During the summit, China’s President Xi told both Korea and the US that China will not back down on the dispute over Korea hosting the US anti-missile system, alluding that China would not end the alleged economic retaliation imposed on Korean firms until the issue was resolved.

If the number of Chinese tourists decreases by half to reach 4 million this year, their spending in Korea is also estimated to plunge by almost 11 trillion won.

The average spending of a Chinese tourist was 2.74 million won ($2,373) in 2015, but this might too decline, industry sources anticipated.

On the back of continued declines of Chinese tourism in Korea, the sales of the duty-free industry saw the most dramatic financial loss.

Lotte Duty Free, Korea’s largest duty-free operator, expected its sales to decrease by 20 percent, 350 billion won down from the same period last year.

The overall duty-free industry also expects its sales to decrease 15 to 20 percent accounting for some 600 billion won.

Lotte Mart also had to shut down 87 of its 99 outlets in China, due to the THAAD controversy. Of the 87 closed outlets, only 13 were voluntarily closed by the company, while the other 74 were closed by Chinese authorities citing safety violations.

Korea’s tourism deficit also expanded to hit a record high in May due mainly to a drop in incoming travelers, according to the Bank of Korea.

The tourism balance of payment, or net costs spent by Koreans on short-term overseas tours, reached $1.18 billion in May. The number of outbound tourists also jumped 21 percent to 2 million in May from a year ago. The number of foreign visitors overall fell 34.5 percent to 978,000.

By Shim Woo-hyun (ws@heraldcorp.com)