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  • 2019.11.11 Monday
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  • by スポンサードリンク


South Korea’s Dilemma


 Since South Korea decided to deploy THAAD in February, China has been economically punishing South Korea. The South Korean economy has been devastated.   


 During March, the sales of Hundai cars in China decreased by 44.3%, and those of Kia decreased by 66.8% compared to the same month in the previous year.   


 In contrast, Japanese cars sold well. The sales of Toyotas in China more than doubled (an increase of 116%), Honda sales increased by 31.6%, and Nissan sales increased by 12.4%.   


 On March 15th, the Chinese government prohibited its travel agencies  from selling package tours for South Korea. Chinese tourists accounted for over 70% of the sales of foreign tourists in South Korea. If this situation continues, the South Korean tourism industry will be destroyed.   


 China became the second largest economy, and has been effectively exercising its economic power. Different from Japan, South Korea has no ability to respond to aggressive Chinese tactics.   


 In 2010, after a Chinese fishing boat was detained by the Japan’s Coast Guard vessel in the vicinity of the Senkaku islands, China imposed restrictions on the export of rare earth metals. At the time, Japan imported 99% of rare earth metals from China. The prices of the metals soared, and those companies in China temporarily prospered. However, Japanese companies diversified their suppliers, and developed alternative technologies to use smaller quantities of rare earth or even eliminate the need for rare earth metals in key sections completely. The prices of rare earth plummeted, and the majority of the Chinese rare earth companies went bankrupt or halted operations. The market is unlikely to recover any more.   


 In 2012, after the Noda Cabinet nationalized the Senkaku islands, radical anti-Japanese riots occurred in China. Many Japanese companies were vandalized, and Japanese department stores such as Heiwado were looted. The Chinese government declared that it wouldn’t compensate Japanese companies for the damages. However, not only Japanese companies but also American and European corporations become aware of the risks of doing business in China, and started to consider withdrawing from China. In order to prevent Japanese companies from withdrawing, local governments offered corporate-tax exemptions instead of compensation. Obviously, acquiring new investment became difficult.   


 Until South Korea prevents the deployment of THAAD, China will continue to economically punish South Korea. And, if South Korea nullifies the THAAD program, the U.S. might abandon South Korea. Its presidential election will take place on May 9th. The ball is in South Korea.   



  • 2019.11.11 Monday
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  • 21:55
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  • by スポンサードリンク


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