Advanced Industry Trade Specialization Index for Jan-Aug this year: Korea 25.6, China 27.8
China’s export competitiveness in most advanced industries such as electricity and machinery has increased.
Korean advanced companies’ R&D spending is only 24.9% of China’s.
Trade Specialization Index for Korean and Chinese Advanced Industries. Provided by the Korean Economic Association
, ‘[Financial News] It has been revealed that since 2022, Korea’s export competitiveness in advanced industries has been surpassed by China. Concerns have also been raised that Korea’s relatively lower research and development expenditure compared to China could lead to continued disadvantages in future competition.’,
, ‘The Korean Economic Association (KEA) announced the results of its analysis of Korea and China’s advanced industry import and export data and advanced company financial data on the 28th.’,
, “According to KEA’s calculation of the ‘Trade Specialization Index’, a measure of export competitiveness limited to advanced industries, from January to August this year, Korea scored 25.6, while China scored 27.8. Compared to ten years ago in 2014, China’s advanced industry trade specialization index rose by 16.0 points, indicating an increase in export competitiveness, whereas Korea’s index declined by 4.3 points during the same period.”,
, ‘In 2014, Korea’s advanced industry trade specialization index was significantly higher at 29.9 compared to China’s 11.8, but by 2022, it had been surpassed, and for three consecutive years, it has remained below China’s index.’,
, ‘When calculating the trade specialization index by advanced industry from January to August, China was found to have higher export competitiveness than Korea in sectors such as ‘electricity’ and ‘machinery’. In contrast to 2014, Korea’s index fell by 19.4 points in ‘electricity’ and 5.3 points in ‘mobility’, whereas China rose by 26.7 points and 64.0 points respectively, showcasing a stark contrast.’,
Growth Rate of R&D Spending in Korean and Chinese Advanced Firms. Provided by the Korean Economic Association
, ‘Furthermore, in its analysis of financial data from companies in both countries, KEA found that last year Korean advanced firms spent approximately $51.04 billion on R&D, which accounted for 3.5% of sales.’,
, ‘In contrast, Chinese advanced firms’ R&D spending was about $205.08 billion, four times that of Korea, with a sales ratio (4.1%) higher than Korea’s. Over the same period, the annual average increase in R&D spending for Korea was 5.7% since 2013, while China posted a significant higher annual average of 18.2%.’,
, ‘KEA stated that for Korea to secure a global competitive edge in advanced industries, its investment scale must be more aggressively increased beyond the current level. They suggested revising current regulations and providing multifaceted support to enable Korean advanced companies to invest more proactively in research and development (R&D).’,
, ‘To start, it was suggested that the tax benefit period for R&D and commercialization facility investments related to national strategic technology under the sunset clause of the Restriction of Special Taxation Act, expiring this year-end, be extended. Additionally, there is an emphasis on considering the inclusion of artificial intelligence (AI), defense, and nuclear sectors under national strategic technology.’,
, ‘Other recommendations include adopting a negative designation method for national strategic technology, introducing a direct refund system, extending carryover deduction periods, and expanding the scope of facility investment credit.’,
, ‘Lee Sang-ho, head of KEA’s Economy and Industry Division, stated, “For Korean companies, even if they operate at the same pace as Chinese companies, the smaller scale means they are at a disadvantage in advanced industry competitiveness. To ensure that the domestic advanced industry does not lag behind China, tax credits, coupled with investment subsidies and infrastructure development in power and water supply, among other varied policy boosts, are required.”’,
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