Taps Coogan – August 4th, 2023

In foreshadowing of the new geopolitical map, South Korea has seen its exports to the US overtake its exports to its neighbor China for the first time since 2003. From the FT via Acemax Analytics:

To underscore the point, South Korea’s exports to China haven’t grown since Xi Jinping become Chairman-for-Life of China in 2012. Meanwhile, exports to the US exploded in the last couple years as western companies seek to extricate themselves from China by moving production to ‘friendlier’ countries.

Of course, the devil is always in the details. China’s exports to South Korea have exploded at the same time South Korea’s exports to the US have risen, highlighting the challenge of ‘friendshoring.’ Actually removing China from supply chains, as opposed to passing their exports through third party countries for value added steps, is going to take years of whac-a-mole.

Nonetheless, the ‘importance’ of the US as an export market is likely to rise as China’s economic growth slows in coming years and its population shrinks.