“The construction and real estate industries represent around 30% of China’s economy. A steep drop in Chinese demand from a real estate-based economic downturn could cause South Korea’s growth rate to fall by as much as 0.3 percentage points.”
This was the warning shared in a telephone interview with the Hankyoreh on Sunday by a securities company analyst familiar with the situation in China.
This suggests that the South Korean administration is way off base with its position insisting that there is “no need to overreact to speculation about a Chinese real estate crisis” and that the real estate issue is “merely an internal situation for China.”
The analyst said, “Given how much of our exports to China center around intermediate goods, the idea that worsening Chinese investment and consumption won’t have much of a ripple effect on South Korean exports is something out of ancient history.”
The South Korean economy is facing pressure on both sides as the US heats up and China cools rapidly. In China, the real estate situation has led to financial worries and an economic drop-off that are dragging down South Korean exports and the value of the won. Meanwhile, more and more analysts are predicting the US will maintain high interest rates for some time to come.
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Source: english.hani.co.kr
ENB
Sandstone Group
