SEOUL (Reuters) - South Korea’s economy would suffer modest collateral damage if the United States were to impose trade restrictions on China, the state-run Korea Development Institute (KDI) think tank said in a report on Monday.
The KDI reckoned a 10 percent fall in Chinese exports to the United Sates would erase 0.31 percent from South Korea’s total gross domestic product. KDI said a fall of that magnitude would not represent a crisis, but it reinforced the case for South Korea to continue diversifying its export markets.
Around a quarter of South Korea’s exports go to China, KDI estimated that South Korean exports to China would fall 0.44 percent annually if Washington were to impose curbs affecting 10 percent of Chinese exports to the United States.
Conversely, South Korea would suffer a 0.04 percent drop in total GDP if Beijing were to impose counter-measures affecting 10 percent of U.S. exports to China, KDI said.
Washington has pressed China to reduce its gaping trade surplus with United States, and there have been fears that President Donald Trump would take tougher stance with Beijing, though his administration adopted a softer tone since a U.S.-China summit earlier this month.
Reporting by Christine Kim; Editing by Simon Cameron-Moore