Why South Korea is becoming China’s new bargain travel hotspot amid Japan spat

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By Yeon Woo Lee and Ralph Jennings

Published December 16, 2025

As Chinese tourists pull back from visiting Japan amid a diplomatic row, a slumping won is positioning South Korea as the new bargain destination for mainland travellers, analysts said.

The Korean won has become Asia’s worst-performing currency in the second half of the year, weighed down by an interest rate gap with the United States and sustained equity outflows to the US market.

In October, South Korea’s real effective exchange rate plunged to a 16-year low – falling even further than it did after former president Yoon Suk-yeol declared martial law last December – according to data from the Bank for International Settlements.

The Chinese currency gained 9.4 per cent against the won between July 1 and December 16, with the won weakening to 0.0048 against the onshore yuan – a shift with the potential to reshape regional travel flows.

“The weaker won has made South Korea a better-value destination for Chinese travellers at the same time Japan has become politically ‘expensive’,” said Subramania Bhatt, CEO of the travel marketing and technology firm China Trading Desk.

China and Japan have been embroiled in a diplomatic row since early November, when Japanese Prime Minister Sanae Takaichi indicated that Tokyo might intervene in the event of an armed conflict in the Taiwan Strait.

Beijing has since advised its citizens to avoid travelling to Japan – normally a popular destination with Chinese tourists – leading hundreds of thousands of travellers to cancel their trips.

That has opened a window for other countries in the region to receive a tourism bump as Chinese travellers rush to rearrange their plans, with Russia and several Southeast Asian nations already seeing an uptick, according to travel industry insiders.

South Korea is also well positioned, with the country reportedly replacing Japan as the most popular outbound destination for flight bookings on the Chinese travel platform Qunar on the weekend of November 15-16, after Beijing issued its Japan travel warning.

Exchange rate fluctuations are further adding to its appeal, as the fall in the won makes South Korea increasingly affordable to China’s tourists while other countries’ currencies head in the opposite direction.

The Thai baht, Indonesian rupiah and Malaysian ringgit have gained 2.6 per cent, 2.5 per cent and 2.64 per cent against the US dollar, respectively, since July, according to data from the Bank of Korea. The Korean won, by contrast, has slumped 8.9 per cent.

The value gap matters more than ever to China’s price-conscious travellers, allowing them to splash out on Korean pop culture and beauty products without breaking the bank.

“Chinese consumers have become increasingly price-sensitive since the Covid-19 shock, especially given domestic inflation that is much lower than global levels,” said Gary Ng, a senior economist for Asia-Pacific at the French investment bank Natixis.

The trend shows little sign of reversing, with the Korean won expected to remain under pressure into early 2026.

“Going forward, the currency weakness is likely turning structural, with a slimmer expected external balance and rising export headwinds on regional overcapacity and competition from China over the medium term,” said Louise Loo, the Asia economics head for UK-based advisory firm Oxford Economics.

Warming relations between China and South Korea are also expected to boost tourism flows. The countries recently implemented mutual visa-free policies, and improving diplomatic ties are providing additional momentum, analysts said.

In late October, Chinese President Xi Jinping visited South Korea for the first time in 11 years, attending the Asia-Pacific Economic Cooperation forum and holding a bilateral meeting with South Korean President Lee Jae-myung.

“Both sides are signalling a strong intent to actively boost tourist exchanges,” said Jee Man-soo, a senior research fellow at the Korea Institute of Finance, who specialises in the Chinese economy.

A total of 4.7 million Chinese tourists visited South Korea during the first 10 months of 2025, exceeding the number of visitors for the whole of last year, according to data from the Korean Tourism Organisation.

“For Korea, the currency discount probably explains a meaningful slice of the upside at the margin: it pushes shopping, beauty and medical trips over the line for price-sensitive segments, on top of visa easing and the K-culture pull,” Bhatt said.