Xi reaps reward of softer approach as Moon heads to Beijing

South Korea President Moon Jae-in

As Chinese President Xi Jinping welcomes South Korea’s Moon Jae-in to Beijing, he’ll be showing off the gains of a foreign policy shift that has seen China tamp down several disputes with its neighbors.

Moon left Seoul for first trip to China as president yesterday, six weeks after China lifted an economic embargo against South Korea over its deployment of a U.S. missile-defense system. The standoff, which hurt sales of everything from cosmetics to K-pop between two of Asia’s biggest economies, ended with Moon promising to respect China’s missile-shield concerns and pursue a “balanced diplomacy” with Beijing and Washington.

The resolution was one of several Chinese diplomatic thaws in recent weeks, as Beijing worked to quiet South China Sea disputes, and mend ties with Singapore and Japan. Such moves help China capitalize on lingering uncertainty over U.S. commitment in the region as President Donald Trump questions Asian trade deals and prioritizes North Korea’s nuclear missile threat over territorial spats.

They may also serve a more personal goal for Xi, who in October pledged China’s return to “the center of the world stage” at a leadership meeting that positioned him to rule for decades. China’s efforts to assert its new might during Xi’s first term – including building military outposts in the South China Sea – had stoked suspicions about its intentions.

“Xi has realized that China’s rapid growth and behavior has scared a lot of people in the region,” said Michael Kovrig, senior adviser for Northeast Asia at the International Crisis Group and a former Canadian diplomat stationed in Beijing. “Xi sees there is a strategic opportunity of Donald Trump having taken America in a different direction and seeing that void, that has probably led him to ramp up that policy further.”

China’s decision to stop punishing South Korea – one of the U.S.’s closest allies – for its deployment of Terminal High Altitude Area Defense, or Thaad, missile shield illustrates the shift. After Seoul decided last year to accept the system, China ordered travel agencies to stop selling South Korea tour packages and launched fire-safety inspections that forced Lotte Group to suspend operations at 99 hypermarkets in China.

But the argument that Thaad was an early component to build a U.S. missile shield around China failed to resonate as North Korea lobbed test missiles into the waters of North Asia. The sanctions “made China look like an insensitive bully,” Kovrig said.

China lifted the embargo without securing Thaad’s withdrawal. The South Korean won has strengthened 2.5 percent since the dispute ended Oct. 31.

The two sides “reached some consensus on dealing with the issue,” Chinese Foreign Ministry spokesman Lu Kang said in response to a question about Moon’s visit. “We hope that the issue can continue to be handled properly.”

Discussions about North Korea will dominate Moon’s visit to China, whose decades-old alliance with Pyongyang has frayed amid leader Kim Jong Un’s provocations. Officials on both sides have urged Trump to dial back threats of military action and focus on sanctions to push Kim back to negotiations.

Xi and Moon will also discuss adding a services component to the free-trade agreement that took effect in December 2015, according to a South Korean government official who spoke on the condition or anonymity. Bloomberg