Seoul said last week that it would exit the agreement as a row intensified over compensation of wartime forced labor by former colonial ruler Japan, which earlier ended preferential export treatment with South Korea.
"I don't think Beijing is unhappy about this outcome," a senior US official told reporters on condition of anonymity.
"It makes the Chinese position in the region stronger, or at least makes the alliance structure less threatening," he said.
The official said that a rising China has long opposed US alliances with powers such as Japan and South Korea, calling them relics of the Cold War.
|Secretary of State Mike Pompeo (AP-Yonhap)|
Secretary of State Mike Pompeo earlier voiced disappointment in South Korea's decision, but the United States has kept a low diplomatic profile, saying that its allies must resolve the issue themselves.
The row "deals with personalities in the Blue House and in Tokyo and really has nothing to do with the US," the official said Tuesday.
South Korean President Moon Jae-in, whose official residence is known as the Blue House, is a former human rights lawyer and veteran liberal who advocates reconciliation with North Korea.
Japanese Prime Minister Shinzo Abe comes from the right of the political spectrum and has called for the Japanese to take more pride in their past despite wartime atrocities.
The US official said that the General Security of Military Information Agreement does not end until November 22 and that Washington hopes that Seoul will change its mind by then.
But the official acknowledged: "I think it's going to be a lot of work to get back to it."
South Korea has said it will still share intelligence with Japan through the United States. But another US official said that such arrangements were ineffective when facing a nuclear-armed North Korea.
The three-way information-sharing setup before the allies' 2016 pact was "pretty cumbersome, very unwieldy (and) virtually useless in a crisis," the official said.
"Especially in a crisis, when you've got a nuclear test or a missile launch, time is of the essence," he said. (AFP)