46 Asia The EconomistAugust 31st 2019
2 tions have yet to bite, too. Japan continues
to authorise exports. The red tape generat-
ed by the new rules is bothersome but not
yet lethal for companies. Businesses in
both countries are more worried by the
trade war between America and China.
The erosion of trust is more serious.
“This is a fight between friends that will
only benefit actual antagonists such as
North Korea,” says Park Cheol-hee of Seoul
National University. Scrapping the pact is
also likely to put South Korea on the back
foot in negotiations about how to divide
the cost of hosting American troops, and
reduce its standing in the eyes of the world,
believes Chun In-bum, a former South Ko-
rean army general. “I’m disappointed be-
cause it makes us look guilty,” he says.
The dispute is also beginning to rile or-
dinary people. Two-thirds of South Kore-
ans say they support the boycott of Japa-
nese products and would consider taking
part. Four-fifths claim they would not go
on holiday to Japan at the moment. Sales of
Japanese beer and clothing in South Korea
have collapsed since July. Airlines have cut
back flights on many popular routes.Japanese public opinion is not yet vo-
cally anti-Korean, but a majority of Japan-
ese voters support the government’s
stance. Right-wing groups are stoking anti-
Korean sentiment by recycling old tropes
of “untrustworthy” and “faithless” Kore-
ans, says Ms Dudden. Visitors to Tokyo re-
port a mood of exasperation with what
many Japanese perceive as South Korean
intransigence.
This makes it unlikely that the dispute
will be resolved quickly. Neither side feels
it can be seen to back down, says Mr Park,
who thinks South Korea should take the
first step towards de-escalation by revers-
ing its decision on the intelligence-sharing
pact. But Moon Jae-in, South Korea’s presi-
dent, who faces legislative elections in
April, is struggling with a sickly economy,
deadlock in his flagship policy of inter-Ko-
rean rapprochement and controversy re-
garding his favoured candidate for justice
minister. Shinzo Abe, Japan’s prime minis-
ter, is for his part keen to please his ultrana-
tionalist base. As the two allies fan the
flames of nationalism, Mr Kim has ample
peace and quiet to expand his arsenal. 7I
t is nothard to find Talad Rot Fai, a night
market in Bangkok. On leaving the near-
by subway station, just follow the column
of Chinese tourists. They eagerly try on
heart-shaped sunglasses, avocado-pat-
terned socks and other fripperies. Yet the
people manning the stalls are glum. Ton,
who runs a store selling mobile-phone ac-
cessories, flicks through a ledger. On his
best days last year, he says, sales came to
perhaps 15,000 baht ($485). Now they have
slumped to around 6,000 baht. “It is not so
good recently and it has been like this for
many months already,” explains Mie, who
sells shoes nearby. She complains that Chi-
nese visitors rarely buy her trainers. When
they do, she says, they drive a hard bargain.
Thais face tough times. Figures released
this month show that the economy grew by
a lacklustre 2.3% in the year ending in June,
its slowest rate in almost five years. (Last
year the economy expanded by 4.1%.) Ex-
ports are limp because of the trade war be-
tween America and China and the strength
of the baht, the local currency. It has risen
by more than 5% against the dollar this
year, making it the best-performing cur-
rency in South-East Asia. Farmers, mean-
while, are cursing the feeblest monsoon ina decade. The country’s central bank, evi-
dently worried about the weakness of the
economy, recently cut its benchmark inter-
est rate by a quarter of a percentage point,
to 1.5%.
Tourism is another source of concern.
The industry generates more than a fifth of
gdp. It has grown by leaps and bounds in
recent years (see chart). But China’s slow-
down and the weakness of its currency
seem to be discouraging its citizens, whomade up more than a quarter of the 38m
foreign visitors to Thailand last year, from
enjoying fresh coconuts on balmy beaches.
The number of Chinese holidaymakers
dropped by nearly 5% in the first six
months of this year compared with the
same period last year.
“I think we are still holding our own,”
maintains Yuthasak Supasorn, the gover-
nor of the Tourism Authority of Thailand.
But the strong baht means Thailand isn’t as
cheap as it used to be. Overall tourist num-
bers are slightly higher so far this year than
last, but the growth is unusually meagre.
Not all the industry’s problems are ex-
ternal. Last year the sinking of a boat in
Phuket killed 47 Chinese tourists, horrify-
ing prospective holidaymakers. Thailand’s
roads are also the most dangerous in Asia,
despite government promises to improve
them. (A report by the World Health Orga-
nisation from 2018 found that only eight
other countries in the world have a higher
rate of traffic deaths.) And petty crime is
rampant. The head of the tourist police in
Bangkok recently described the scale of
pickpocketing around the Khao San road, a
hostel hub, as “unbelievable”.
Another factor in the slowing growth of
tourism is overburdened infrastructure.
Packed airports with long queues induce a
sense of anything but relaxation among
visitors. Even beaches are too crowded.
Last year the government closed Maya Bay,
the cliff-encircled Eden made famous in
the film “The Beach”, to allow its ecosystem
to recover from the tourist onslaught of
past years. The spot is not expected to
reopen until 2021.
A drop in tourism will be difficult for a
variety of companies. Poorly managed
state enterprises may be in the worst posi-
tion to endure a downturn. Thai Airways
already loses money and is struggling un-
der more than 100bn baht of debt. Even so,
the transport minister has given permis-
sion for the carrier to purchase or lease 38
new aircraft.
Politicians are eager to ensure that tour-
ism picks up again. The tourism minister
believes more should be spent on market-
ing and incentives to attract visitors. On
August 16th the government announced a
stimulus package of 316bn baht to boost the
economy. Among other measures, it ex-
tends a programme which provides free
visas on arrival for tourists from countries
including China and India—happily a
country sending ever larger numbers of
visitors to Thailand. It also offers 1,000
baht of spending money and a 15% rebate
on hotel accommodation to domestic tour-
ists who travel outside their home prov-
ince. Yet the stimulus package may help
only at the margins. In a country riven by
coups and political conflict, tourism has
succeeded in spite of the government, not
because of it. 7BANGKOK
A fall in the number of Chinese tourists breeds uneaseTourism in ThailandLand of nervous smiles
Taking flightsSource: Ministry of Tourism and SportsThailand, tourist arrivals, m0102030402009 10 11 12 13 14 15 16 17 18To t a lFrom ChinaFrom India