China-US Trade War: Trade war takes toll on South Korean economy

World
Europe

02:24

China and the United States are South Korea's two largest trading partners, and their ongoing trade war has big ramifications for Seoul. Ramifications that have only grown since Washington began pressuring allies to stop using products made by the Chinese telecom firm Huawei. CGTN's Jack Barton has this report from South Korea.

South Korea's economy was hit by its worst first quarter since the global financial crisis.

YANG JUNSOK, PROFESSOR OF ECONOMICS CATHOLIC UNIVERSITY OF SOUTH KOREA "Korean trade has gone down by about 6.9 percent in the first four months of this year, compared to last year, and most of that can be attributed to a fall in semiconductor prices".

Sluggish global demand is an issue, but South Korea also finds itself in the crossfire of the US-China trade war.

PROF. KIM BOWON KAIST BUSINESS SCHOOL "Korea has a very special relationship with the US, not just economically but also security, in terms of national security and political situations. On the other hand, South Korea has increased its dependence on China in terms of trade, so Korea is in a very delicate situation."

Even more delicate now the US is attempting to curb Huawei.

JACK BARTON SEOUL "South Korea's Foreign Ministry says it is in talks with the U.S. and it has discussed national security concerns over the use of Huawei's equipment, an issue further complicated by the close defense ties between Seoul and Washington."

YANG JUNSOK, PROFESSOR OF ECONOMICS CATHOLIC UNIVERSITY OF SOUTH KOREA "Because it relies on the US for a lot of defense-related operations, the united states will probably pressure Korea to not use Huawei as much as possible."

There is also concern here about Huawei's perceived close government ties. In the short-term, though Korean businesses sentiment is expected to remain nervous.

YANG JUNSOK, PROFESSOR OF ECONOMICS CATHOLIC UNIVERSITY OF SOUTH KOREA "The global economic situation, the global trade situation is so shaky right now that we do not need any more additional problems and that's what the US-China trade war is."

A trade war believed to be a factor in the Bank of Korea's decision this month to cut its growth forecast for the year ahead. Jack Barton, CGTN, Seoul.