After a tense year that included harsh Chinese sanctions on South Korea, Beijing and Seoul announced on October 31 that they would take steps to repair bilateral relations. And on November 10-11, Chinese President Xi Jinping and South Korean President Moon Jae-in will hold a summit on the sidelines of the Asia-Pacific Economic Cooperation meeting in Da Nang, Vietnam. 

The timing of the Chinese-South Korean rapprochement was significant: it followed closely on the heels of both China’s 19th Party Congress (which further cemented Xi’s grip on power) and an October 23 meeting of the U.S., Japanese, and South Korean defense ministers, which produced an agreement for their countries to work toward greater trilateral cooperation. The reconciliation also came just days before November 4, when U.S. President Donald Trump set off for his first trip to Asia since taking office. 

The source of the year-long dispute between China and South Korea was the latter’s installation of the Terminal High Altitude Area Defense (THAAD) missile defense system. Beijing claims that THAAD and its powerful radar undermine China’s nuclear deterrent and has cast the missile system as part of a U.S.-led plan to contain growing Chinese power in East Asia. South Korea and the United States, for their part, insist that THAAD is aimed only at defending against the nuclear threat from North Korea.   

The falling out between the two countries has been costly, particularly for South Korea. Since July 2016, when former South Korean President Park Geun-hye decided to install THAAD, Beijing has attempted a series of punitive economic actions in order to force a reversal of the decision by Seoul. According to a report by the Hyundai Research Institute, Chinese economic retaliation for THAAD will cost the South Korean economy approximately $7.5 billion in 2017, compared to a loss of only $880 million for the Chinese economy.

Now that the dispute is over, the central question going forward is whether or not China’s economic coercion against South Korea worked. The answer matters for a vast number of countries, more than a hundred of which now count China as their number one trading partner. If by applying economic pressure, Beijing successfully compelled Seoul to reverse a decision deemed harmful to Chinese interests, China is more likely to repeat this approach against other countries in the future. But although evidence thus far is murky, it appears that China’s campaign against South Korea was at least a partial failure. 

South Korean President Moon Jae-in addresses the National Assembly in Seoul, November 2017.
Reuters

BIG RED BULLY

China’s use of economic coercion against other countries has so far produced mixed results. After the Norwegian Nobel Committee awarded the 2010 Nobel Peace Prize to Chinese dissident Liu Xiaobo, China restricted salmon imports until December 2016, when Oslo conceded to Chinese concerns about sovereignty, agreeing in a joint declaration to not support actions that undermine China’s core interests. Chinese sanctions were also successful against Mongolia—after Ulaanbaatar decided to host the Dalai Lama in November 2016, Beijing imposed hefty fees on Mongolian commodity imports. In December, Mongolia pledged not to extend future invitations to the Tibetan spiritual leader.

Other efforts have been less successful, however. The combination of a Chinese ban on imports of Philippine tropical fruit and a cutback on Chinese tourism to the Philippines was unable to persuade Manila to withdraw the January 2013 arbitration case it filed against China over disputes in the South China Sea.

In the South Korean case, initial statements by China suggested that Seoul had finally caved to Chinese pressure. At an October 31 press briefing, Chinese Foreign Ministry spokesperson Hua Chunying noted what she claimed were South Korean commitments, which she called the “three nos”: no to joining an integrated U.S. missile defense system, no to developing U.S.-Japanese-South Korean security cooperation into a full-blown military alliance, and no to making additional deployments of THAAD. Hua called on Seoul to “match word to deed and follow through” on these assurances.

It appears that China’s campaign against South Korea was at least a partial failure.

South Korea, however, subsequently explained that the “three nos” position is not a promise made to China but, rather, a statement of South Korea’s long-standing position. In fact, just one day before the compromise with China was announced, South Korean Foreign Minister Kang Kyung-wha offered the same three assurances in response to a question posed by a member of parliament. China’s foreign ministry appears to have co-opted her statement, implying that it had been part of the bilateral agreement. 

The details of the understanding reached between China and South Korea remain murky, but Beijing’s willingness to restore normal bilateral ties despite Seoul’s refusal to remove THAAD suggests that China’s coercive gambit failed. 

MOON JAE-IN’S BALANCING ACT

China plays the long game in its foreign policy, however, and it may be premature to conclude that its coercion campaign against South Korea was a total flop. Success or failure may ultimately depend on President Moon’s willingness to take additional steps to bolster South Korea’s security, including enhancing trilateral defense cooperation with the United States and Japan, that China opposes. 

Under growing pressure from domestic constituencies who favor closer relations with China, Moon may be reluctant to challenge Chinese interests for fear that the deal with Beijing will unravel. He undoubtedly wants to put tensions behind him in order to revive South Korean exports to China and welcome more Chinese tourists. There has, moreover, been plentiful domestic criticism over South Korea’s hefty economic losses from the THAAD row—such pressure may have caused Moon to pursue rapprochement with China so as to mitigate economic losses and strike a strategic balance between Washington and Beijing.  

A conservative protestor outside the U.S. embassy in Seoul, November 2017.
Kim Hong-ji / Reuters

In addition to economic concerns, Trump’s irresponsible threats against North Korea may be driving Moon to reposition his country closer to China and farther from the United States. In an interview with a Singaporean media outlet after the announcement of the breakthrough, Moon said that South Korea’s “relationship with China has become more important not only in terms of economic cooperation but also for strategic cooperation for the peaceful resolution of the North Korean nuclear issue.” He added, “That is why I am pursuing a balanced diplomacy with the United States as well as China.” Moon further asserted that a U.S.-Japanese-South Korean military alliance is not “desirable.”

The United States, meanwhile, is worried about Moon’s strategic intentions and is likely questioning his steadfastness were China ever to renew pressure on him in the future. Prior to Trump’s departure for Asia, National Security Adviser H. R. McMaster welcomed the news that China was lifting sanctions on South Korea but appeared troubled by Kang’s remarks about the “three nos.” McMaster said, unconvincingly, that he doubted that Kang’s statements had been “definitive” enough to be called “policy principles” and that he didn’t “think that South Korea would give up its sovereignty in those three areas.” Although the statements made by Kang may not technically represent a change in ROK policy, it would be concerning to U.S. policymakers if South Korea were foreclosing future security options for the short-term benefit of improving bilateral relations with China.  The United States likely prefers that South Korea forego commitments that place limits on future U.S.-South Korean alliances, or on trilateral cooperation between Seoul, Tokyo, and Washington.

KEEP YOUR GUARD UP

Trump’s visit to Seoul today is likely to be a defining moment both for Moon’s foreign policy and for the U.S.-South Korean alliance. South Koreans hope that Trump will emphasize the need for a peaceful solution to the North Korean nuclear crisis and reaffirm the importance of the alliance. Seoul should do its part by making clear at the highest level that the understanding reached with Beijing does not include a pledge not to deploy additional THAAD batteries, join regional anti-missile defense arrangements, or bolster trilateral military cooperation with the United States and Japan. President Moon should commit publicly to eschew any agreement that would inhibit the government’s ability to defend its sovereignty and interfere with its responsibilities to protect its own people against outside threats.

China can be expected to persist in its efforts to drive a wedge between the United States and South Korea and to use its economic leverage to coerce countries to defer to Chinese interests. Seoul must continue to maintain its guard against future actions that Beijing may take to undermine its sovereignty and the alliance system in Asia. Many other countries that seek to preserve their sovereignty—both inside and outside of the Asia-Pacific—are watching closely.

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  • BONNIE S. GLASER is a Senior Adviser for Asia and Director of the China Power Project at the Center for Strategic and International Studies. LISA COLLINS is a Fellow with the Korea Chair at CSIS.
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