In the aftermath of a long-range missile test by North Korea, the US is finding the South Korean government more receptive to installing the Terminal High Altitude Area Defense (Thaad) ballistic missile defense system.

The Thaad system is designed to “intercept and destroy ballistic missiles inside or outside the atmosphere during their final, or terminal, phase of flight.” In theory, this would allow South Korea to shoot down any North Korean ballistic missiles that crossed into South Korean territory.

In previous years, South Korea has distanced itself from the possibility of installing Thaad without ever fully rejecting the idea. Now, South Korea is openly considering the deployment of Thaad on South Korean soil.

Part of the hesitation by South Korea in considering installing the Thaad system, beyond angering the North Koreans, is that China has made it clear that it strongly opposes South Korea deploying Thaad, as doing so would also undermine China’s missile capabilities. The Thaad system could also shoot down ballistic missiles launched from China.

If South Korea deploys Thaad, it may set off an arms race, as China may feel compelled to develop missile technology to defeat the Thaad system as well as demonstrate its military prowess in other ways.

The cost to South Korea would be roughly $1-2 billion, with the funds going to Lockheed Martin as prime contractor with Raytheon, Boeing, Aerojet, Honeywell and BAE Systems often doing subcontracting work.

Thaad was permanently deployed to Guam last year, which was the first permanent deployment of the Thaad system outside the US. Now it appears the US is making progress in expanding out from Guam to South Korea – a move that is both lucrative for US defense contractors and advantageous for a larger US strategy of containing Chinese influence in Asia.

While China is telegraphing a strident, but largely technical response to South Korea deploying Thaad, the ultimate response from North Korea is likely to be extremely belligerent and possibly catastrophic. It is hard to see South Korea deploying Thaad as anything other than an escalation of the Korean conflict.