South Korea and China renewed their currency swap deal. The contract was set at $56 billion and will mature in three years.

The extension of the deal is welcome news amid chilling ties in the wake of China’s economic retaliations against South Korea’s deployment of US anti-missile assets. As the previous scheme expired on Tuesday with a renewal unannounced, pessimism that negotiations would break down had prevailed.

The renewal carries significant meaning in that South Korea has secured more foreign exchange liquidity in case of financial emergencies.

The arrangement accounts for 46 percent of the entire $122.2 billion worth of currency swaps that South Korea has with other countries. Its foreign exchange reserves stand at $384.7 billion, the ninth highest in the world, but are vulnerable to a currency crisis because the country is small and has an open economy.

Foreign investors may withdraw their money at any time if the situation deteriorates. North Korea has been escalating concerns over security with its unremitting nuclear and missile tests. As the US Federal Reserve has shifted its monetary policy from quantitative easing to quantitative tightening, interest rates in the US are on the brink of surpassing those in South Korea.

Particularly considering that South Korea does not have currency swap lines with the US or Japan, the renewed currency swap deal with China will prove useful. Without the accord with China, South Korea would find it hard to tide over a potential currency crisis down the road.

And yet it is too early to be optimistic for the restoration of bilateral economic ties.

It seems that Beijing has agreed to extend the deal with the intention of increasing the influence of yuan to raise its status as a global reserve currency of choice on par with the dollar and yen. Analysts say it is difficult to attach greater significance to the deal than a decision to secure national interest. When it comes to the Terminal High Altitude Area Defense anti-missile system installed in South Korea and considering that Beijing insists the system threatens its security, China is unlikely to ease its retaliations in the near term.

But the currency swap accord has symbolic meaning as economic cooperation in spite of that and shows a way out of the THAAD strife.

The Chinese authorities had not said until quite recently that it would renew the deal, stoking concern it may cut the currency swap line to South Korea. It seems they agonized on renewing it. For China, the deal may be a means to further globalize the yuan, but it would be hard to deny that Beijing must have weighed the benefits of its relation with South Korea before giving the go-ahead to the contract extension.

In a sense that the two sides have struck a major economic deal on the governmental level after the THAAD issue put a strain on their relations, the accord raises expectation it will be a cornerstone for restoring economic ties. The deal has also shown that mutually beneficial arrangements could be a solution to conflicts over the system. It has even aroused hopes for changes to happen in Beijing’s attitude toward South Korea after the 19th Chinese Communist Party Congress due to start Wednesday.

Continued strife over THAAD will result in unhappy consequences for both sides. Anti-Korean sentiment in China and antipathy against China in Korea will only pour cold water on the bilateral ties.

The government needs to exercise its wisdom to boost expectations on the deal in the direction of disentangling the complicated THAAD problem. As a first step, it must try to find as much common ground as possible for mutual economic benefits, while keeping up efforts to persuade Beijing that the system is for self-defense and does not target China.

The South Korea-China summit meeting early next month will be a good occasion to try to solve the THAAD issue and strengthen their economic cooperation further.