South and North Korean officials attend an opening ceremony of a joint liaison office in Kaesong, North Korea, on September 14, 2018. - North and South Korea opened a joint liaison office in the Northern city of Kaesong on September 14, as they knit closer ties ahead of President Moon Jae-in's visit to Pyongyang next week. (Photo by - / KOREA POOL / AFP) / South Korea OUT        (Photo credit should read -/AFP/Getty Images)
-/AFP/AFP/Getty Images
South and North Korean officials attend an opening ceremony of a joint liaison office in Kaesong, North Korea, on September 14, 2018. - North and South Korea opened a joint liaison office in the Northern city of Kaesong on September 14, as they knit closer ties ahead of President Moon Jae-in's visit to Pyongyang next week. (Photo by - / KOREA POOL / AFP) / South Korea OUT (Photo credit should read -/AFP/Getty Images)
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(CNN) —  

North Korea is withdrawing from a joint liaison office near the demilitarized zone (DMZ) with South Korea, a key symbol of the rapprochement and ongoing peace process between the two countries.

The move comes after the US slapped two Chinese firms with sanctions for doing business with Pyongyang, the first action taken by Washington against North Korea since the second summit between North Korean leader Kim Jong Un and US President Donald Trump in Hanoi ended early with no agreement.

South Korea’s Unification Ministry announced the move Friday, saying the decision had been taken by the North on “instructions from the superior authority.”

In its communication with the South, Pyongyang said it would not mind Seoul’s representatives “remaining in the office,” which is based in Kaesong, a part of North Korea near the de facto border between the two countries.

The office was established after Kim and South Korean President Moon Jae-in met at the DMZ for an historic summit last year, which was followed by a meeting between Kim and US President Donald Trump in Singapore.

Pyongyang said it would notify Seoul regarding “further practical matters in the future.”

In the statement, the Unification Ministry said South Korea regrets the decision, and urged the North to return soon and continue the work being done at the liaison office towards a full peace settlement.

“We regard such a withdrawal as very sad and unfortunate (and) we hope that the North will return shortly and hope that the liaison contact office will operate normally as soon as possible,” Vice Minister of Unification Chun Hae-sung said at a press conference in Seoul Friday.

“We believe that we should take some time to judge (the situation).”

North Korea has yet to issue any direct public statement on the decision to withdraw. Chad O’Carroll, an analyst and chief executive of the Korea Risk Group, said the move was to be expected following the failure of the Hanoi summit.

“North Korea’s pull-out Friday from the Kaesong Liason Office has been on cards since Hanoi, given recent no-shows there,” he said on Twitter.

He added that the move was designed to send a message that from Pyongyang’s perspective “Seoul has insufficient influence” over the US-North Korea relationship and that intra-Korean talks are increasingly pointless, “when sanctions prevent practical cooperation.”

Following the Trump-Kim summit in Hanoi, the US and South Korea canceled major war games that have long been a source of tensions on the Korean Peninsula in order to “support diplomatic efforts” with Pyongyang.

Speaking on Thursday, Joseph Dunford, chairman of the US Joint Chiefs of Staff, said he was “absolutely confident” that smaller exercises held in place of the traditional war games enabled the US and South Korean forces to “maintain readiness.”

Saying it was his job to be “the glass half-empty guy when it comes to North Korean capabilities,” Dunford said he still saw a potential but as yet undemonstrated capability “to match a nuclear weapon with an intercontinental ballistic missile, and I think its incumbent on the United States military to be prepared to defend the homeland and our allies from that eventuality.”