China and South Korea have reportedly agreed to restore bilateral relations to a “normal development path swiftly.” What this means for the ongoing ban on the sale of tour group packages from China to South Korea is unclear, as tour group packages for South Korean destinations are still unavailable on Chinese online travel agencies (OTAs). However, it seems very likely that Chinese tourism will resume in earnest in the coming months, which is an encouraging development for South Korea’s tourist industry that has suffered since March with the deployment of the THAAD missile defense system.
The missile defense system was deployed to defend South Korea from potential North Korean missile attacks. However, the Chinese government has vehemently opposed the THAAD deployment because of the system’s long-range surveillance capabilities, which could detect Chinese missile launches.
Korean duty-free shops suffered an estimated $528 million in losses in the first four months of the dispute. Nonetheless, demand for South Korean luxury goods has remained high despite the drop in travel and sales.
South Korea’s president Moon Jae-in will meet with Chinese president Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit next month in Vietnam. While tensions are set to thaw, the Chinese government still maintains its opposition to the system’s deployment in South Korea.
The dispute was a clear defeat for China’s East Asian foreign policy strategy
From a short-term diplomatic perspective, the entire dispute was an apparent defeat for China’s East Asian foreign policy strategy. The ramping up of tensions on the Korean Peninsula and North Korea’s continued provocations and missile launches demonstrated the legitimacy of South Korean fears regarding North Korean aggression.
However, the dispute has also illustrated how little control China exercises on the actions of North Korea. The status quo on the Korean Peninsula has largely been maintained with China’s ongoing economic and diplomatic support for North Korea. While the Chinese government doesn’t necessarily support North Korea’s nuclear ambitions, China is concerned that the collapse of the North Korean regime may lead to a refugee crisis right on its border and a stronger, unified Korean state and U.S. ally.
With the North Korean government showing no willingness to back down and respect the current political status quo, there was little chance that the U.S. or South Korea would be willing to rollback defensive capabilities in South Korea. In short, China had no hope of removing the THAAD missile defense system from the Korean Peninsula.
The THAAD dispute allowed China to demonstrate one of its most important diplomatic weapons: tourism
The silver lining for the Chinese government is yet another demonstration of its new economic weapon: tourism. The extreme losses the South Korean tourism industry and South Korean retailer Lotte, who sold the land where THAAD is deployed to the South Korean government, demonstrate China’s ability to bring substantial economic pressure upon its neighbors who might oppose Chinese foreign policy goals.
China’s tourist diplomacy may not have been able to counter the THAAD deployment through tourism alone, the threat of another tourist ban could provide an effective deterrent in China’s ongoing bid to establish hegemony over East Asia.