(Yicai Global) Feb. 15 -- South Korea, which has been struggling with a trade deficit for almost a year now, should latch onto the rebounding Chinese market to create more opportunities for exports and bolster economic growth, according to a report by a South Korean think tank.

China’s economic recovery could lift the size of South Korea’s exports by 0.55 percentage point this year, almost a third of last year’s growth, according to a report released by the International Trade and Commerce Research Institute under the Korea International Trade Association on Feb. 12.

And the jump in exports to China could hike South Korea’s gross domestic product by 0.16 percentage point in 2023, equivalent to one tenth of the country’s projected economic growth for the year, it added.

South Korea’s exports plunged 16.6 percent in January from the same period last year, marking the fourth straight month of contraction, according to the country’s Ministry of Trade, Industry and Energy. And it is the first time in 25 years that the country has had a trade deficit for 11 straight months.

South Korea should make the most of the Regional Comprehensive Economic Partnership, the world’s largest free trade pact, to leverage more opportunities in the Chinese market, said Nae-young Kang, author of the report and chief researcher at the association.

To normalize the relationship between the two countries after the difficulties of the Covid-19 pandemic, the South Korean government started issuing short-term visas to Chinese citizens again last week, and this week the Chinese Embassy in Seoul said it will grant short-term visas to South Korean citizens again from Feb. 18.

South Korea outperformed Japan last year to become China’s fourth biggest trading partner with the trade value between the pair exceeding USD360 billion, according to China’s General Administration of Customs.

South Korean investment in China was the fastest growing of all nations last year at 64.2 percent from a year earlier, according to China’s Ministry of Commerce. Its investment in China is mainly concentrated in the new energy and automobile sectors. Samsung Electronics, SK Group, Hyundai Motor Group and other Korean giants have all been actively expanding their business footprints in China.

There is no need to worry about the short term as the two countries have a strong trade foundation, Li Min, associate researcher with the China Institute of International Studies, told Yicai Global.

However, another market insider expressed his concern, “the pair’s relationship is greatly impacted by geopolitics, which is likely to affect consumer sentiment.”

Editors: Shi Yi, Kim Taylor