August 31, 2017 10:00 am JST

THAAD feud mars anniversary of China-South Korea relations

Early reconciliation unlikely as Beijing focuses on autumn leadership shuffle

SOTARO SUZUKI and OKI NAGAI, Nikkei staff writers

South Korean President Moon Jae-in, left, and Chinese President Xi Jinping © Yonhap/Kyodo

SEOUL/BEIJING Twenty-five years after China and South Korea established formal diplomatic relations, ties between the two countries have soured with little hope of reconciliation on the horizon.

The chilled relations put a damper on celebrations to mark the anniversary of bilateral diplomatic ties. More than 100 people gathered at a hotel in Beijing on Aug. 23 to mark the event, but the highest-ranking Chinese official in attendance was Chen Zhu, vice chairman of the Standing Committee of the National People's Congress.

"This has become a cheerless anniversary," said a Beijing insider close to bilateral diplomatic channels.

Compare this with the 20th anniversary celebration, a gathering of roughly 400 people jointly hosted by China and South Korea and held in the Great Hall of the People in Beijing. China's top biller at the 2012 event was then-Vice President Xi Jinping, who would take the helm of the Communist Party just three months later.

On top of this year's smaller crowds and B-list guests, South Korea decided to hold its own event the following day.

Congratulatory messages exchanged by the two countries' leaders on the anniversary were also less than effusive. Seoul hopes to develop a "substantive strategic and cooperative partnership," South Korean President Moon Jae-in said.

Xi, for his part, expressed a desire to jointly address differences.

These "differences" are over the Terminal High Altitude Area Defense missile shield, which South Korea decided last July to jointly deploy with the U.S. under then-President Park Geun-hye.

Park was ousted months later and replaced by Moon, who had preached caution on installing THAAD, whose radars, Beijing says, are capable of spying on Chinese territory. But with Pyongyang test-launching a volley of missiles this year, Moon ultimately acceded to America's wishes.

ECONOMIC FALLOUT The normalization of ties with China was the culmination of then-South Korean President Roh Tae-woo's policy of indirectly engaging with Pyongyang by improving relations with the Communist bloc.

The strategy not only further isolated North Korea internationally, it also deepened Chinese-South Korean economic ties. Bilateral trade came to $211.4 billion in 2016, 33 times the figure in 1992.

But Beijing is now venting its anger over THAAD on South Korean corporations. The Lotte group, which provided land for the system's deployment, was ordered to suspend operations at dozens of Chinese supermarkets by authorities citing fire code and other violations. Close to 90 of roughly 110 locations remain shuttered.

Chinese consumers have jumped on the patriotic bandwagon to boycott South Korean products. Hyundai Motor's first-half sales in China plunged 30% on the year.

The impact is also being felt in South Korea, where Chinese companies are canceling plans to set up shop at the Saemangeum industrial complex, according to a representative of the campus.

South Korean business is calling for a summit to mend relations, but rumors that Moon would visit China in August proved ill-founded.

The Chinese leadership, meanwhile, cannot afford to show weakness ahead of the twice-a-decade Communist Party congress this fall. While Beijing does not want to see relations with a neighbor deteriorate, there will be no easy compromises at this sensitive stage.

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