South Korean conglomerate Lotte has been hit with sanctions from China after the company agreed to cooperate with THAAD deployment. File Photo courtesy of Li Lin/EPA
March 6 (UPI) -- South Korea's economy is vulnerable to Chinese sanctions that are being phased in as a response to a joint decision to deploy a U.S. missile defense system on the peninsula.
According to Rajiv Biswas, chief economist on the Asia-Pacific at IHS Economics and Country Risk, China is inflicting damage on South Korea businesses that have been cooperative on THAAD deployment, Yonhap reported.
Chinese authorities have shut down four branches of Lotte Mart, a South Korean discount retailer, and Lotte's duty-free stores have been the targets of cyberattacks of Chinese origin, according to Biswas.
Biswas stated the impact of the decision to deploy THAAD is becoming hard to ignore.
China is South Korea's largest trading partner, and is eight times bigger in terms of nominal GDP.
South Korea's total exports to China in 2016 were $124 billion, or about 25.1 percent of all exports, according to Biswas' analysis.
South Korea also greatly benefits from the rising numbers of Chinese tourists, who account for half of all foreign visitors.
In 2016, more than 8 million Chinese visited South Korea on tourist visas, up 34.8 percent.
The IHS analyst also pointed out South Korean manufacturers in China are extremely vulnerable to economic retaliation.
China retains 18 percent of all South Korean government bonds.
The United States and South Korea are deploying THAAD on the peninsula for defense purposes, and to avoid the escalation of more dangerous tensions that could occur with the deployment of tactical nuclear weapons.
The New York Times recently reported the White House was considering a pre-emptive military strike option on North Korea, as well as placing U.S. tactical nuclear weapons back on the peninsula.
But on Monday, South Korean Defense Minister Han Min-koo denied the claim regarding tactical nuclear weapons in the report, local news service Newsis reported.
Han said there have been no talks with Washington regarding deployment.