China inflicted a world of pain on South Korea in 2017

Perhaps no other country felt the economic cost of China’s wrath as South Korea did this year.

By one estimate, China’s decision to boycott South Korea’s tourism industry over Seoul’s decision to install a US-made anti-missile system cost the economy some 7.5 trillion won ($6.8 billion), according to South Korea’s National Assembly’s Budget Office.

Since 2013, China has been the largest source of foreign tourists to South Korea, and made up around half of the 17 million people from overseas who visited the country in 2016. But since Seoul and Beijing’s falling out, the number of Chinese tourists visiting South Korea between March to October this year plunged more than 60% from the same period last year.

Relations between the two countries hit a low in March after Seoul refused to halt the deployment of the anti-missile system, known as Terminal High Altitude Area Defense (THAAD), which Beijing deems a threat to its national security. As a result, China’s national tourism administration told travel agencies to suspend selling group packages to South Korea.

Beijing also directed its ire more specifically against Korean conglomerate Lotte, after the company agreed to provide one of its golf courses near Seoul for the deployment of THAAD. For example, China has fined Lotte over its advertising practices, and shut down a large number of its supermarkets in the country for reasons like fire-code violations.

South Korean president Moon Jae-in has tried hard to reconcile with Beijing since taking office in May. The two countries agreed to normalize relations in late October after Seoul announced it would freeze the deployment of THAAD. In early December, Moon paid his first state visit to China, and pledged a “new era” in bilateral relations. Moon also invited Chinese president Xi Jinping to the opening ceremony of the Winter Olympics (paywall) in Pyeongchang in February—South Korea’s vice finance minister said that he hoped to see a resurgence of Chinese tourists if Xi’s visit takes place.

Following those efforts, signs emerged that China may be finally relenting by gradually lifting its ban on group travel to South Korea, but the facts remain murky. A group of 32 tourists left China for a five-day trip to Seoul on Dec. 2, Chinese media outlet Beijing News reported (link in Chinese), making it the first tour group to go the country since March—though the report also noted that the packages to Korea come with conditions such as the prohibition of cruise trips, chartered flights, or shopping trips to Lotte stores.

However, yesterday (Dec. 20) Korean media reported that China had reinstated its travel ban on group travel to Korea. Stocks in Korean companies that depend heavily on tourists, such as cosmetics makers, hotel, and tour operators promptly fell (paywall) on the news.

China’s national tourism administration couldn’t be reached out for comment.

State-owned tour operator China Youth Travel Service had also been promoting group travel packages to Korea, according to Korean news service Yonhap on Dec. 19—however, the operator’s website no longer lists such services, and group packages to Korea remain unavailable for many Chinese travel agencies. Tuniu, a Chinese online travel agency that took down all offerings to Korea in March, has reinstated services such as individual visa applications on its website (link in Chinese), but group travel remains unavailable. Ctrip, China’s largest online travel agency, is also not offering group travel services to Korea, according to its website (link in Chinese).

Hailey Jo contributed reporting.

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