South Korea

Why China stoking up anger over South Korea missile system is doomed to fail

Encouraging boycotts of South Korean goods won’t stop Seoul deploying the defence shield, but will sour an economically valuable relationship, observers say

PUBLISHED : Wednesday, 22 March, 2017, 12:05pm
UPDATED : Thursday, 23 March, 2017, 5:27am

Beijing has imposed unofficial sanctions against South Korea over its deployment of a missile defence system, but the effectiveness of the measures is questionable given China’s heavy reliance on Korean components to support its manufacturing industry, according to analysts.

China has not announced any formal punitive measures after Seoul decided to deploy the US-developed missile defence system. But it has allowed state-controlled media to stoke anger and resentment against South Korea and stepped up scrutiny of Korean consumer products.

This led to some Chinese consumers boycotting South Korean products and businesses. Group tours to South Korea have been called off and flights to its airports reduced.

Despite these headline-grabbing moves, experts believe China’s ability to punish South Korea is limited.

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Less than 5 per cent of South Korea’s exports to China are consumer goods – the easy target for Chinese boycotts. Most are raw materials and manufacturing components and equipment.

Rajiv Biswas, chief economist in the Asia-Pacific region for IHS Global Insight, said South Korea was an important source of electronics exports to China.

A quarter of China’s imported integrated circuits, key components to make television sets and mobile phones, are from South Korea, he said.

Andrew Gilholm, director of analysis for China and North Asia at the consultancy Control Risks, said China was behind “unofficial, non-explicit, regulatory harassment of certain Korean companies”.

But the boycott against firms did not alter the fact that China relied on South Korea in some areas, he said. “Chinese companies need cooperation with technology from Korean companies to achieve those industry upgrading goals,” he said.

Trade between the two nations has been booming. South Korean exports to China surged 28.7 per cent in February, compared with the same month a year earlier, the strongest growth since late 2010.

The Korean International Trade Association said that if China were to continue with its “unofficial” sanctions, the economic losses for South Korea would be, at most, US$14.76 billion, or 1.07 per cent of GDP.

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Seoul is deploying the Terminal High Altitude Area Defence missile shield amid fears over North Korea’s nuclear weapons programme, but China says the system poses a threat to its own security.

Analysts said Chinese consumers’ boycotts of South Korea products would only push Seoul further into Washington’s orbit.

China could also find itself poisoning a critical relationship that has thrived in recent years based on booming trade and investment, a shared resentment of Japan and its alleged lack of atonement for wartime aggression and the common goal of dismantling North Korea’s nuclear weapon programmes.

“If Chinese economic pressure goes too far, it will only increase the Korean people’s patriotism and nationalism,” said Lee Jung-nam, a professor at the Asiatic Research Institute at Korea University. “This would also damage China’s image. If China wants to become a leader in Northeast Asia, it shouldn’t leave such negative impressions on its neighbours.”

The Chinese authorities have whipped up nationalist sentiment before to serve diplomatic ends, although the boycotts and protests often proved short-lived.

Some Chinese consumers boycotted the French supermarket chain Carrefour in 2008 after the Beijing Olympics torch relay was interrupted by Tibetan pro-independence activists in Paris.

Japanese cars were boycotted by some Chinese consumers in 2012 during a flare up in tensions between the two nations over the disputed Diaoyu Islands in the East China Sea, known as the Senkakus in Japan. The fast food outlet KFC was also briefly targeted last year amid anti-US sentiment over Washington’s critical stance on Beijing’s assertive claims to much of the South China Sea.

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Jin Meihua, the deputy head of Northeast Asia Research Centre in Jilin province, which borders North Korea, agreed that China’s boycott would have a limited impact on the South Korean economy, but added it could create hostility among ordinary South Koreans towards the Chinese.

Jin said South Koreans had previously seen Beijing fan anti-Japan sentiment, with little result.

“China also boycotted Japan because of the Diaoyu Island dispute, but then Japanese companies moved on to invest in Southeast Asia and now the number of Chinese tourists to Japan is growing hugely,” said Jin.

Beijing’s economic pressure on South Korea would have no impact on the instillation of the missile defence shield, according to Richard Hu Weixing, head of the Department of Politics and Public Administration at the University of Hong Kong. “Actually, they are going to speed up the deployment,” he said.

Additional reporting by Kristin Huang and Liu Zhen