Now, seemingly out of the blue, both sides have decided that enough is enough.

Chinese President Xi Jinping will meet his South Korean counterpart Moon Jae-in on the sidelines of the upcoming Asia-Pacific Economic Cooperation summit in Da Nang, Vietnam, to kick off a new period of detente between the two countries.

What really happened here? Did China simply cut its losses over THAAD?

For Beijing, the US deployment of THAAD was never about the missile interceptors. Rather, Beijing has long expressed open concern – even through its foreign minister – about the powerful X-band AN/TPY-2 radar that accompanies the THAAD system.

The Chinese fear is that this radar could be linked to other theatres and homeland missile defence systems and degrade the PLA Rocket Force’s ability to carry out a nuclear second strike in a war against the United States.

The United States and South Korea long maintained that the deployment was solely about the North Korean threat to US military assets in South Korea. To convince China of this, the United States invited China to technical talks, which Beijing rejected.

China’s technical claims about the radar were vastly overstated, especially when it came to the system’s range and operating capabilities.

So, on first glance, now that Seoul and Beijing are mending their ties with the THAAD system in place, it appears to be a defeat for China – an example of failed economic coercion.

Matters, however, are not that simple.

From its side, South Korea gave China three assurances, or the “three no’s”. South Korea would not consider additional THAAD deployment, would not consider the use of other US missile defence systems and would not consider joining an alliance with the US and Japan.

It is unclear if Seoul coordinated these “three no’s” with the United States, but based on US National Security Adviser H.R. McMaster’s reaction to a question before Trump’s Asia trip on the matter, it appeared to have been a product of behind-the-scenes South Korea-China diplomacy.

The consequences of these assurances are troubling. Indeed, by tolerating a single THAAD deployment, China has received considerable assurances about the scope of South Korean behaviour within its alliance with the United States.

Even while the assurances are in accord with existing South Korean policy and an alliance with Japan is unlikely given the deep divisions between Seoul and Tokyo, that a US ally would give Beijing such assurances is worrying in itself.

All of this comes, too, as the US-South Korea alliance is strained by North Korea’s acquisition of an intercontinental-range ballistic missile capability, which makes US alliance management considerably more challenging than before. Seoul must believe that Washington would come to its assistance, as North Korea can target US cities.

Not only that, but the strained and difficult personal relationship between the left-leaning South Korean President Moon Jae-in and US President Donald Trump only further intensifies the alliance management task, especially given Trump’s repeated criticism of the South Korea-US Free Trade Agreement.

The long-term implications of the China-South Korea understanding on missile defence remains to be seen. Effectively, by employing economic coercion, China has constrained the United States’ relationship with a key ally in Northeast Asia.

If, in the future, realities change and additional US missile defence deployments become necessary, China will probably again retaliate economically against South Korea.

Time will tell who – Seoul or Beijing – came out on top in the THAAD saga, but it is far from obvious that this was an instance of failed Chinese economic coercion.

Ankit Panda is a senior editor at The Diplomat where he writes on international security, diplomacy and economics in the Asia-Pacific region