SEOUL: The South Korean economy is facing trials at home and abroad as China steps up its economic retaliation for Seoul’s Terminal High Altitude Area Defense (THAAD) deployment plan.
Some of China’s measures are already having a visible impact, including the cancellation of large-scale South Korea visits by Chinese tour groups. Stock prices for duty-free stores and businesses involved in cosmetics, logistics, and aviation fell across the board on Mar. 3 as news broke of the Beijing’s halt on sales of South Korean tourism products, with Hotel Shilla and AmorePacific seeing respective drops of 13.1% and 12.7%. The won-to-dollar exchange rate climbed by 14.5 to 1,156.1.
As the economic retaliation becomes increasingly overt, more and more observers are worrying about the impact spreading to other industries and businesses. China is South Korea’s single biggest trading partner, receiving 25.1% of its exports last year. Now there are growing fears that South Korean experts, which had been showing signs of recovery recently amid slumping domestic demand, could be once again hamstrung with China’s THAAD retaliation and the US’s intensifying protectionism.
Responding to reports of the travel product sales ban, the South Korean government said it first needed to investigate the facts.
“We’re reviewing the situation right now,” said the Ministry of Foreign Affairs.
A high-ranking source with the Ministry of Trade, Industry and Energy said, “In terms of national interests, we need to avoid a situation where things escalate into a head-on clash of tit-for-tat measures by the two governments.”
At a senior party-government meeting on Mar. 3, acting president and Prime Minister Hwang Kyo-ahn said, “Since intensifying objections from China are expected as the THAAD deployment moves closer to realization, we will continue monitoring China’s measures, bolstering our communication with China and establishing the necessary measures in a timely manner.”
Meanwhile, the South Korean embassy in China posted a notice on its website on Mar. 4 advising visitors of “an even greater need for caution with regard to our citizens’ safety in connection with recent developments related to the THAAD deployment, including the Lotte Group’s decision to provide a site.”
