or either economy slows, South Korea’s manufacturing sector could suffer greater disruptions than its global peers,” the report stated.
The concern is especially pronounced in the electrical equipment sector, which includes semiconductors. This segment’s overseas demand reliance surged to 76.7%, with 37.5% tied to the U.S. and China—a figure that exceeds Japan (33.2%) and Germany (20.9%) but remains below Taiwan (53.1%).
Despite this exposure, South Korea’s global manufacturing GDP share rose from 2.6% in 2000 (8th place) to 2.8% in 2023 (6th place). China soared to the top spot, increasing its share from 6.3% to 27.1%, overtaking the United States, which fell from 27.1% to 17.0%. Japan, Germany, and India followed in third to fifth place.
Ha Sang-woo, head of KEF’s Economic Research Division, stressed the urgency of policy support: “With mounting protectionism and shifting trade dynamics, our manufacturing sector—heavily reliant on external demand, especially from the U.S. and China—is increasingly exposed to global volatility. The government and political leadership must act decisively to strengthen our manufacturing competitiveness.”
M. H. Lee (mhlee@koreabizwire.com)
