South Korean businesses are breathing a sigh of relief after the Chinese and Korean governments made moves to ratchet down hostilities and mend economic ties following a yearlong dispute over South Korea’s deployment of US THAAD missile defences on the peninsula. The Chinese government had instigated an unofficial partial boycott of South Korean goods and services, although it never explicitly linked this to the THAAD deployment, and South Korea’s tourism, cosmetics, entertainment and Auto industries have been suffering from falling sales in China.
Korean Business Has Been Feeling the THAAD Heat
The Bank of Korea has estimated that the dispute had knocked 0.4% from South Korean economic growth this year and an estimated 70% drop in Chinese tourist arrivals had lost the economy $6.5bn. Lotte Shopping reported a 45% drop in operating profit at its Korean stores and a 95% fall in same-store sales growth at its China operations, and Hyundai Motor saw a 40% fall in car sales in China.
Vice Finance Minister Ko Hyoung-kwon is hoping that economic relations can be upgraded to “a more sophisticated level of cooperation” and South Korean President Moon and China’s Xi Jinping are due to meet at the APEC summit at the end of this week and with Korean businesses looking for further signs of improved relations.