China's political dispute with Taiwan may add to regional risks created by protest rallies in Hong Kong that could further undermine South Korea's exports to its neighbors, a central bank report suggested Sunday.
South Korean exports have dipped for 10 consecutive months since December amid the prolonged trade dispute between the United States and China, the world's largest importers of South Korean goods.
"Considering the country's close financial and trade relations with the countries, a change in China's relationship with Taiwan and Hong Kong may have direct and indirect impacts on the Korean economy," the Bank of Korea said in a weekly report.
Hong Kong students and Taiwanese supporters hold slogans during a march in Taipei, Taiwan, Sunday, Sept. 29, 2019. (AP)
China is by far the world's largest importer of South Korean products, while Hong Kong and Taiwan make up the world's fourth and sixth-largest destinations of South Korean exports, respectively.
"In addition, of all our exports to Hong Kong, 82.6 percent are re-exported to China," the report said.
The report noted Taiwan's exports and investment to China may already be waning, possibly contributing to the apparent slowdown in China's growth and exports, which have been partly blamed for the steady drop in South Korea's own exports.
"The slumping trade with Taiwan and reshoring of Taiwanese companies from China are also negatively impacting the Chinese economy that is already slowing down," it said.
"Deterioration in China-Taiwan and China-Hong Kong relations will act as a factor that will increase uncertainties in their shared region, as well as the global market," the report added. (Yonhap)