The Kaesong Industrial Complex, established in 2004, was a significant economic collaboration between South Korea and North Korea. It employed around 55,000 North Korean workers and had over 120 South Korean firms operating within its precincts. This joint project was seen as a beacon of hope for inter-Korean relations, fostering economic cooperation and providing a stable working environment. However, the geopolitical climate shifted dramatically with North Korea's missile test, Kwangmyŏngsŏng-4, which occurred on February 7, 2016. This action was perceived as a blatant challenge to the international community and a demonstration of North Korea's advancing missile technology.

Following this provocation, the South Korean government led by President Park Geun-hye announced a complete suspension of operations at Kaesong on February 10, 2016. The decision, regarded as necessary for national security, drew mixed reactions domestically and internationally. Critics argued that shutting down Kaesong would exacerbate tensions between the two Koreas and harm North Korean workers who depended on the income the complex provided. Nonetheless, many officials maintained that the halt was essential to send a strong message against North Korea's aggressive conduct.

The closure of the Kaesong complex represented a fundamental shift in economic interaction between the two Koreas, marking a setback in reconciliation efforts. It was not only a response to a specific military threat but also a reflection of broader concerns about North Korea's nuclear ambitions and its impact on regional stability. This action subsequently led to increased isolation of North Korea and more stringent sanctions imposed by the international community.