China's economy and Korean companies

STEP 1China is Korea's biggest customer

The Korean economy grows by selling goods overseas (Lesson 2). Let's start by checking who the biggest of those overseas customers is and what that customer buys.

In 2025, how much did Korea sell and where?

According to the “2025 Annual Export and Import Trends” announced by the Ministry of Trade and Industry on January 1, 2026, Korea's 2025 exports were a record $709.7 billion. The country that took the most exports was still China, at $130.8 billion (18.4%). The US ($122.9 billion) and ASEAN ($122.5 billion) followed close behind. In the figure below, tap a region to see the amount, the share and the items sold most to that market. Tap “China's share, 20 years” to see how China's share has changed.

China's share has been falling steadily. According to Korea International Trade Association (KITA) trade statistics, the share of exports going to China first topped 20% in 2005 at 21.77% and rose to 26.80% in 2018. It then fell to 22.79% in 2022 and 19.74% in 2023, dropping below 20% for the first time since 2004, then to 19.5% in 2024 and 18.4% in 2025. Even so, nearly one out of every five dollars of Korean exports still goes to China. This ratio is called the share of exports to China.

China mostly buys “parts”

Most Korean exports to China are not finished goods but intermediate goods. The main items are materials and components that Chinese factories use to make other products, such as semiconductors, petrochemicals, displays and general machinery. In 2025 exports to China, the top item was again semiconductors, followed by petrochemicals in second, wireless communication devices in third and general machinery in fourth. Semiconductors did well, but the others fell, so exports to China declined 1.7% from a year earlier.

The reason this matters is simple. Demand for intermediate goods follows the utilization of Chinese “factories,” not Chinese consumers. That is why China's manufacturing cycle, that is, indicators like the PMI from Lesson 6, offers clues to the outlook for Korean exports. Consumer goods sold directly to Chinese consumers, such as cosmetics and food, are small in value but have a big effect on the stock prices of related sectors.

STEP 2Three paths from China's economy to Korean sectors

The phrase “China's economy is doing well” alone is not enough. Split China's economy into three engines and it becomes much clearer which news moves which Korean sectors.

The three engines and Korean sectors

First, factories (manufacturing). When Chinese factories run busily, orders for Korean intermediate goods such as semiconductors, displays, petrochemicals and machinery rise. Most of the exports to China you saw in STEP 1 take this path. Whether China's manufacturing PMI rises above 50 is the first signal.

Second, property and infrastructure. Building apartments and bridges in China requires steel, cement, construction equipment such as excavators, and a variety of chemical materials. China's property cycle connects to Korean steel, construction equipment and some chemical sectors. The problem is that this engine has been cooling for several years. According to China's National Bureau of Statistics, real estate development investment fell 10.6% in 2024 and 17.2% in 2025, and in January–August 2026 it fell another 19.9%, the biggest decline since records began. This trend is shortened to the China property cycle.

Third, consumption. When Chinese people open their wallets, Korean sectors such as cosmetics, duty-free shops, travel and casinos, and games and entertainment benefit. This is why duty-free and cosmetics stocks have swung widely whenever Chinese group tourism rises and falls. However, China's retail sales growth in January–August 2026 was only 1.1%, so the consumption engine is weak too.

See it in a picture: run the three engines yourself

Switch each engine between “Strong” and “Weak.” The sector cards below change color to show whether conditions are mostly favorable (green), unfavorable (orange) or mixed (yellow). The buttons at the top can also load real periods.

A customer and a competitor at once

China is a customer that buys Korean products and also a competitor that makes the same products and sells them to the world. Petrochemicals and steel are the classic cases. After China greatly expands capacity, if its domestic demand weakens, the surplus pours into the world market and drags down the prices of Korean products too. It is the situation where the supply curve from Lesson 3 shifts far to the right. In November 2025 the Ministry of Trade and Industry also cited “falling export unit prices from continued global oversupply” as the reason for weak petrochemical exports. So news that “China's economy is bad” hurts Korean chemicals and steel twice: orders shrink, and surplus Chinese volume presses prices down.

STEP 3China and Korea in the data

Now let's check with numbers how the three engines actually moved. We'll look first at the 15-year big picture, then at the short drama of the three months after the stimulus announcement.

The 15-year flow: exports to China and China's growth rate

The first tab overlays Korea's exports to China (bars) from 2010 to 2025 with China's real economic growth rate (line). Tap a bar to see that year's numbers. The second tab shows how Korean sector ETFs moved after the September 2024 stimulus.

The big picture is clear. In the early 2010s, when China was growing 7–10% a year, exports to China grew fast from $116.8 billion to $145.9 billion (2013). After China's growth fell to the 6% range, exports moved up and down between $120 billion and $160 billion. In 2021 they hit a record $162.9 billion with the post-COVID rebound (growth of 8.6%), but in 2023 China's weak economy combined with falling semiconductor prices (Lesson 3) to cut them 19.9% to $124.8 billion. In 2025 China grew about 5%, yet exports to China actually fell 1.7%. The STEP 2 point that “what drove growth matters more than the growth number” is confirmed by the numbers too.

In 2026 a different scene is unfolding. According to CEIC, which compiles Korea Customs Service statistics, exports to China in August 2026 were $24.1 billion, a monthly record. The surge in memory chip prices you saw in Lesson 26 lifted even exports headed to Chinese factories. At the same time China's property investment was falling by a record margin, so the same “China” is a tailwind for semiconductors and a headwind for steel and construction equipment.

September 2024: the stimulus and the three months after

On September 24, 2024, the People's Bank of China announced a 0.5 percentage point cut in the reserve requirement ratio, a 0.2 percentage point cut in the 7-day reverse repo rate, and a cut in rates on existing mortgages all at once. A bundle of policies like this is called China economic stimulus. Cutting rates and the reserve requirement ratio on the same day was a first in ten years. China's CSI 300 index rose 4.33% that day (Yonhap), and 15.7% in that week alone, its best week since November 2008 (Financial Times).

Look at the second tab of the chart above. Two weeks after the stimulus, KODEX Steel was up 8.2% and KODEX Energy & Chemicals up 7.9%. Hopes rushed first into sectors that rely on the property and infrastructure engine. Meanwhile, TIGER Cosmetics fell 2.1% over the same period and the KOSPI gained only 0.3%. This is interpreted as the stimulus focusing on finance and property, with little aimed directly at reviving consumption.

Three months later is even more interesting. At the end of 2024, energy and chemicals was 18.9% lower than before the stimulus and cosmetics 13.6% lower. Only steel held on to a level 5.8% higher. What the market was waiting for was not the announcement itself but numbers showing China's property and consumption actually reviving, but property investment in 2024 ended up falling 10.6% and fell even more in 2025. As you learned in Lessons 14 and 20, hopes get priced in quickly, and when the actual numbers fall short, they come out just as quickly.

For stocks: how to sort China news

You can check recent moves by sector on the Theme Map, and how macro factors such as export growth are reflected in sector conditions on the Impact Map in the Macro Map. It also helps to make a habit of reading the “exports to China” line separately in the export and import trends released on the 1st of each month (Lesson 26).

It is not always so. Even within the same sector, results differ widely by company depending on China sales share and competitiveness. And in many years other forces, such as US–China tensions, exchange rates and the semiconductor price cycle, matter more than China's economy. The sector links in this lesson summarize tendencies and are not investment advice.