Backlash from China growing over THAAD
Chinese tourists shop at a Lotte Duty Free store in Seoul, Thursday. Lotte Duty Free’s website crashed Thursday afternoon, which the company claimed was due to China attacking its server as part of retaliation against the decision to deploy a U.S. anti-missile system here. / Yonhap
Beijing bans entire tour packages to Seoul in retaliation
By Park Hyong-ki
South Korea faces further retaliation including a currency swap suspension from China after it signed a land swap deal with Lotte Group for the deployment of a U.S. anti-missile system here, analysts said Thursday.
They say the planned deployment of a Terminal High Altitude Area Defense (THAAD) battery will adversely affect a wide range of Korean businesses beyond cultural content and fashion.
The China National Tourism Administration reportedly banned all tourist packages to South Korea in apparent retaliation to the THAAD plan. Yonhap News Agency reported the Chinese authority convened a meeting of tourist agencies in and around Beijing and ordered them to entirely stop sales of online and offline tour programs.
China has already started a series of apparent retaliatory measures against Lotte and other Korean companies operating in the nation. State-run Chinese media have been staging a campaign to boycott Lotte and other Korean products.
Chinese authorities are said to have begun a safety inspection of Lotte’s retail stores this week.
This follows tax audits and safety checks of Lotte’s retail stores in China last November as the Korean government sought out Lotte for land for the THAAD deployment.
On Thursday afternoon, Lotte Duty Free’s website crashed, which the company claimed was because China attacked its servers as part of its retaliation.
Analysts say the country’s $56 billion swap deal with China, which expires in October, could also fall prey to the heightening conflicts with China over THAAD. It accounts for almost half of all of Seoul’s global currency swap deals.
The seriousness of antagonism caused by the U.S.’ anti-missile battery deployment here may be a lot bigger than that of a dispute between Korea and Japan over a statue symbolizing Japan’s wartime sex slavery.
Following civil activists’ installment of the statue just outside the Japanese consulate in Busan, Japan called off bilateral currency talks.
“We can’t predict what will happen to the bilateral currency swap. But China has taken the THAAD issue very seriously from day one,” said Piao Renjin, a Chinese analyst at NH Investment & Securities.
“Already, we are seeing Chinese consumers protesting against Lotte outside of its marts. This anti-sentiment could expand further. Korea may likely face greater economic repercussions.”
The Ministry of National Defense and Lotte Group signed a land swap deal Tuesday to enable the U.S. Forces Korea to set up THAAD on the conglomerate’s golf course in Seongju, North Gyeongsang Province. In exchange, Lotte will receive a piece of military-owned land in Namyangju, Gyeonggi Province.
Kim Man-gi, a professor of Chinese language and literature at Sookmyung Women’s University, said that Korea would have to prepare for the worst-case economic scenario when the anti-missile defense system is deployed. Korea’s defense ministry said that it plans to deploy it by the end of this year.
“When that time comes, Korea’s economy will suffer a severe impact,” Kim said.
Kim is the author of “Why I Study China” and is dubbed a “China investment specialist” here.
“From China’s perspective, its economy can do fine without Korea. But this is not true for Korea because we rely on China for a quarter of our exports. Samsung chips and Hyundai cars assembled in China will likely be affected.”
After Japan’s suspension of the bilateral currency swap talks, the government said it will also not ask Japan to resume them, noting that Korea has record foreign reserves of $374 billion.
Currency swaps with global key currencies can help an economy, especially Korea, to cushion and stabilize its market from potential financial fallout and volatility.
China has been expanding monetary ties with Asian economies to boost the yuan as one of the key global currencies alongside the U.S. dollar, Japanese yen and the euro.