BOK: "Recovery of Chinese Tourists Slow... Effect of China Reopening Still Limited"

On February 16th, a citizen is passing by a clothing store in Myeongdong, Seoul. Photo by Jinhyung Kang aymsdream@

The Bank of Korea explained that despite China's reopening (resumption of economic activities), the ripple effects on our economy remain weak due to sluggish exports and delayed recovery of tourists.

In a BOK Issue Note report titled "Assessment of the Domestic Economic Impact of China's Reopening" on the 17th, the Bank of Korea analyzed, "Although China’s reopening after prolonged lockdown measures is expected to contribute to global economic recovery, the impact on neighboring countries including South Korea has yet to become visible."

According to the Bank of Korea, although China officially abandoned its COVID-19 prevention measures and resumed economic activities this year, the recovery of Chinese tourists remains slow.

On the other hand, demand for overseas travel by our citizens has significantly increased, worsening the travel balance compared to last year.

The Bank of Korea explained, "The recovery of Chinese tourists is slow due to the Chinese government’s ban on group tours and a shortage of flights between Korea and China, which is limiting the overall recovery of inbound tourists."

Exports to China show a similar pattern.

By sector, non-information technology (IT) sectors such as machinery and steel have recently seen a mitigation of sluggishness, but the IT sector including semiconductors continues to experience a weak trend.

However, imports from China, which had been slowing since the second half of last year, are rebounding this year, mainly driven by raw material imports such as secondary battery materials.

The Bank of Korea pointed out, "The trade deficit with China widened in the first quarter of this year."

On the 28th of last month, Myeongdong Shopping Street in Jung-gu, Seoul, was bustling with foreign tourists and citizens. Photo by Dongju Yoon doso7@

This is due to the recovery of China's domestic demand centered on service consumption and investment following the reopening.

China’s consumption is rapidly rebounding, especially in face-to-face activities such as dining services and cosmetics, and investment continues to grow supported by expanded government aid. On the other hand, external trade saw exports barely turning positive in March, while imports are still declining.

According to the Bank of Korea’s analysis, countries like South Korea with a high proportion of manufacturing and IT sectors see their growth rate improve by an average of 0.13 percentage points when China’s growth rate rises by 1 percentage point focused on manufacturing. However, if the growth is service-oriented, the improvement averages only 0.09 percentage points.

For this reason, positive effects of China’s reopening have yet to fully materialize not only in South Korea but also in other Asian countries such as Japan and Taiwan.

The Bank of Korea expects the domestic economy to gradually recover in the second half of the year due to easing IT sector downturns and inventory adjustments within China, but uncertainties such as the recovery of Chinese tourism remain significant.

The Bank of Korea explained, "Uncertainties in exports to China persist due to the timing and speed of the global IT market recovery as well as changes in China’s industrial structure," adding, "In the short term, the recovery of Chinese tourists is also expected to impact the domestic economy."

This content was produced with the assistance of AI translation services.