On October 31, China and South Korea agreed to set aside their differences and normalize relations after a year of cooling economics ties. The dispute started when South Korea deployed the U.S.-owned Terminal High Altitude Area Defense (THAAD) system on its soil. Though South Korea maintained that THAAD is purely to defend against the threat of North Korean ballistic missiles, China argued it could also be used to track Chinese missiles. To demonstrate its discontent, China punished South Korean businesses by boycotting them and suspending Chinese tour groups to South Korea. The recent lifting of these measures demonstrates China’s recognition of South Korea’s growing role as a balancing force between itself and the United States in the Asia-Pacific.

China is South Korea’s largest trading partner, and China’s economic retaliation dropped the number of Chinese visitors to South Korea by 60 percent in the first nine months of this year compared to 2016, which reduced South Korea’s 2017 gross domestic product growth by 0.4 percent. This, among other reasons, caused South Koreans’ approval of China to fall sharply at the beginning of this year, according to a survey conducted by the Seoul-based Asan Institute for Policy Studies. From January to March 2017, China’s approval rating declined from 4.31 to 3.21 (on a ten-point scale), putting it slightly below that of Japan, which consistently has been mistrusted by South Koreans due to the deep enmity rising from historical grievances.

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The recent deterioration of South Korea–China relations was unfortunate, because South Korea has avoided explicitly taking sides in the U.S.-China rivalry in the Asia-Pacific. Since the end of World War II, when the Korean Peninsula was divided at the thirty-eighth parallel—with the Soviet Union governing North Korea and South Korea by the United States—South Korea, along with Japan, has been one of the United States’ most stalwart allies in the region. But unlike Japan, which appears to be fully committed to a U.S.-centric regional construct, South Korea has been careful not to isolate China. While South Korea maintains a mutual-defense treaty with the United States, signed shortly after the armistice was reached and which effectively ended the Korean War, it also entered a free-trade agreement with China in 2015.

The normalization of the two countries’ economic relations illustrates China’s understanding of the importance of keeping South Korea close. For China, building partnerships wherever feasible is especially important during these times when it is embroiled in contentious regional issues. No progress has been made over the islands in the East China Sea; the South China Sea remains contested among Japan, Taiwan and various Southeast Asian countries; and China has also been engaged with border disputes with India. While China rarely shies away from unilateral action at the expense of other countries, it is also known for its long-term visions and strategy, as exemplified by the ambitious $900 billion New Silk Road project. There is no indication that the boycotting of South Korean goods has hurt Chinese consumers in any significant way, but China has determined that regaining favorable opinion from South Koreans is the prudent course of action, at least for now.

Even though China has agreed to normalize economic relations with South Korea, it has made explicitly clear it still disapproves the deployment of THAAD on South Korean soil, never mind that THAAD’s radar needs to be pointed towards North Korea to detect and track ballistic missiles. As long as North Korea continues to develop its missiles, China cannot discount South Korea’s determination to defend itself against the North Korean threat. The two countries can continue to bicker on this issue, but improved relations between the two countries will have positive effects on the greater region.

South Korea has a critical role to play in the Asia-Pacific region. It must certainly not neglect its close ties with the United States, yet it must also maintain positive relations with China. There may come a time for South Korea to be tested as the great balancer, ensuring that the U.S.-China rivalry in the region does not become too heated. The United States and China will also benefit from realizing that in the end, it may not serve either of them to keep South Korea solely in their camp. South Korea is in the advantageous position of maintaining good relations with both of the superpowers of the world, but it also must carefully consider the great responsibility that comes with it.

Ki Suh Jung is Young Professionals in Foreign Policy’s Asia-Pacific Fellow. He is also an officer in the U.S. Navy, recently deployed in the Pacific. Ki Suh earned his BA in Economics and Government from Dartmouth College. You can find examples of his previous work in The Diplomat and the Huffington Post.

Image: Chinese President Xi Jinping (R) gestures towards South Korean President Moon Jae-In (L) during a signing ceremony at the Great Hall of the People in Beijing, China December 14, 2017. REUTERS/Nicolas Asfouri/Pool​