Cruise control: China squeezes South Korea as boats and planes stay away

11 Mar, 2017

Pressure in China on travel firms forced airlines and cruise operators to cut routes to South Korea, as the fallout spread on Friday from a diplomatic row over Seoul's plans to deploy a US missile defence system against Beijing's objections. China Eastern Airlines Corp Ltd and Spring Airlines Co Ltd stopped offering flights on their websites between the eastern Chinese city of Ningbo and popular South Korean tourist island Jeju from next week.
Korea's Eastar Jet said it was halting flights between the South Korean cities of Cheongju and tourist hotspot Jeju with various Chinese cities including Ningbo, Jinjiang and Harbin.
This followed Carnival Corp's Costa Cruises and Royal Caribbean Cruises cutting South Korean visits by their China ships. Royal Caribbean cited "recent developments regarding the situation in South Korea".
The moves reflect a more aggressive and blatant stance against South Korean business in China, although Beijing has not directly said it is targeting South Korean firms.
An internal South Korean government document seen by Reuters said Chinese authorities gave a "7-point" verbal instruction to travel firms to curtail or ban trips to South Korea.
These included a ban on tour groups visiting South Korea from March 15, cruise ships not being allowed to dock in South Korea ports and a warning that those who violated the guidance would face "severe punishment".
Reuters could not immediately reach China's tourism administration for comment. China Eastern and Spring Airlines did not respond to requests for comment.
The crackdown has sent a chill across South Korea's retail and tourism sectors, which rely heavily on China trade, and prompted South Korea to say it will consider filing a complaint against China to the World Trade Organisation.
South Korea sold $124 billion worth of goods and services to China last year, about five times the amount it exported to nearby Japan and double the amount it shipped to its second-biggest overseas market, the United States.
Tourism is a particularly sensitive sector, with official South Korean data showing almost half of the visitors to the country come from China. Asked about cruise operators cancelling South Korean port visits, an official from South Korea's Ministry of Trade, Industry and Energy told Reuters the ministry was checking if any WTO rules have been violated.
"If we are to launch a dispute, we still need to make sure if anything has been ordered by Beijing," the official said. Political risk analysts said the widespread actions against South Korean firms pointed to centralised co-ordination. Princess Cruises, also owned by Carnival, said in a statement on Friday it would remove visits to South Korea from routes after talks with "relevant departments".
"Due to the current situation, Princess Cruises' China team has been in close dialogue and prudent discussions with relevant departments," the firm said. "All routes which involve South Korea have been altered." The diplomatic problems with its biggest trade partner have come at a difficult time for South Korea.

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