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

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

On April 28, it was announced that K-pop group Epex will perform on 31 May in Fuzhou, Fujian, province, the first time that All-Korean Idol Group has held a concert in the mainland of China since 2016.

In addition, the large-scale annual Dream Concert-South Korea’s longest-running K-pop event you have planned Shooted to take place on 26 September in a stadium with 40,000 seats in the province of Hainan, said the Korea Entertainment producers’ Association on 30 April.

These developments could indicate a relaxation of the unofficial ban of China on K-pop acts on the mainland after South Korea deployment of the Terminal Large Air Defense Rocketing Weather System announced in 2016, with China said the system was different reasons.

The inverted 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 in the midst of a long -term decrease in consumption.”

She noted that consumption in 2018 contributed nearly 70% to China’s gross domestic growth, but the share has fallen to less than 30% in recent years, with the growth of the country’s consumer price index almost zero.

“In response, the government started promoting cultural events – including foreign pop concerts – to stimulate discreet spending in tourism, hospitality and local trade,” she added.

On April 25, the Chinese Ministry of Culture and Tourism will relate to the promotion of cultural events, including concerts and music festivals.

Oh Puded that China is the export market for South Korea album after Japan and the US, and the second largest music market in Asia, “emphasizes its strategic importance eviction years of limitations.”

Also helping the case for K-pop in China is the fact that the sector is considered rate-proof.

Shinhan Securities’ Ji In-Hae wrote 14 brands in an APIL that “although the market is volatile because of the rates, [entertainment and media are] Not affected by the rates at all, while the possibility of the opening of China is valid. “

CGS “Oh said:” Core revenue Drivers streaming, concerts and fan content digital and immendible, making them immune to cross-border rates. ” Even when fans buy albums and merchandise, the tariff exposure is “neglected”, given low prices for unity and loyal fans.

“In contrast to semiconductors or cars, where global trade policy directly influences the supply chains and prices, K-pop consumption is much less sensitive to protectionist measures,” she added. Semi -conductors and cars are two of the most important exports of South Korea.

Last month, South Korea announced a $ 23 billion support package for the semiconductor sector in the light of Unationsy on American rates. The Trump administration that you have affected 25% levy on all vehicles sent to the United States, and another 25% on steel and aluminum imports.

The Hyundai and Kia in South Korea are among the top eight bestseller brands in the US, according to the Auto -Marktcarpro. The country is also the fourth-venture exporter from Staal to the US in 2024, according to the International Trade Administration under the American Handel department.

But China’s soft attitude 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 APIL 4 remark that China can try to restore the ties with neighboring countries, including South Korea, in the light of his own economic challenges.

Cultural diplomacy could come to the fore as an important starting point, they said, which led to the relief of informal prohibitions about the South Korean content and the summary of K-Pop’s fan-driven income flows in the region. The sector has been described in half as “a long -term beneficiary of [a] Changing world order. “

CGS ‘OH reflects that opinion and tells CNBC that “the reintroduction of K-pop could help in diversifying cultural offers and promoting regional goodwill.”

She added that China seems to heat the ties with South Korea and at the same time plan temporary limits for certain Western content, including Hollywood films.

Oh said that the shift not only restores access to a previusly limited fan economy, but also offers an opportunity to deepen the cultural involvement in Asia, which will lay the foundation for structural growth in the region in the region.

The developments can be good news for K-pop shares.

The profit and share price of K-Pop’s four Larganst companies, known as the “Big Four” and all in public mentioned in 2024. These are the legions of admiring fans, multi-city concerts and billions of YouTube streams that are seen worldwide.

But a Rebound-Sems that takes place in the first few months of 2025, with three of the Big Four companies that register considerable year-to-date increases.

The Chinese concert market would offer a considerable boost in 2025 if the country lifted the unofficial ban on South Korean artists. Joshua Kim van CGS wrote in a comment of 10 February that the Chinese concert market size increased from $ 2.9 billion in 2019 to $ 8 billion in 2024, and grew 189% during the period.

“Henze, when China lifts the ban on Korean artists, we expect that China will represent more than 25% of concert income in 2025, which exceeds the contribution in 2016,” he said.

Morgan Stanley Equity Analyst Seyon Park said she would consider that China reopened to “potentially powerful catalytic converter” that could considerably stimulate income and real value, estimates considerably higher, although the reopening is likely to be gradual.

According to OH, the approval for the EPEX concert is a “policy test case” that can pave the way for larger actions. She noted that smaller fan events by girls’ groups twice and that I could indicate in Shanghai that China starts with medium actions before he continues to wider income.

EPEX is a relay Rookie group in the industry, which registered in 2021, but oh said they are not insulated approvals, insiders, they are a wider transsion transsion trancha transsion trancha.

“With Hybe, JYP, SM and YG Al ​​Pueoneled for Global Aren win Catalyst for the Big Four,” she said.

Or to quote to the number of 2009 of the 2NE1 of YG Entertainment, K-Pop says China: “It’s a long time ago, but we are here now.”