Beijing’s reported economic retaliation against South Korea for deploying the U.S. Terminal High Altitude Area Defense (THAAD) missile system continues to target certain sectors, like imports of Korean cosmetics, canceling K-pop concerts, and a ban on Chinese tour groups to South Korea.

At Seoul’s Namsam Tower, smaller than usual crowds gather to watch the daily Korean cultural performances and to look out at the sprawling modern metropolis from the highest point in the city.

Buses of visitors from countries like Malaysia, Vietnam and Hong Kong still arrive at this popular site, but there are fewer visitors overall than in the past because Chinese tourists have virtually disappeared in the last month.

Fewer Chinese visitors

Chinese tourists accounted for nearly half of the 17 million visitors to South Korea last year. But the latest government figures indicate the number of tourists from China fell by nearly 20 percent in March. Local travel agencies, airlines, hotels, cruise lines, and duty-free operators have all been affected.

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In Seoul, some tour groups and restaurants that cater exclusively to Chinese visitors have temporally shut down. Even travel agencies not directly affected by the abrupt decline of Chinese visitors are worried this could hurt South Korea’s image as a tourist destination.

“While it is comfortable for me to work as a tour guide because my guests do not need to line up and can avoid the inconvenience, it is always good to have many tourists visiting South Korea. It is sad,” said Kim Sun-hee, a Malaysian tour group guide.

THAAD reprisal

Chinese officials have objected to the advance weapons system as an unnecessary and provocative regional military escalation, and voiced concern that the system’s powerful radar could be used to spy on them and other countries as well. Washington and Seoul insist THAAD is needed to defend against North Korea’s increasing nuclear and missile capabilities.

Beijing has also been accused of limiting some imports of Korean cosmetics and other products, and canceling K-pop concerts. Shares of the Korean cosmetics conglomerate AmorePacific dropped significantly in the wake of the reported Chinese retaliation, as did the stock value of the Korean automaker Hyundai after photos of a vandalized Hyundai car circulated widely on Chinese social media.

And the Lotte Group, the South Korean department store chain that provided the military with a plot of land for the THAAD deployment has had more than 50 of its stores closed in China.

Quiet pressure

Beijing has not acknowledged imposing a tourist ban, but travel agencies in Seoul have been told by their partners in Beijing that tours have been canceled because of pressure from the China government.

Shon Ho-kwon, the president of Modetour International Inc. in Seoul, said he was told officials from the China National Tourism Administration contacted virtually every travel agency and “made a verbal warning that there will be many disadvantages if (the agencies) continued selling South Korea tourism products.”

“There is no document to prove this, but clearly it is understood that China is making such suggestions,” Shon said.

A prolonged dispute between South Korea and China, its largest trading partner, could significantly hurt both economies in the long run.

“South Korea last year had about $4 billion in investment in China. China had about $2 billion that they invested in South Korea,” said James Kim, research fellow at the Asan Institute for Policy Studies in Seoul.

But there is no resolution in sight with some travel agencies reporting no Chinese reservations for the upcoming spring holidays, which had been the busiest tourist season of the year.

Youmi Kim contributed to this report.

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