By Choi Sung-jin
As China increases pressure on Korea over the latter's proposed deployment of the U.S. missile defense system, concerns are mounting about Beijing's possible economic retaliation, business officials say.
"The Chinese government has only to say one word to its tour agencies – ‘no' (for Korean tours)," a Korean businessman operating in Beijing said. By just controlling the number of Chinese "youke" (overseas travelers) bound for Korea, it can deal a serious blow to the Korean economy, he said.
Chinese people account for half of foreign tourists in Korea. When the number of Chinese visitors plunged last summer because of Middle East respiratory syndrome (MERS), the nation's tourism revenue also plummeted, which in turn affected domestic consumption and dragged down further already sluggish economic growth.
Bilateral economic cooperation is rapidly chilling over the scheduled introduction of the U.S. missile shield here, called the terminal high-altitude area defense (THAAD) system, which Beijing suspects would neutralize its missiles.
Despite Seoul's denial, private businesses do not rule out the possibility of China taking trade retaliation against Korea.
China is by far the largest export market for Korea, absorbing up to a fourth of its foreign shipments. If Korea's exports to China fall by just 1 or 2 percent, it could work as the proverbial final straw, industry sources said.
Government officials seem to think China would not go as far as trade retaliation, violating World Trade Organization rules. They say China, which has emerged as one of the G2, carries greater international responsibility and has little justification to retaliate economically. "Politics is politics, and economy is economy," Finance Minister Yoo Il-ho told foreign correspondents in Seoul Monday.
There are many nontariff tools Beijing can use to deal a blow to Korean exporters, however, just as it did in the "garlic dispute" of 2000. Beijing suspended the import of Korean mobile phones and polyethylene at the time, in retaliation for Seoul's emergency tariffs to protect domestic garlic farmers from cheap Chinese produce.
"The separation of economy from politics, which has been maintained despite numerous diplomatic turbulences so far, may face a different phase if the bilateral relations aggravate further," an analyst said.
Chinese authorities, for instance, can enhance customs procedures for directly bought goods from Korea, or toughen sanitary standards for Korean agricultural and livestock products, such as kimchi and rice. The state-controlled Chinese media could also play a part by carrying articles that exaggerate minor blemishes in Korean export goods. If they restrict the viewing of Korean dramas, it could dash the hallyu boom, too.
"If China blocks Korean exports with ‘invisible' barriers, Seoul needs quickly to respond by making it an international issue," a trade expert said.
As China increases pressure on Korea over the latter's proposed deployment of the U.S. missile defense system, concerns are mounting about Beijing's possible economic retaliation, business officials say.
"The Chinese government has only to say one word to its tour agencies – ‘no' (for Korean tours)," a Korean businessman operating in Beijing said. By just controlling the number of Chinese "youke" (overseas travelers) bound for Korea, it can deal a serious blow to the Korean economy, he said.
Chinese people account for half of foreign tourists in Korea. When the number of Chinese visitors plunged last summer because of Middle East respiratory syndrome (MERS), the nation's tourism revenue also plummeted, which in turn affected domestic consumption and dragged down further already sluggish economic growth.
Bilateral economic cooperation is rapidly chilling over the scheduled introduction of the U.S. missile shield here, called the terminal high-altitude area defense (THAAD) system, which Beijing suspects would neutralize its missiles.
Despite Seoul's denial, private businesses do not rule out the possibility of China taking trade retaliation against Korea.
China is by far the largest export market for Korea, absorbing up to a fourth of its foreign shipments. If Korea's exports to China fall by just 1 or 2 percent, it could work as the proverbial final straw, industry sources said.
Government officials seem to think China would not go as far as trade retaliation, violating World Trade Organization rules. They say China, which has emerged as one of the G2, carries greater international responsibility and has little justification to retaliate economically. "Politics is politics, and economy is economy," Finance Minister Yoo Il-ho told foreign correspondents in Seoul Monday.
There are many nontariff tools Beijing can use to deal a blow to Korean exporters, however, just as it did in the "garlic dispute" of 2000. Beijing suspended the import of Korean mobile phones and polyethylene at the time, in retaliation for Seoul's emergency tariffs to protect domestic garlic farmers from cheap Chinese produce.
"The separation of economy from politics, which has been maintained despite numerous diplomatic turbulences so far, may face a different phase if the bilateral relations aggravate further," an analyst said.
Chinese authorities, for instance, can enhance customs procedures for directly bought goods from Korea, or toughen sanitary standards for Korean agricultural and livestock products, such as kimchi and rice. The state-controlled Chinese media could also play a part by carrying articles that exaggerate minor blemishes in Korean export goods. If they restrict the viewing of Korean dramas, it could dash the hallyu boom, too.
"If China blocks Korean exports with ‘invisible' barriers, Seoul needs quickly to respond by making it an international issue," a trade expert said.
