SEOUL, September 13 (AJP) - More of South Korea's semiconductors and electronic components now reach American buyers through factories in Southeast Asia than through factories in China, according to a Bank of Korea report published Sept. 13 on how trade routes have been redrawn since the U.S.-China conflict began.
In 2022, 18.6 percent of the South Korean computer, electronic and optical products that ended up in American consumption or investment had passed through Viet Nam, Indonesia, Malaysia, the Philippines or Thailand. The share that passed through China was 17 percent.
What South Korea sends straight to the United States has barely moved. Of all Korean-made value that ends in American final demand, 73.1 percent went directly in 2016 and 72.4 percent in 2022.
The change came in everything else. Across all industries, the share routed through China fell to 6.8 percent from 10.7 percent over those six years, while the share routed through the five Southeast Asian economies rose to 8.3 percent from 4.9 percent.
The Bank of Korea (BOK) calls the countries absorbing this work connector economies. They sit inside both systems at once, tied to American demand on one side and to Chinese production networks on the other, and they pick up trade that no longer moves between the two directly. Viet Nam, India and Mexico are the clearest cases.
The pattern took hold after 2017, when Washington and Beijing began stacking tariffs on each other's goods. Rather than give up either market, manufacturers shifted final assembly to third countries whose exports faced lower barriers, and the components kept arriving from the same suppliers as before.
Viet Nam has absorbed the largest share of that work on the South Korean side. Korean value shipped into Vietnamese plants in the computer, electronic and optical sector and ending in American final demand rose to 21 percent in 2022 from 12.8 percent in 2016. The share ending in Chinese final demand rose to 19.4 percent from 11.2 percent. Together the two markets accounted for 40.4 percent, against 24 percent six years earlier.
BOK reads the shift as a gain in resilience. More production sites and more shipping routes leave an exporter with options when a geopolitical shock closes one of them.
The arrangement carries a bill. Because so much Korean output now reaches the United States through Southeast Asia, trouble in the region travels back to South Korea instead of stopping at a foreign supplier's border.
Washington has tools aimed at exactly this kind of routing. Rules of origin decide which country a finished product legally comes from, and therefore which tariff rate it pays. Transshipment investigations test whether goods were actually manufactured where they were shipped from or merely passed through to disguise their origin. Tightening either would hit Korean companies operating plants in Southeast Asia along with the parts makers at home that supply them.
BOK recommends treating the connector economies as a buffer while cutting reliance on any single production site or route.
The findings rest on the Organization for Economic Cooperation and Development's international input-output tables covering 2016 to 2022, and the trade-routing figures stop at that year. BOK judges that the pattern has held since, citing export strength in Viet Nam and Malaysia, both of which serve artificial intelligence supply chains.
Direct goods trade between the United States and China fell 39.9 percent between 2022 and 2025 on American figures. Global goods trade grew over the same period.
AJP Takeaways
- The Bank of Korea reported that 18.6 percent of South Korean computer, electronic and optical products reaching American final demand in 2022 passed through Viet Nam, Indonesia, Malaysia, the Philippines or Thailand, above the 17 percent that passed through China.
- The Bank of Korea found that the share of Korean-made value going directly to the United States held near steady at 73.1 percent in 2016 and 72.4 percent in 2022, with the entire shift occurring in indirect routes, where China fell to 6.8 percent from 10.7 percent and the five Southeast Asian economies rose to 8.3 percent from 4.9 percent.
- The Bank of Korea warned that tighter U.S. rules of origin or transshipment investigations aimed at Southeast Asia would reach Korean companies running plants in the region along with the domestic parts makers that supply them, and recommended cutting reliance on any single production site or route.
- The Organization for Economic Cooperation and Development supplied the international input-output tables behind the analysis, which cover 2016 through 2022 and leave the trade-routing figures four years old. AJP added the data vintage and the explanation of how rules of origin and transshipment investigations work.
Copyright ⓒ Aju Press All rights reserved.
