Very briefly, this 38 North
report is the best run-down of THAAD deployment and the tensions it has generated between the ROK and China. As the author states:
When the decision was originally made, the ROK government anticipated a negative Chinese reaction to THAAD deployment, but went ahead with it for several reasons. First, its anxiety about security and lack of missile defenses had increased significantly in response to the acceleration of North Korea’s nuclear and ballistic missile development. Second, the ROK government needed to manage the risk of Washington abandoning the US-ROK alliance. In doing this, it considered THAAD to be one means of filling security gaps and securing conditions for the stable presence of US forces. Third, Seoul understood the system’s effective radar detection range to be limited to the Korean peninsula and is oriented solely to detect North Korean ballistic missiles. Fourth, Seoul needed to demonstrate that it would not permit China to exercise a veto over its right to deploy a system to defend its national security. Fifth, the ROK government dismissed the fear that a THAAD battery in its territory would become integrated into the US ballistic missile defense system as groundless.In addition to these factors, opponents of President Park Geun-hye’s conservative administration won a majority of National Assembly seats in the subsequent general election, raising the prospect that deploying THAAD would have become less politically feasible with further delay.
However, China holds a very different view of the South Korean decision. First, Beijing believes that one THAAD battery can neither deter North Korea militarily nor compel Pyongyang to change its behavior. Second, it thinks the system’s detection range could later be changed to suit US needs, enabling THAAD to potentially target Chinese assets, including strategic missile systems and forcing Beijing to spend more on defenses for its coastal missile bases. Third, Beijing is aware that a long-term goal of the US rebalance to Asia is to check or block China through security cooperation with South Korea and Japan. Fourth, it expects an additional strategic burden from changes to the regional “power balance,” such as new Russian defenses against THAAD that Beijing will also have to take into account.
On a related note,
CFR published a study on South Korea's option in Northeast Asia in response to the China factor.
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