South Korean economy to suffer if US put trade curbs on China: think tank

[SEOUL] South Korea's economy would suffer modest collateral damage if the United States were to impose trade restrictions on China, the state-run Korea Development Institute (KDI) think tank said in a report on Monday.

The KDI reckoned a 10 per cent fall in Chinese exports to the United Sates would erase 0.31 per cent from South Korea's total gross domestic product. KDI said a fall of that magnitude would not represent a crisis, but it reinforced the case for South Korea to continue diversifying its export markets.

Around a quarter of South Korea's exports go to China, KDI estimated that South Korean exports to China would fall 0.44 per cent annually if Washington were to impose curbs affecting 10 per cent of Chinese exports to the United States.

Conversely, South Korea would suffer a 0.04 per cent drop in total GDP if Beijing were to impose counter-measures affecting 10 per cent of US exports to China, KDI said.

Washington has pressed China to reduce its gaping trade surplus with United States, and there have been fears that President Donald Trump would take tougher stance with Beijing, though his administration adopted a softer tone since a US-China summit earlier this month.

REUTERS