China's retaliation over South Korea's deployment of the THAAD missile defense system is estimated to have inflicted losses in sales of some 7.5 trillion won in the tourism and accommodation sectors this year alone.
The retail sector was hit hardest of all.
The National Assembly Budget Office said last Sunday that this was due to a sharp drop in the number of Chinese tourists.
The estimated losses were calculated based on the spending level of an average Chinese traveler in past years.
In 2016, a Chinese tourist spent an average of over two thousand dollars in South Korea, much higher than the 16-hundred dollar average spent by all foreign tourists visiting Korea.
During the first nine months of this year, Chinese tourists decreased by nearly 3.3 million year-on-year. This is estimated to have resulted in sales losses of over seven trillion won.
This breaks down to losses of nearly five trillion won in shopping revenue and over one trillion won for the accommodation sector. The food and beverage and transportation sectors were also hit by fewer Chinese tourists.
In Korea, Chinese tourists spend the most on shopping.
Last year, an average Chinese person spent over 13-hundred dollars in Korean stores, which is more than two thirds their entire spending. Accommodation costs accounted for 15 percent of their total spending.
With the Chinese being big shoppers, domestic duty free shops especially suffered a blow as their reliance on Chinese tourists stands at about 64 percent.
By region, Seoul and Jeju Island are believed to have suffered the most from China's THAAD retaliation, as they are the top two destinations visited by foreign tourists.
The Korean Wave or Hallyu was also affected as the surplus margin in music and video-related services plunged 40 percent this year. Meanwhile, the travel industry also posted a record deficit as fewer Chinese visited Korea while more Koreans traveled overseas.
However, there are some optimistic signs for the future.
With Seoul and Beijing recently agreeing to normalize relations, tourism sales are expected to gradually recover.
There are already signs of thawing ties as group tours to Korea are again being organized in China. But it's unclear when conditions will fully normalize as China has only partially lifted its Korea ban.
There have been growing calls within Korea for the nation to lower its dependency on specific countries. Efforts have already been made to diversify Korea’s tourism income, which has led to more tourists coming from Southeast Asia, the Americas and other regions.
The Assembly Budget Office advises further diversification in tourism and exports, and to look for new markets to prevent adverse effects occurring from similar incidents in the future.