China’s Limited Retaliation Options Against the THAAD Deployment in South Korea

The Chinese Ambassador to South Korea gave a rather dramatic warning to the leader of South Korea’s opposition Democratic Party on February 25 that a decision to deploy a Terminal High Altitude Area Defense (THAAD) system would put China–South Korean relations at risk. Thus, it should not be surprising that threats of Chinese retaliation toward South Korea would surface following the July 8 U.S.-ROK announcement that the governments had decided to deploy THAAD in South Korea in response to North Korea’s growing missile threats. Despite emotional assertions that South Korea has compromised Chinese interests by pursuing self-defense against North Korea’s growing missile capabilities, China does not have the capability to punish South Korea without damaging its own economic and strategic interests on the Korean peninsula.

The Global Times stated in a July 15 editorial that “Beijing must review and readjust its Korean Peninsula strategies in accordance with the latest threat from the peninsula, including its ROK policies.” At a bilateral meeting between South Korean and Chinese foreign ministers on the sidelines of the ASEAN Regional Forum meeting on July 25, Chinese Foreign Minister Wang Yi went out of his way to assert that the South Korean decision “has undermined the foundations of trust between the two countries.”

At the same time that Wang Yi was making this claim, National Security Advisor Susan Rice reiterated the U.S. position on THAAD directly to Chinese counterparts during her meetings in Beijing: The decision to deploy THAAD was an “alliance decision” that was made “directly in response to the threat posed by North Korea in its nuclear and missile programs. It is purely a defensive measure. It is not aimed at any other party other than North Korea and the threat it poses. And this defensive weapon system is neither designed nor capable of threatening China’s security interests.”

Threats of Chinese retaliation including reductions of tourist flows and visa approvals between China and South Korea and cancellations of Korean pop concerts and television dramas in China have inflamed a South Korean domestic political debate over THAAD deployment in an attempt to take advantage of domestic opposition and threaten the Korean public with retaliatory countermeasures designed to punish South Korea for what Beijing views as a strategic misjudgment. But China’s capacity to pursue economic countermeasures without sacrificing its own economic and political interests remains limited.

First, Chinese threats of punishment are likely to alienate rather than win over the South Korean public, while risking damage to a vibrant economic relationship that has brought China and South Korea together. Threats to cut off economic ties or discriminate against South Korean exports are inconsistent with China’s World Trade Organization (WTO) obligations and will generate resentment among the South Korean public. China cannot hope to maintain friendly relations with its neighbors through economic threats or bullying. For instance, immediately following announcement of the deployment, the Global Times advocated cutting off economic ties with companies involved with THAAD and banning of Korean politicians and businesses that support deployment of the system. Such measures may roil South Korea’s domestic political debate, but the costs are so narrowly targeted that the vast majority of the Sino-South Korean economic relationship would not be affected by Chinese retaliatory measures.

Second, China might consider retaliation against South Korea by boosting China–North Korea relations. For instance, the Chinese and North Korean foreign ministers traveled on the same plane to the ASEAN Regional Forum (ARF) meeting in Laos and projected renewed closeness between the two countries at the ARF meeting in Laos. The Korea Times on July 25 reported that Chinese foot-dragging on UN statements condemning a spate of North Korean missile tests in violation of UN Security Council Resolutions was an instance of Chinese retaliation for the decision to deploy THAAD. Both of these measures seem to be attempts to impose a price and to sway South Korean domestic opinion by emphasizing that South Korea must pay a price for taking actions perceived to threaten China’s strategic and economic interests.

However, Chinese retaliation options against South Korea in response to the THAAD decision are limited and counterproductive to China’s own strategic interests. China needs to retain good relations with South Korea as part of its long-term interest in ensuring that the Korean peninsula is friendly to Chinese interests, knowing that a unified Korea’s future strategic orientation is far more likely to be shaped by Seoul than Pyongyang. Second, closer Chinese relations with North Korea are not an effective means of punishment against South Korea given that it is in China’s interests to do more to bring the North Korean nuclear threat under control.

Chinese objections to THAAD both underscore Chinese sensitivity to the U.S. presence on the peninsula and make clear China’s desire to limit the scope of the U.S.-ROK alliance to North Korea in the near-term while hoping that it will disappear completely as part of any process that might lead to Korean unification. Despite these concerns, Chinese senior officials have not backed away from the importance of a denuclearized North Korea.

China’s immediate diplomatic focus is ensuring the success of the upcoming Group of Twenty (G20) meeting that China will host in Hangzhou, generating fears in South Korea that the brunt of Chinese retaliation will follow that international meeting. However, the G20 Summit also provides a valuable opportunity for a frank trilateral leaders-level discussion with Xi Jinping about the U.S.-ROK “alliance decision” to deploy THAAD, how it is linked to the growing North Korean nuclear and missile threat, and how to maintain regional stability in spite of North Korea’s destabilizing actions.