China to partially lift ban on group tours to South Korea but online curbs will stay

China will allow travel agencies in Beijing and Shandong province to partly resume sales of group tours to South Korea, in a sign of thawing relations between the nations that have been locked in a year-long diplomatic stand-off.

But executives from tour agencies in the regions said they had been told not to include in their travel packages units of South Korean retail-to-chemicals giant Lotte Group – which provided land for the installation of a US-backed anti-missile system that Beijing vehemently opposed.

China had banned all group tours to the neighbouring country since March in the wake of South Korea’s decision to install the US Terminal High Altitude Area Defence system. Beijing worries the THAAD’s powerful radar could penetrate Chinese territory.

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In South Korea, a halving of inbound Chinese tourists in the first nine months of the year cost the economy US$6.5 billion in lost revenue based on the average spending of Chinese visitors in 2016, official data shows.

But a late October agreement between the countries to move past the dispute had boosted hopes group tours may be allowed in the near future.

The China National Tourism Administration would allow the resumption of only over-the-counter sales of package tours from Beijing and Shandong to South Korea, Park Yong-hwan, deputy director of the Korea Tourism Organisation, and executives of Chinese travel agencies said on Tuesday.

Online sales of package tours and chartering flights or cruise trips were still banned, Park said.

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According to the travel agency executives, restrictions on including Lotte Group units, such as Lotte Duty Free, in tour packages also remained. The executives declined to be identified due to the sensitivity of the matter.

Lotte, South Korea’s No 5 conglomerate, has faced a major setback in the wake of deteriorating bilateral relations, with most of its hypermarkets in China being shut down after fire inspections.

The South Korean travel ban is expected to be in place for other Chinese regions for now and would be gradually lifted, Park said.

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Shares in South Korean tourism and retail companies rallied after the news of the partial lifting of the ban, first reported by Yonhap earlier in the day.

Asiana Airlines gained 3.1 per cent and duty free store operator Hotel Shilla rose 2.8 per cent. Casino operator Paradise rose 2.2 per cent, while cosmetics maker LG Household & Health Care added 3.7 per cent.