China’s traders, investors and tourists are likely to pause and examine the risks of South Korea’s prolonged political turmoil in the months ahead, analysts said – with some possibly halting their business or activity outright until more stable circumstances present themselves.
Advertisement
As investigators try to detain South Korean President Yoon Suk-yeol over his declaration of martial law in early December, neither an end to the saga nor clarity about the country’s next leader is in sight.
Chinese traders are sizing up the odds of more street protests in Seoul and further “policy paralysis” over the next six months, said Nick Marro, principal economist for Asia at the Economist Intelligence Unit.
“As long as political uncertainty persists, international investors – including Chinese investors – are going to look at South Korea from a perspective of heightened risks,” Marro said. “That might delay some decision-making or planned investments.”
Korean chipmakers with investments in China are also assessing the terrain, said Victor Gao, vice-president of the Beijing-based think tank Centre for China and Globalisation.
Advertisement
Those giant companies might decide to retain their China projects if Yoon leaves office, he said. US officials asked Yoon’s government to restrict semiconductor technology exports to China last year, in line with curbs imposed by Washington.