South Korea would hurt own economy by trying to lessen market ties with China

By Hu Weijia Source:Global Times Published: 2017/3/28 23:33:39

It is understandable that South Korea doesn't want to rely on the Chinese market for economic growth, but with the economical interdependency between Beijing and Seoul that will be difficult to achieve.

Over the next year or two, boycotts by China in reaction to the deployment of the Terminal High Altitude Area Defense (THAAD) missile system could cause an economic loss of around 10 trillion won ($9 billion) in commodity exports for South Korea, media reports said recently, quoting research from the Overseas Economic Research Institute under the Export-Import Bank of Korea.

As South Korean businesses have felt the impact of China's anger over the THAAD deployment, there have been an increasing number of voices in South Korea calling for the country to reduce its dependence on the Chinese market.

However, this won't be easy to realize. A close economic relationship has been established between the two neighboring countries and South Korea exports a large amount of intermediate industrial products to China, which serves as the last stop in the Asian manufacturing supply chain.

Asia-Pacific's outstretched supply chains are a complex network and can not be completely changed overnight, thus it is impossible to cut off trade links between China and South Korea.

South Korea should learn a lesson from Japan. Although Japan wanted to reduce its dependence on the Chinese market following damaged Sino-Japan economic ties in 2012 due to the territorial dispute over the Diaoyu Islands, China has remained an important destination for Japanese exports and investment.

Additionally, enterprises from other countries are fiercely competing to win attention from local buyers in the world's second-largest economy and would enjoy if South Korean companies decreased their dependence on China's fast-growing consumer market. The game between China and South Korea over the THAAD deployment is more of a reflection of the US' strategy against China. It would be unwise for South Korea to give up the Chinese market to support the US' strategy at a time when American companies are striving to increase their presence in the Chinese market.

The South Korean economy can't grow well without close involvement with China as the economies in Asia are closely connected to each other. If viewed from another angle, it is also impossible for China to impose extreme economic sanctions against South Korea, which is an important trade partner for China with its many primary and intermediate exports.

As such, economical interdependency between Beijing and Seoul cannot be altered in the short term by geopolitical decisions, such as the THAAD deployment.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn



Posted in: EYE ON THE ECONOMY

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