Chinese President Xi Jinping's three-day trip to South Korea will conclude on Saturday, with a visit by President Lee Jae Myung. The newly elected U.S. ally has promised to balance Seoul’s ties to Beijing.

Lee, who took office in June after his predecessor was ousted for a failed attempt at martial law, faces high stakes. Lee has to protect South Korea's export economy while lowering tensions between North Korea and China in the face of increasing competition from both countries.

Lee hosted Donald Trump, the U.S. president, for a hasty state visit earlier this week. He showered him with gifts and praise, before announcing an unexpected trade deal that would lower U.S. import tariffs in exchange for South Korean investments worth billions of dollars.

On Saturday, the South Korean President will host similar events in honor of Xi at the Asia-Pacific Economic Cooperation Forum (APEC), including a state dinner and a summit. Xi is visiting South Korea for the first time since 2011.

Xi met Trump Thursday, ahead of the APEC Summit. They struck a deal which included lower U.S. Tariffs on Chinese Goods in exchange for Beijing cracking down on the illicit fentanyl market, the resumption U.S. Soybean purchases, and the continued flow of exports of rare earths. The Chinese President also held discussions with leaders from Japan, Canada and Thailand.

Lee's office said that he will meet with Xi to discuss denuclearisation, a diplomatic term used to describe North Korea's nukes, which have been banned by the United Nations Security Council.

Pyongyang responded by dismissing the denuclearisation plan as a "pipedream" that will never be realized.

Trump offered to meet North Korean leader Kim Jong Un on his South Korean visit, but Pyongyang didn't respond publicly.

Seoul is the key U.S. ally of the U.S. in Asia. It hosts thousands of American soldiers and relies on U.S. nuclear umbrella to protect it from a nuclear-armed North Korea.

South Korea's economy relies heavily on the U.S. not only because it has imposed tariffs and pushed for investment in order to balance trade imbalances but also China. China has become a major challenge for South Korean businesses and exerts influence over North Korea.

CHARM IS OFFENSIVE?

Trump's absence from this week's APEC summit has positioned Beijing as the undisputed champion of open and free trade. The U.S. had dominated that role for decades.

John Delury is a senior fellow at Asia Society. He said that China has not yet launched a charm offensive towards U.S. allies such as South Korea, despite the pressure of Trump's tariffs, and the uncertainty surrounding U.S. commitments to military operations.

He said: "I believe Beijing is taking a phase-one approach, where they are a bit hesitant and letting Trump's administration do the damage by itself."

He added, "We haven't seen China launch big charm offensives in order to try and capitalize on some damage."

He said that a second phase might include more outreach but also Beijing's own pressure.

South Korea expressed concern about China's control over rare earth exports, and demanded the removal of Chinese sanctions against five U.S. linked units of South Korean shipbuilder Hanwha Ocean. Beijing claimed that the sanctions were a result of security concerns arising from the company's collaboration with U.S. investigation.

Seoul hopes that Xi’s visit will lead to Beijing easing restrictions on South Korean entertainment, which were effectively banned following the deployment of the U.S. led Terminal High Altitude Area Defense system (THAAD), missile defence system.

South Korea also expressed concern about structures built in waters disputed between China and South Korea, which China claims to be for fishing purposes.

A senior APEC official said on Friday that the member countries were "working round-the-clock" to negotiate a free trade declaration. (Reporting and writing by Ju-min Park; Jihoon Lee; Eduardo Baptista, Josh Smith, Himani Sarkar, Himani Sarkar, Himani Sarkar, Himani Sarkar, Himani, Himani, Himani, Himani, Himani, Himani, Himani, Himani, Himani, Himani, Himan, Himani, Himani, Himani, Himani, Himani, Himani, Himani, Himani, Himani, Hima, Himani, Himani

(source: Reuters)