South Korea's finance minister on Monday ruled out the possibility of decoupling from China, calling the world's second-largest economy Seoul's "most important partner" for economic cooperation.
South Korea has long pursued economic cooperation with China while relying on the U.S. security commitment to deter potential North Korean aggression, a delicate balance that is being questioned as Seoul leans toward Washington, strengthening economic security through closer ties with the U.S.
Finance Minister Choo Kyung-ho said South Korea has no plan to decouple from the Asian neighbor.
"We should not consider efforts to bolster the relationship with the United States as a move to disregard China," Choo told lawmakers in a parliamentary session. "We have never announced a plan to decouple from China, and we have no intention to do so."
The comments came as South Korea's exports to China fell 23.4 percent on-year to $6.79 billion over the first 20 days of the month, despite hopes over the positive impact of its reopening. Outbound shipments to the United States edged down 2 percent to $5.8 billion.
China has become South Korea's largest trading partner and accounts for about a quarter of South Korea's total exports.
South Korea's exports fell 16.1 percent on-year in the first 20 days of May. South Korea's trade deficit for this year has reached US$29.5 billion, already accounting for more than half of the record-high annual trade deficit of $47.8 billion in 2022.
Choo said South Korea's trade balance could improve after May and he expects a gradual recovery of tax revenue down the road as well.
"After May, South Korea's trade deficit will decrease, and we can anticipate a completely different performance in the fourth quarter," Choo said.
He said the government's tax revenue is also expected to rebound later in 2023 following an economic recovery.
"Although tax revenues have remained sluggish recently, I cautiously predict that they will gradually recover as the economy improves," he said.
South Korea's tax revenue slipped 24 trillion won ($18.1 billion) on-year in the first three months of 2023 following a slump in the real estate sector, government data showed earlier.
In March alone, the country's tax revenue came to 32.8 trillion won, down 8.3 trillion won from the previous year.
The ministry blamed the decline on the weak housing market coupled with sluggish exports, which in turn led to lower corporate profits.
Source: Yonhap News Agency