Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Korea wary of China's economic retaliation following Yoon's Taiwan remarks
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By Park Jae-hyuk
By Park Jae-hyuk
Concerns are growing over China's possible economic retaliation against Korea after President Yoon Suk Yeol's recent remarks on Taiwan elicited angry responses from Beijing, according to sources, Tuesday.
They fear that the world's second-largest economy could introduce measures similar to those taken against Korean retailers and exporters when the U.S. deployed a Terminal High Altitude Area Defense (THAAD) battery here in 2017. China claimed that the powerful radar of the THAAD battery could be used to spy on its military activities.
After rumors spread that the Chinese customs agency ordered tightened inspections of cargo arriving from Korea after Yoon criticized Beijing's “attempts to alter the status quo by force,” the Korean government and businesses are paying close attention to Beijing's next step.
“We are aware that Korean businesspeople in China shared the rumor on social media,” a foreign ministry official told reporters, Friday. The official added that diplomatic offices will continue to monitor the situation.
On Monday, the Ministry of Trade, Industry and Energy said there were no delays seen in customs clearances of Korean exports to China.
“China is the largest importer of Korean products and one of the most important economic partners,” said Kim Wan-ki, head of the ministry's office of international trade and investment. “We are carefully monitoring the situation based on close communication with relevant ministries, the Korea Trade-Investment Promotion Agency (KOTRA) and the Korea International Trade Association,” Kim added.
A source in the air cargo industry, however, claimed that customs clearances of Korean products have been delayed recently in major cities in China, such as Shanghai and Tianjin.
“Korean components should be sent to factories in China earlier than initially planned,” the official said. “It even takes less time when using routes via Taiwan or Vietnam.”
Korean duty free store operators, as well as apparel and cosmetics makers, which have been anticipating rising revenues from China's reopening from COVID-19 restrictions, are keeping a close watch on whether Chinese consumers will boycott Korean products, just as they did in 2017 against Lotte, which offered the site to deploy the THAAD battery. Beijing's retaliatory action eventually forced the conglomerate to leave the Chinese market.
“We have yet to suffer any damage from the recent political tensions, but we have remained vigilant about the situation,” a retail industry official said.
There are also rumors that a Chinese municipal government asked local electronics firms to give the reason why they use semiconductors made in foreign countries. Industry officials view the measure as an attempt to restrain the exports of Korean semiconductors to China.
If the bilateral relationship worsens, Korean exports to China will likely decline further.
According to the trade ministry, Korean exports to China last month fell 26.5 percent year-on-year, due to a chip industry slump. In addition, Korea saw a $2.27 billion deficit in trade with China, extending its shortfall for seven months in a row.