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Korea Encouraged To Cut Economic Overindependence On China

By March 7, 2017 at 7:52 am
As of end-February, South Korea had the world's eighth-largest foreign currency reserves. (Photo : Ryan Peirce/Getty Images)

Korea has been encouraged to cut its overdependence on China when it comes to its economy. This measure is needed to lessen the risks linked to regional conflicts as shared by analysts.

With the report that China will continue to increase its retaliatory measures against Korea because of THAAD, the country needs to consider this plan. It is very hard to tell and predict when will China stop and lift its measures.

Since Korea announced the deployment of the missile defense system as a protection from North Korea, China started to take series of steps against Korea businessmen. It can be recalled that lately, China just stopped tour agencies from providing tour packages to Korea.

This measure shocked Korea as the Chinese government has been using the official channels to gain realistic and tangible damage to the economy as per Korea Times. Some reports were telling that China owns over 50 percent of sales in some major duty-free shops.

Some of Korea's analysts tell that China can extend and expand its retaliation measures like not extending the won-yuan currency swaps. It looks like China is taking an aggressive retaliation since the announcement of the THAAD deployment plan.

This retaliation by China is worrying the Koreas most especially the exporters as most of the Korea's exports are heading to China. Even prior to the retaliation, there were already analysts who showed concern over Korea's over independence on China.

The Korea Institute for Industrial Economics and Trade or the KIET released a report that about one-third of the exports dropped last year and this has been attributed to the decrease in shipments to China. Korea's exports to China really suffered since China's economic growth slowed and the country diverted its focus from exports to consumption.

Meanwhile, Korea has been too dependent on China in order to increase its domestic demand at the same time.  Chinese tourists were also considered in most of the Korea's government policies. Moreover, the Korean version of Black Friday or the Korea Sale Fiesta has been conducted during China's national holidays in order to increase consumption.

Because of this, Korea has been encouraged to take more basic steps and measures like growing the disposable income of Korean households as an alternative of depending too much on China.

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