Beijing saw it as a threat to its own security and reacted furiously, imposing a string of measures on South Korean businesses and banning group tours to the South, in moves seen as economic retaliation.
The ban on tour groups hit the South Korean travel and retail industries hard, with Chinese visitors renowned for shopping trips to their neighbour.
Some of Beijing's restrictions on tours appeared to have been lifted after the two countries issued identically-worded statements in October on their mutual desire to improve relations.
But the number of Chinese visitors to the South continued to tumble in December, Korea Tourism Organisation statistics showed today.
A total of 332,474 Chinese travellers came to South Korea last month, down 37.9 percent from the previous year, it said.
It was only a marginal improvement on the 42.1 per cent fall seen in November and 49.3 per cent in October.
For 2017 as whole, South Korea had 4.2 million Chinese visitors -- down 48.3 percent on the previous year.
But non-Chinese arrivals were unchanged at 9.2 million.
China is the South's top trading partner and the diplomatic row took a major toll on many South Korean firms -- most notably retail giant Lotte Group, which provided the land to host THAAD.
Angry boycott campaigns and regulatory crackdowns by Chinese authorities decimated its business in the world's second-largest economy, and it was forced to put its supermarket unit in China up for sale.
President Moon Jae-In visited Beijing for a summit with his Chinese counterpart Xi Jinping in December.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)