In Stratfor's 2017 Fourth-Quarter Forecast, we said that Seoul's decision to install the Terminal High-Altitude Area Defense (THAAD) missile defense system would feed tensions between South Korea and China, as South Korea will remain broadly aligned with the White House's defense stance. Over the past three months, Beijing and Seoul have tried to work through their differences to mend ties. Their underlying differences remain, however, preventing a full thaw in the near term.
After a yearlong feud, South Korea and China are trying to mend fences. On Dec. 13, South Korean President Moon Jae In traveled to China for the first time since his inauguration in an attempt to rebuild the two countries' relationship, which has been damaged by the presence of the United States' Terminal High-Altitude Area Defense (THAAD) missile defense system in South Korea. Ever since China responded with unofficial economic sanctions, tensions have been high. Moon's visit attempted to put Beijing and Seoul back on track as they work to move past their differences.
On Dec. 13, Moon and Chinese President Xi Jinping held a summit where Moon hailed a "new era" in bilateral relations. Xi also said Moon's trip could "help repair the damage" of the past year. And during a Dec. 14 meeting involving Moon, Chinese Premier Li Keqiang and the governor of the People's Bank of China, China promised to resume stalled projects with South Korean companies and restart high-level dialogues on economic affairs. Beijing even signaled that it would consider increasing the number of Chinese tourist groups it will send to the 2018 Winter Olympics in Pyeongchang, which would be a boon considering the uphill challenge Seoul is facing to bring in attendees amid the crisis on the Korean Peninsula.
At this point, China and South Korea have the political will to restore their damaged relationship. From China's point of view, strained relations with both Koreas have put it at a disadvantage in the region. And as Beijing looks to contain the United States' regional agenda — particularly in regard to North Korea's nuclear program — it sees Seoul as a weak member of the U.S.-led security infrastructure that is most likely to agree to Beijing's proposed deconfliction measures. South Korea, for its part, has been eager to revive its slowing economy and de-escalate tensions in the region. Moreover, China and South Korea are the two most likely victims of any conflict on the Korean Peninsula, meaning they share mutual interests in maintaining a dialogue with North Korea, preventing a government collapse in Pyongyang and deterring U.S military action. South Korea recently considered scrapping a regular military exercise with U.S. forces to minimize the risk of a North Korean reaction during the Winter Olympics. And on Dec. 13, Moon and Xi reaffirmed their commitment to a dialogue with North Korea.
Still, a full thaw in bilateral relations between China and South Korea is unlikely anytime soon. During Moon's visit, the two countries reportedly cancelled a joint statement due to a disagreement over Beijing's demand that Seoul pledge not to deploy additional THAAD launchers. Meanwhile, Chinese officials and state media have used a cautious tone in covering the visit, and Seoul has complained that its leaders are experiencing a "downgrade" in respect.
Ultimately, China and South Korea's conflicts are a reflection of their increasingly divergent responses to the North Korea crisis. China maintains that the deployment of THAAD in South Korea compromises its national security. It wants South Korea to refrain from advancing U.S.-led missile defense in the region and is wary of a potential trilateral security alliance between South Korea, the United States and Japan. Seoul has taken a step toward a trilateral partnership with Japan, but China's demands put it in a bind. Between the imminent security threats posed by North Korea's nuclear program and the remilitarization of Japan, Seoul can't afford to upset its security relationship with the United States.
Beijing understands that its economic boycott strategy can do little to change Seoul's decision on THAAD, but it refuses to be seen as rewarding South Korea by easing economic pressure too much and too fast. But China's hard-line approach could also increase public outcry and amplify conservative voices in South Korea, hurting the government's ability to mend its relationship with China and possibly promoting a closer security alliance with the United States.
Still, South Korea is in the more difficult position. Seoul must advance its own security interests while also sustaining relations with China's economy. South Korea has little room to shape events in the region, meaning North Korea will continue to exploit its vulnerabilities.