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Virus to hit S. Korea 2nd hardest if China's supply of intermediary goods disrupted

All News 14:53 February 18, 2020

SEJONG, Feb. 18 (Yonhap) -- The rapidly spreading coronavirus in China is expected to hit South Korea second hardest if the virus epidemic forces Beijing to disrupt its supply of intermediary goods to Seoul, a report showed Tuesday.

According to the report by the Korea Institute for International Economic Policy (KIEP), China's exports of intermediary goods to South Korea stood at US$75.1 billion in 2017, accounting for a 6.5 percent of Beijing's total exports of intermediary goods.

The United States was the largest importer of China's intermediary goods in 2017, with the ratio standing at 10.7 percent, the report showed.

That was followed by Japan with 5.5 percent, Germany with 2.7 percent and Taiwan with 2.7 percent.

"If the supply of Chinese-made intermediary goods is disrupted, it will have a negative impact on Korean firms doing business in China," the report said. "Also, it could have a negative impact on Korean exporters as China's economy slows."

Virus to hit S. Korea 2nd hardest if China's supply of intermediary goods disrupted - 1

South Korea's economic dependence on China has made it increasingly vulnerable to risks, including Beijing's retaliation for Seoul's decision to deploy a U.S. anti-missile system and an economic downturn in the Chinese economy, analysts said.

Concerns are growing over South Korea's export performance down the road amid the spread of the COVID-19 virus.

It is widely feared that the outbreak and spread of the novel coronavirus, believed to have originated in the Chinese city of Wuhan, will dampen China's economic growth in the first quarter.

China is South Korea's top trading partner, with slightly over 25 percent of its overseas shipments going to the world's second-largest economy after the U.S.

International ratings agency Standard and Poor's recently suggested that the virus could lower China's economic growth by 70 basis points to 5 percent this year, with a peak effect in the first quarter before a rebound begins in the third quarter.

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