Korea caught in the superpower squeeze

Diplomacy

Published: 23 Oct. 2022, 17:05 Updated: 23 Oct. 2022, 17:08

Korea caught in the superpower squeeze

Security from U.S., trade with China is a dying paradigm

22nd ANNIVERSARY SERIES: PART 2

The Korea JoongAng Daily examines the economic, political and military challenges facing Korea as the United States makes big moves to protect its economic interests. Caught between the United States and China, the country is seeking to maintain a balance without being locked out of either economy. This is the second in a three-part series.

Seoul wants to avoid a future in which intensifying tensions between Washington and Beijing spiral into regional catastrophe.

But gone are the days where South Korea could depend on its traditional ally, the United States, for security and China, its largest trading partner, for economy.

The rising military and technology rivalry between the United States and China is putting to test South Korea’s balancing ability.

Both Washington and Beijing, in light of a shifting world order, expect Seoul to take a clearer stance.

The Joe Biden administration is pushing policies that exert U.S. influence over global technology and supply chains in an attempt to choke off China’s access to advanced microchips and production technologies.

The United States is urging its allies to take its side in its efforts to finding alternative supply chains, pushing regional groupings bound to alienate China like the Indo-Pacific Economic Framework (IPEF). It has also been urging allies to unite over values, such as safeguarding human rights and promoting democracy.

The Yoon Suk-yeol administration has made clear its intentions to strengthen the Korea-U.S. alliance, which it says was weakened by the previous government.

However, the Biden administration is playing off of the Donald Trump government’s “America First” policies with its “Made in America” measures, which don't necessarily favor its allies abroad.

This was acutely demonstrated through U.S. President Joe Biden’s signing of the Inflation Reduction Act (IRA) in August, putting Korean electric vehicles makers at a disadvantage. Biden's government is expected to continue to push out such hard-line measures, especially with the U.S. midterm elections coming up in November and the campaign for the 2024 presidential election following.

Seoul is learning it will have to fight for its own interests and carefully weigh the costs and benefits of aligning with Washington.

Analysts say they don’t see Sino-U.S. relations improving in the near future, or in the next decades or even century.

In the best-case scenarios, the two superpowers will maintain the current rivalry. In the worst-case scenario, escalated confrontation and even regional military conflict can’t be ruled out.

To avoid a situation like a century ago, when its sovereignty was taken away by foreign powers, Korea must make key strategic decisions now to dictate its own future and survive the shifting global order.

Experts in Sino-U.S. relations generally agree that South Korea will have to take clearer stances on issues dividing the two rivals. But they point out that there is a window of time to utilize strategic flexibility to make sure Seoul’s interests are heard by both sides.

“Korea needs to break away from the existing framework of ‘the United States for security, China for economy’ and its strategic ambiguity and find consensus with the people on where Korea's values, identity and national interests lie,” said Kim Han-kwon, a professor at the Center for Chinese Studies at the state-run Institute of Foreign Affairs and National Security (IFANS). “And based on this public consensus, it is necessary to outline Korea's position on each major issue between the U.S. and China and clarify its foreign policy direction.”

In times of better Sino-U.S. relations, Korea didn't have to make stark choices. But that is not the case anymore.

“With the shifting U.S.-China strategic competition, the areas in which Korea must demonstrate strategic ambiguity, strategic clarity and strategic flexibility have changed,” said Kim. “As U.S.-China strategic competition is gradually intensifying and unfolding around rules and norms in relation to technological hegemony and high-tech industries, the realm where strategic ambiguity is allowed is decreasing and the area where strategic clarity is required is increasing.”

Blurred lines

President Yoon Suk-yeol, right, and U.S. President Joe Biden hold a joint press conference after their first bilateral summit at the presidential office in Yongsan, central Seoul, on May 21. [JOINT PRESS CORPS]

On May 21, President Yoon and Biden held their first bilateral summit in Seoul and agreed to expand relations to a "global comprehensive strategic alliance," broadening coordination in security affairs to shared values and economic and technological cooperation.

Yoon told Biden at the beginning of the summit, "Today we're living in the era of economic security, where economy is security and security is economy.”

The Yoon administration has just started its five-year term but faces major diplomatic hurdles.

The Yoon government has heralded that the Korea-U.S. alliance is stronger than ever, shifting from the Moon Jae-in administration’s focus on patching up relations with China with its Korean Peninsula peace initiative.

The United States has been pushing policies that attempt to exclude China from global supply chains.

In 2019, the Trump administration set the tone for the Sino-U.S. tech war by enacting sanctions and export bans on Huawei to cut off the Chinese telecommunications giant from the critical chips it required.

Earlier this month, the Biden administration enacted wide-sweeping export curbs aimed at cutting off key software, chips and machinery that could help China develop semiconductors, artificial intelligence and supercomputers, in what is seen as an escalation in tensions between Beijing and Washington in technology. Washington argues that such advanced semiconductors can be used by Beijing for advanced military capabilities.

In May, South Korea joined 13 other countries in the U.S.-led IPEF, which aims to set the rules for economics and trade in the region and is seen as an initiative to help members decouple from the Chinese market by finding alternative supply chains, offsetting Beijing’s influence.

Seoul has pushed to mend relations with Tokyo, frayed by pending historical issues, as Washington pushes to strengthen trilateral security cooperation with its East Asian allies.

However, the results of trying to strengthen the alliance with Washington both on the security and economic cooperation front are not always as expected, as seen with the IRA law, which came as a slap in the face to Korean automakers.

Korea’s IRA concerns were raised in Yoon’s brief encounter with Biden on the sidelines of the UN General Assembly in New York last month. Seoul had been hoping for a second Korea-U.S. summit, but Yoon only got 48 seconds with Biden. Seoul’s frustrations with the IRA were raised during Yoon’s talks with U.S. Vice President Kamala Harris in Korea on Sept. 29 and recognized in Biden’s recent letter to Yoon.

“Most of U.S. foreign policy seems to be stemming from its domestic politics,” said Lee Hee-ok, a professor of political science and diplomacy at Sungkyunkwan University and director of the university’s Sungkyun Institute of China Studies.

“Although America First is Trump's brand, Biden seems to have maintained it and just upgraded it. It seems highly likely that similar bills such as the IRA and the semiconductor and chips and science law will continue to be passed, and Korea is likely to be trapped in the process of a decoupling of the U.S. and China.”

He warned that Seoul shouldn’t expect to be guaranteed any perks or advantages just for taking part in such U.S.-led networks.

“In regard to foreign and technology policies that Washington is currently pursuing, it is unlikely that the United States will provide economic incentives just because Korea is an ally,” added Lee. “U.S. foreign policy is now closer to mercantilism rather than liberalism, so it is highly likely that the diplomatic burden on Korea will increase as the United States implements foreign policies that prioritize U.S. domestic politics as seen through the IPEF or IRA.”

Korea needs to “find a balance of benefits that can be received for following the requests of the United States,” Lee added.

“Rather than immediately reducing dependence on China, there inevitably needs to be attempts at diversifying the market, including in trade and technology, while hedging some of the pressure from the United States.”

Other analysts point out that Seoul needs to be prepared to make sacrifices in the process of aligning with the United States on key issues, even if it means drastically reducing dependence on China.

“At the end of the day, the reality is that relying on the United States for security and China for economy has been a very comfortable stance for Korea to take up,” said Korea-U.S. relations expert Cha Du-hyeogn, a principal fellow at the Seoul-based think tank Asan Institute for Policy Studies. “Looking back, this was bound to become a very vulnerable structure as the United States had already begun to no longer view China as a competitor that it can coexist with.

“Frankly speaking, it was a policy that expected to get benefits and gain from both sides without making any sacrifices,” said Cha. “But that's impossible. Now, we have to be prepared to make sacrifices for taking an overall similar stance with the United States, to manage the benefits of a security guarantee without sacrificing too much.”

He noted that a Korea-U.S. comprehensive alliance “ultimately means we have no choice but to follow the same path as the United States when it comes to major economic policies” which “means in large a decoupling in high-tech industries and technology fields.”

But Cha acknowledged Korea “can't completely decouple from China” yet.

“That's also the case for the United States in regard to the general economy, especially in consumer goods, not the high-tech economy,” he added. “There must be a role that Korea can play in the middle so that the strategic competition between the U.S. and China does not intensify further and become too extreme. However, I think that our basic stance in the competition will inevitably lean in the direction of the United States.”

Thaad and beyond

Foreign Minister Park Jin, Chinese Ambassador to Korea Xing Haiming and other dignitaries commemorate the 30th anniversary of diplomatic ties between Korea and China at a hotel in central Seoul on Aug. 24. [YONHAP]

Seoul has yet to recover fully from the fallout with Beijing over its decision to deploy the U.S.-led Terminal High Altitude Area Defense (Thaad) to Korea in 2016.

Korea would like to avoid a repeat of a similar situation where it got crushed in the Sino-U.S. rivalry.

Chinese President Xi Jinping formally secured a third term as head of China’s Communist Party Sunday after the conclusion of the 20th national congress in Beijing. This would make him the most powerful Chinese leader since Mao Zedong.

“I expect China to reinforce its politics of identity,” said Sungkyunkwan’s Prof. Lee. “If its politics of identity is strengthened, it seems that an ideological decoupling in Chinese diplomacy will be inevitable between Korea and China. But currently, in order for China to disperse the pressure from the United States, there will also be a need to develop a strategic relationship between Korea and China.”

Seoul and Washington's joint decision in 2016 to deploy the Thaad battery and its installation in Seongju, North Gyeongsang, in 2017 resulted in strong protests from Beijing and economic retaliation against Korean businesses.

Contrary to expectations that relations would eventually return to normal, the Korean economy has experienced stagnant exports to China and a decreased trade surplus. Likewise, competition between Korea and China is intensifying in many industries. China, in turn, is also preparing for semiconductor self-reliance.

Beijing has urged Seoul to uphold the so-called "Three Nos" pledge made by the Moon administration in October 2017. Korea said it would not make additional Thaad deployments, not participate in an American missile defense network and not establish a U.S.-Korea-Japan military alliance.

But the Yoon government’s Foreign Ministry stressed that the Three Nos policy was not an official pledge or agreement.

In August, simultaneous events were held in Seoul and Beijing to celebrate the 30th anniversary of the establishment of bilateral ties, and Yoon and Xi exchanged personal letters.

In his letter, Yoon wrote that he hoped that the two countries "seek new directions for cooperation over the next 30 years" and "quantitatively develop ties" based on a "spirit of mutual respect and reciprocity."

In September, Yoon met with China’s No. 3 official, Li Zhanshu, chairman of China's Standing Committee of the National People's Congress.

Despite indications that the Yoon government was tilting toward Washington, experts say there is no need to rush to decouple from Beijing at the moment because Korea is still reliant on China for production and trade.

“Korea currently emphasizes that the goal of diplomatic relations with China is mutual respect, while China's perspective is that we can pursue the same things even though our positions are different,” said Sungkyunkwan’s Prof. Lee. “Korea's view is different from the past, in that it has a strong notion that Korea-China relations should be positioned on an equal footing, while in China's perspective, mutual respect is about guaranteeing core interests. The two are talking about the same thing but are giving different interpretations.”

Koreans have especially been wary that a second Thaad situation could be reprised.

“I believe that a Thaad situation can recur at any time,” said Lee. “At that time, the reality is that it is difficult for the Korea-U.S. alliance to solve these problems. When Thaad was deployed, there was nothing the United States could do when China retaliated economically against Korea.”

He said that in the process of strengthening the Korea-U.S. alliance, Seoul should formulate a list of possible Chinese retaliations and a portfolio of how the alliance will respond.

“It is necessary for Korea to review the basic framework of strengthening cooperation with China on the basis of the solid Korea-U.S. alliance, which has been the basic framework of its China's policy since the establishment of diplomatic ties between Korea and China,” said IFANS Prof. Kim.

Kim called for a “China plus one” strategy to manage supply chain disruptions and seek economic diversification, including efforts to follow-up negotiations on a Korea-China free trade agreement to provide an institutional framework for cooperation between the two countries.

“Korea shouldn’t rush too much when it comes to the U.S.-led economic policies to exclude China from some high-tech industries,” said Kim. “It is still not easy for Korea to find a country that can replace a market or a production base of the same size as China.”

Through a China plus one strategy, he said Korea will be able to continue to utilize China's low-cost production capacity and huge market while finding alternative solutions “in order to respond to the possibility that the confrontation will grow bigger and that Beijing will use this economic advantage as leverage and apply pressure on Seoul.”

Preventing a New Cold War

China's President Xi Jinping waves during an introduction of members of the Chinese Communist Party's new Politburo Standing Committee, the nation's top decision-making body, in the Great Hall of the People in Beijing Sunday. [AFP/YONHAP]

Sino-U.S. tensions will continue for the time being and possibly extend for decades to come, according to the experts. And that could be the best-case scenario.

A worst-case scenario could include conflict in the region, or military clashes reminiscent of Russia’s invasion of Ukraine. In such a case, South Korea, as a U.S. ally, would have no choice but to get involved.

There are many security variables in the Indo-Pacific region, including tensions in the Taiwan Strait, South China Sea and North Korea’s continued nuclear and missile threats. Last month, Pyongyang adopted a new nuclear strike law, amid a series of back-to-back missile launches and a possible seventh nuclear test in the works.

As with other times of tension on the Korean Peninsula, there are growing calls in South Korea for the redeployment of U.S. tactical nuclear weapons or the development of the country’s own nuclear armaments.

“There are many different sensitive issues across the Indo-Pacific region,” said IFANS Prof. Kim. “That means there can be a variety of scenarios, from long-term confrontation to even military conflict. This includes disputes in the Taiwan Strait or the South China Sea and the escalation of tensions on the Korean Peninsula. It is time for Korea to prepare specific countermeasures for each pending issue and scenario that can be predicted as sensitive and important between the United States and China.”

“I think it is necessary to take a very cautious stance on the Taiwan issue, and to actively cooperate with like-minded countries on the multilateral stage on China policy,” said Sungkyunkwan Prof. Lee. “On the other hand, in regard to bilateral relations, I think a two-track approach that does not touch on sensitive issues about China on the bilateral stage is needed.”

However, North Korea is an issue that the South can and should deal with now, he pointed out, noting that China and the United States have no interest in changing their roles.

“Even if North Korea conducts a nuclear test, it is unlikely that there will be a fundamental crack in the relationship between North Korea and China,” said Lee. “Relations between North Korea and China are strategically advanced, and there are likely to be attempts by Beijing to stably manage its relations with Pyongyang regardless of its nuclear and missile tests.”

China and Russia, traditional allies of North Korea, have been reluctant to support stronger sanctions or even joint statements condemning Pyongyang for its nuclear and missile provocations in the UN Security Council.

“In that sense, I think South Korea must find a role now,” said Lee. “We are very reactive. If the United States doesn't move, China doesn't move, and we don't move, then the situation on the Korean Peninsula will escalate.”

However, the general geopolitical trend is inevitably tilting toward another Cold War structure pitting North Korea, China and Russia against South Korea, the United States and Japan.

“Overall, it will be difficult for us to stop the trend itself called the new Cold War,” said Asan Institute’s Cha. “Korea can play a role in slowing the trend toward a so-called new Cold War, but it will be difficult to stop the trend itself.”

How Russia’s invasion of Ukraine unfolds could serve as a lesson for North Korea.

“The Ukraine situation still has a long way to go, but if Russia moves toward accepting an armistice agreement, it will show that the U.S. has blocked Russia from carrying out nuclear blackmailing,” said Cha. “This will teach a huge lesson to North Korea. North Korea's nuclear power is no match for Russia’s, even if it develops its nuclear program for another five to six years. If Russia is stopped, this will show North Korea that nuclear blackmail is becoming less and less effective.”

However, he pointed out that the United States and China will be likely to avoid military conflict in the region because they are both aware there is too much at stake.

While Seoul’s diplomatic strategy is heavily reliant on geopolitical factors beyond its control, South Korea still has leverage and should be using its voice.

“Korea has no choice but to follow the same path in the current U.S.-led supply chain reorganization in high-tech industries such as semiconductors,” said Cha. “Our priority now is that in important fields, we have to take the basic direction of strategic clarity, not strategic ambiguity. In terms of tensions between the U.S. and China, we need to convey our opinion to the United States that there is a need to slow down the speed a bit and also try to limit scope of the decoupling.”

When expanding the scope of strategic clarity, Korea needs to pay heed to the fact that despite being a middle-power country and having the world's 10th largest economy and sixth largest military power, it is still relatively weak compared to the four neighboring powers, said Kim.

“Korea has entered a phase where it is necessary to expand our strategic clarity by breaking away from strategic ambiguity,” said Kim. “In this process, Korea, which has relatively weak national power compared to the United States and China, has strategic flexibility to respond issue by issue, and we need to convey to both countries that the response to each issue does not mean we chose one side or the other.”

BY SARAH KIM [kim.sarah@joongang.co.kr]