News analysis

Summit a good 'first step' in restoring ties

South Korean President Moon Jae In's cordial summit with his Chinese counterpart Xi Jinping in Beijing is viewed as a "good signal" and "first step" in restoring ties frayed by a diplomatic row over Seoul's deployment of an American missile shield system.

Experts said both sides showed a willingness to mend ties instead of harping on the issue of the Terminal High Altitude Area Defence (Thaad) system, which Seoul installed for self-defence despite Beijing's objection due to security concerns.

But a complete thaw will come slowly, they added.

South Korea's presidential office noted yesterday that the two leaders were in talks for more than two hours - double the allocated time - and Mr Xi spoke less about Thaad this time than when they met in Vietnam last month.

An official told reporters it is a "good signal" that Mr Xi referred to it only as "the issue we all know" in his opening remarks and did not raise it again until towards the end of the talks when he reiterated Beijing's stand and asked Seoul to handle the issue "seriously" and "appropriately".

Dr Lee Seong Hyon, a research fellow at The Sejong Institute think-tank, said the summit signals the "first step of China's letting go of a grudge against South Korea for hosting Thaad, despite China's vehement opposition".

But he also warned that "political thaw will happen slowly" as China needs to move beyond "anti-Thaad sentiments that it generated but couldn't control once they were born". Economic improvements will occur more quickly, he added.


South Korean President Moon Jae In (left) and Chinese President Xi Jinping at the Great Hall of the People in Beijing, China, on Dec 14, 2017. PHOTO: EPA-EFE

Mr Moon's first visit to China since his inauguration in May is viewed as an opportunity for both countries to restore economic ties damaged by Beijing-imposed boycotts targeting group tours to South Korea, K-pop and South Korean companies operating in China.

On Oct 31, both countries inked an agreement to move beyond the Thaad row, but experts said it will take time for tourism and collaborations to return to pre-Thaad levels.

The ban on group tours alone cost an estimated 7.5 trillion won (S$10 billion) in losses for South Korea's travel-related sectors, while South Korean companies such as Lotte Group and Hyundai Motor suffered plunging sales. But the overall impact on economic growth is limited to 0.2 to 0.3 percentage point after South Korea expanded trade and tourism with other countries, especially with South-east Asia nations.

 

Some analysts have said it is better to rely less on China, which accounts for one quarter of South Korea's exports.

Despite the Thaad row, South Korean exports to China in the first 10 months of this year increased 12.5 per cent year on year to US$114.3 billion (S$156 billion), boosted mainly by an increase in Chinese demand for South Korea's semiconductors and chips.

"To mitigate the possible risks from political conflicts and economic or financial spillovers of the Chinese economy, it would be wise to diversify," said Dr Hyunju Kang, a research fellow at the Korea Capital Market Institute think-tank.

Sejong Institute's Dr Lee predicts that after 25 years, South Korea-China ties will "enter a new normal period".

A version of this article appeared in the print edition of The Straits Times on December 16, 2017, with the headline 'Summit a good 'first step' in restoring ties'. Print Edition | Subscribe