China’s rate cuts aimed at propping up its flagging economic growth are likely to prove a double-edged sword for Korea’s exporters. Shipments to China may rebound from a declining trend while competition with Chinese products will probably intensify in the global market.

China’s central bank last week slashed its one-year rate for deposits by 25 basis points to 2.75 percent and its one-year lending rate by 40 basis points to 5.6 percent. Speculation is growing that the unexpected measure will be followed by yet another cut in the benchmark interest rate.

China’s economic slowdown prompted the decision to cut rates for the first time in more than two years. Its economy grew by 7.3 percent in the third quarter, down from 7.5 percent in the previous three months. The growth rate is feared to dip below 7 percent in the fourth quarter, the slowest since 2009 at the height of the global financial crisis.

China’s deteriorating growth is posing a serious threat to Korea’s economy, which relies on the world’s most populous country for a quarter of its exports. So far this year, Korea’s shipments to China have slid by 0.4 percent, compared to an 8.6 percent increase last year.

If rate cuts boost corporate investment in the world’s second-largest economy by lowering borrowing costs, Korean companies may sell more goods to Chinese producers. But it should be assumed that the effect will be limited. China is running out of ways to stimulate growth. Over the past six years, China has seen its debt to gross domestic product ratio rise from 1.5 times to 2.5 times in parallel with its injection of more liquidity into the economy.

The depreciation of the Chinese currency, which is expected to follow rate cuts, will strengthen the price competitiveness of Chinese manufacturers, posing more challenges to Korean exporters in the global market. An increasing number of Korea’s major export items have overlapped with those of China in the past years as China is sharpening manufacturing technology and pursuing long-term industrial strategies similar to those being pushed by Korea.

Hence, local companies can hardly rely on the effect of China’s rate cuts. They should accelerate efforts to enhance their competitiveness to avoid being squeezed between Chinese challengers and Japanese rivals, which have been riding on the weak yen to expand their share in overseas markets.

With China joining other major economies in taking bolder monetary policies, Korea’s central bank is under mounting pressure to further cut its benchmark interest rate, which was lowered to 2 percent in October. What makes its decision difficult is the concern that additional rate cuts may trigger an outflow of capital and increase the already-bloated household debt.

It seems that the Bank of Korea will be tilted toward a further rate cut. But the measure should be accompanied by a set of more effective and sophisticated policies to prevent the economy from sliding into deflation.