South Korea could suffer $20 billion in economic losses if its already-soured relations with China exacerbates, an industry report said Tuesday.
Korea is already suffering from China’s apparent economic retaliation measures, such as banning Chinese travelers from visiting Korea and applying stricter customs procedures on Korean goods, as China has been asserting that the deployment of a US anti-missile system on the Korean Peninsula poses a threat to its territory.
A duty free shop specializing in cosmetics products is shut down in Mapo-gu, Seoul, Thursday. (Yonhap)
If the bilateral relations between Seoul and Beijing maintains the status quo, Korea’s revenues from Chinese travelers using duty-free shops and tourism spots in Korea will go down by $7.4 billion this year from 2016, and Korea’s exports to China will suffer a $2.6 billion loss, according to the report by the Korea Development Bank’s economic research institute.
If the relations further worsen with additional retaliation and the spread of anti-Korean sentiment, the revenues from duty-free shops and the tourism sector will plunge by $11.7 billion, and Korea’s exports to China will see an $8.3 billion loss -- resulting in a $20 billion economic loss in total, the report said.
About 68 percent of duty-free sales comes from Chinese travelers and China is Korea’s biggest export destination, taking up one-fourth of Korea’s total exports.
By sector, Korea’s cosmetics, duty-free shops and tourism businesses will be hit the hardest by Chinese retaliation against Korea, followed by autos, mobile phones, textiles, petrochemicals and shipping industries, the report said.
Korea’s semiconductors, displays, shipbuilding and construction will be rarely affected by the worsened bilateral relationship with China, it said.
By Kim Yoon-mi (email@example.com)