China’s two-year-long THAAD revenge warrants diplomatic actions

Beijing Hyundai Motor Company, a Chinese joint-venture of Hyundai Motor, will discontinue the operation of its No.1 plant in Beijing, China next month. This seems to be the result of China’s reprisal for the deployment of the THAAD, rather than the lost competitiveness of Hyundai Motor’s products. The Chinse government’s retaliation has been continued for two years now, but there’s no sign of resolution.

Beijing Hyundai’s sales in China fell by 18 percent during the first quarter of this year compared to the same period last year, and its capacity utilization rate was cut below half. This may be partially attributed to the heightening competition among global automakers in the market, however the main cause is the so-called THAAD revenge. Even Global Times, a Chinese state-run English-language newspaper, cited an employee of Hyundai Motor in Beijing and pointed to “the falling appeal among Chinese consumers for South Korean brands after the country's deployment of the U.S. Terminal High Altitude Area Defense anti-missile system” as one of the reasons of the closure of Hyundai Motor’s plant. The THAAD revenge is also deemed as the culprit of a series of large retailers, including Lotte Corporation, throwing their hands in the air and exiting the Chinese market.

Such impact is not just limited to manufacturers and retailers present in the East Asian country. South Korean internet portals Naver and Daum have been blocked in China, respectively since October last year and January this year, causing a lot of inconvenience to Korean nationals and companies in China. The Chinese government has not given a proper explanation to the South Korean government demanding a reason. Restrictions on group tours to Korea, which is an area heavily affected by the Chinese authorities, have not been eased yet either.

China is a socialist country under the rule of the Communist Party. Businesses and consumers in the country are heavily swayed by the government’s decisions. The Chinese authorities say that the sudden unpopularity of Korean products and mass cancellations of group tours to Korea were simply what Chinese consumers have chosen, but nobody would be fooled. Admittedly, economic issues are not completely free from diplomatic and security issues, but the behavior of the Chinese government, which has been carried on for over two years since the deployment of THAAD, is clearly a petty one incomprehensible by the standards expected from a modern globalized country in the 21st century. The South Korea government should fully leverage its diplomatic capabilities and prompt the normalization of business activities with China as soon as possible. With the appointment of Jang Ha-sung who oversaw economic policies as a new ambassador to China, tangible outcomes on the inter-country economic issues are expected. It is the responsibility of a government to address the issues that cannot be resolved by individual companies.