S Korea to offer tax and loan concessions to firms hit by China's trade sanctions
28 Sep 2017
South Korea said it will offer tax and loan concessions to firms hit by trade sanctions imposed by China, after Seoul deployed a powerful defence system, which underlined the broader impact of intensifying tensions on the Korean peninsula, Reuters reported.
Seoul will allow duty free firms and other retailers operating in China to defer all or part of their corporate income and value-added taxes for up to nine months, the finance ministry announced today.
South Korean auto-component makers, hit by falling sales of South Korean cars in China, will also be able to avail cheap loans.
The US deployed missile shield, known as the Terminal High Altitude Area Defense (THAAD), in South Korea this year to guard against North Korea's shorter-range missiles. China has opposed the deployment, claiming the system's powerful radar can probe deep into its territory.
Retaliating to the development, Beijing has imposed boycotts on South Korean goods traded in the mainland, adding to the pressure on the Moon Jae-in administration to help firms hit by China's curbs.
According to Stephen Lee, an economist at Meritz Securities, today's measures aimed at making up the losses suffered by the tourism and auto sectors, show the government has limited options to counter Beijing's sanctions, Reuters reported.
Meanwhile, Reuters reported in a separate report, that South Korea expects more provocative acts by North Korea next month, to coincide with the anniversary of the founding of the North Korean communist party and China's all-important Communist Party Congress.
During a meeting with president Moon Jae-in on Thursday, national security adviser Chung Eui-yong said he expected Pyongyang to act around 10 October and 18 October but offered no details.
The South Korean security adviser's report also pointed to the risk of a military conflict being sparked by ''accidental incidents,'' according to Park Wan-ju, a lawmaker and head spokesman of the ruling Democratic Party.
''The president said the United States speaks of military and diplomatic options, but South Korea can't go through war again,'' said Park, Reuters reported.