Stock Markets
Daily Stock Markets News

China looks set to turn to K-pop sector as U.S. tariffs bite


Epex at the MBC Every1 variety show “Weekly Idol” at MBC Dream Center on April 23, 2024, in Goyang, South Korea.

Mbcplus | Imazins | Getty Images

Locked in a trade war with the United States and struggling with weak domestic consumption, China looks set to make a U-turn on an unlikely sector: K-pop.

It was announced on April 28 that K-pop group Epex will be performing in Fuzhou, Fujian, province on May 31 — the first time an all-Korean idol group has held a concert in mainland China since 2016.

On top of that, the large-scale annual Dream Concert — South Korea’s longest-running K-pop event — has reportedly been scheduled to take place on Sept. 26 at a 40,000-seat stadium in Hainan province, the Korea Entertainment Producers’ Association said on April 30.

Those developments could signal an easing of China’s unofficial ban on K-pop acts on the mainland after South Korea announced the deployment of the Terminal High Altitude Air Defense missile defense system in 2016, with China saying the system was aimed at constraining China’s power in the region, among other reasons.

The about-face on K-pop represents a “structural turning point” for the sector, according to Oh Jiwoo, research analyst at CGS International Securities Hong Kong.

Oh told CNBC “this policy shift is part of China’s broader strategy to revitalize domestic demand amid a prolonged consumption downturn.”

She noted that consumption contributed nearly 70% to China’s gross domestic product growth in 2018, but the share has dropped to below 30% in recent years, with the country’s consumer price index growth hovering near zero.

“In response, the government has started promoting cultural events—including foreign pop concerts—to stimulate discretionary spending in tourism, hospitality, and local commerce,” she added.

On April 25, China’s ministry of culture and tourism released a notice calling for the promotion of cultural events, including concerts and music festivals.

Oh pointed out that China is South Korea’s third-largest album export market after Japan and the U.S., and the second-biggest music market in Asia, “underscoring its strategic importance despite years of restrictions.”

Tariff-proof sector

Diplomatic detente

But China’s softening stance on K-pop has a diplomatic dimension that goes beyond the desire to increase domestic consumption, analysts say.

Citi analysts John Wu and Alicia Yap said in an April 4 note that China may seek to restore ties with neighboring countries, including South Korea, in light of its own economic challenges.

Members of South Korean girl group Twice at the 2018 Mnet Asian Music Awards at the Asia World Expo on Dec. 14, 2018 in Hong Kong.

Vcg | Visual China Group | Getty Images

Cultural diplomacy could emerge as a key starting point, they said, leading to the easing of informal bans on South Korean content and resumption of K-pop’s fan-driven revenue streams in the region. The sector has been described by them as “a long-term beneficiary of [a] changing world order.”

CGS’ Oh echoes that view, telling CNBC that “the reintroduction of K-pop could help diversify cultural offerings and foster regional goodwill.”

She added China appears to be warming ties with South Korea while placing temporary limits on certain Western content, including Hollywood films.

Oh said the shift not only restores access to a previously restricted fan…



Read More:
China looks set to turn to K-pop sector as U.S. tariffs bite

Subscribe
Notify of
guest
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

Get more stuff like this
in your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.