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China Poised to Resort to Economic Retaliation with S. Korea Looking to Accept THAAD
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China Poised to Resort to Economic Retaliation with S. Korea Looking to Accept THAAD
  • By Jung Suk-yee
  • February 11, 2016, 01:15
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China is giving warnings against the deployment of the THAAD system in South Korea.
China is giving warnings against the deployment of the THAAD system in South Korea.

 

The Chinese media outlets including the Global Times are criticizing the South Korean government for its attempt to accept the THAAD system in the Korean Peninsula, mentioning that the deployment of the missile defense system can affect the security of Beijing, Tianjin, Hebei, etc. Under the circumstances, China is expected to put pressure on South Korea by means of economic retaliation.

Examples of China’s economic retaliation based on the power of the yuan abound. It halted the import of Norwegian salmon in October 2010 after Liu Xiaobo was awarded the Nobel Peace Prize and suspended the export of its rare metals to Japan during their conflicts surrounding the Senkaku or Diaoyu Islands in 2012. Immediately after the presidential election in Taiwan in January this year, the Chinese government issued an administrative guidance to reduce the number of Chinese tourists to Taiwan to one-third in order to put pressure on Tsai Ing-wen, president-elect of the country who is in favor of secession from China.

Experts point out that China’s retaliation against South Korea can take the form of pressure on Chinese tourists heading for South Korea. Limitations on customs-free goods are legal although travel restrictions like those applied with respect to Taiwan are rather unlikely.

In the meantime, the Chinese government announced on January 23 that it would temporarily halt the payment of subsidies for lithium-ion batteries for use in electric buses. This measure is to protect Chinese companies in the automotive battery industry on the face of it, but it can be a warning against the deployment of the THAAD system in South Korea and similar measures can follow in the other industries as well.

Undoubtedly, China’s economic retaliation will have significant repercussions on the part of the Korean economy in that it relies heavily on trade with China. Last year, China accounted for 25.3%, second to none, of Korea’s total exports. Likewise, no less than 20.6% of Korea’s total imports were from China.