(Bloomberg) -- South Korea will continue efforts to diversify its export markets as the U.S.-China trade war escalates, according to a key new member of President Moon Jae-in’s economic team.
The government will also take a "flexible" approach raising the nation’s minimum wage to Moon’s target of 10,000 won ($9) per hour, said Yoon Jong-won, new senior secretary to the president for economic affairs.
"If the conflict intensifies and increases uncertainty over global trade growth, it will certainly have an impact on Korea’s exports and investment," Yoon told reporters on Aug. 3. Yet he also sought to calm concern about how much Korea could be hurt by a decline in demand for parts and components from China, which uses these intermediate goods in products it assembles and then sells in markets such as the U.S.
Yoon, who was a Korean representative at the Organisation for Economic Cooperation and Development before he joined Moon’s team in June said about 75 percent of the nation’s exports to its neighbor were for domestic Chinese consumption and that perhaps little more than 5 percent were ultimately headed for the U.S.
As part of Moon’s efforts to diversify markets for exports, he met Indian Prime Minister Narendra Modi outside New Delhi last month to celebrate the inauguration of Samsung (LON:0593xq) Electronics (KS:005930) Co.’s new mobile phone factory.
Amid concern Korean export growth may lose steam and that inflation is still short of the central bank’s 2 percent target, Yoon said: "The quarter-on-quarter increase of 0.7 percent of economic growth is the level around the potential growth rate and I don’t see any economic indicators yet that show that growth will slow further."
While Yoon didn’t elaborate in detail on his comment about taking a more "flexible" approach of raising the minimum wage to 10,000 won, it could indicate that the government may not rush to achieve this by 2020, as originally planned.
Minimum pay for workers is set to rise by 10.9 percent to 8,350 won per hour in 2019, slower than a 16 percent jump to 7,530 won for this year, the Minimum Wage Commission said in July.
Yoon has also been tasked with fostering a more innovation-friendly environment for businesses. He said this would help boost investment and jobs to spur growth in the longer term.
Still, the government has no plans to roll back higher company taxes following an increase last year, he said. It will continue pursue deregulation for companies that are seeking growth, while making competition fair and providing relief for people with insufficient income.
"China is catching up fast so we need to keep on innovating and upgrading our technologies, which will bring in more jobs and help the economy to grow," Yoon said.
