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[Journalism Internship] Korea proves adept at balancing power through strategic diplomacy at APEC

Published: 07 Dec. 2025, 15:48

President Lee Jae Myung, center in the first row, takes a commemorative photo with leaders from countries attending the 2025 Asia-Pacific Economic Cooperation (APEC) summit held at the Gyeongju Hwabaek Convention Center on Nov. 1. Leaders present at the event included Chinese President Xi Jinping, fifth from left in the front row, Japanese Prime Minister Sanae Takaichi, fourth from right, and U.S. Treasury Secretary Scott Bessent, seventh from left in the back row. [YONHAP]

Lee Chae-min, Keh Yun-young, Jung Yoon-sun, Kim Gun-Young

The 2025 Asia-Pacific Economic Cooperation (APEC) marked a significant shift in Korea’s diplomatic relationships with key countries, with President Lee Jae Myung securing major bilateral agreements that position Seoul as a strategic bridge between competing global powers.

Korea leveraged the APEC 2025 summit to fortify its ties with China, the United States and Japan through targeted diplomatic, economic and cooperative agreements. President Lee secured major deals ranging from a large-scale currency swap with China to an approximately $350 billion trade and investment treaty with the United States, while reopening momentum for bilateral dialogue, which led to mutual benefits for good ties with Japan. The summit underscored Seoul’s expanding role as a medium amid intensifying regional power competition.

The United States and China are the two leading forces. Each of them wants other countries to pick sides. This raised the importance of Korea balancing between the two countries, which caused the Gyeongju APEC to have a significant impact on Korea.

Korea and China promise economic harmony

President Lee Jae Myung, right, shakes hands with Chinese President Xi Jinping in Gyeongju, North Gyeongsang, on Nov. 1. [YONHAP]

China and Korea engaged in a conference at APEC, where they held economic negotiations. It was Chinese President Xi Jinping's first visit to Korea in 11 years. Diplomats said this was significant in that “President Xi’s visit is likely to refrain from giving strong signals about its willingness to strengthen ties with China and Korea.”

First, Korea and China confirmed a five-year currency swap between the Bank of Korea and the People’s Bank of China for about 70 trillion won ($50 billion). Seoul's presidential office said, "The currency swap is expected to help stabilize financial and foreign exchange markets,” adding that it will “start trade between the two nations."

A currency swap gives the won and renminbi liquidity to reduce financial shocks. Additionally, it provides a stable trade that facilitates the usage of the currencies, which will eventually reduce foreign exchange risk.

"Practical progress will be made in the Korea-China FTA negotiations on services and investment to lay the institutional foundation for economic cooperation," the Lee's office said.

A memorandum of understanding (MOU) was signed during APEC as a step toward expanding the Korea-China FTA beyond goods trade. The MOU includes the following parts: joint economic cooperation, enhancing exchanges, cooperation in the Silver Economy Sector, and cooperation to combat voice phishing and online financial Fraud.

Some analysts say APEC became a chance to form an economic partnership, and even a future partnership. This diplomacy with China shows a balanced strategic relationship by building a strong relationship with China economically and also with the United States, making a relationship between the two behemoths: China and the United States.

However, Choo Jae-woo, a professor of Chinese foreign policy at Kyung Hee University, left a concerning view by mentioning he said he is “afraid Korea popped the champagne too early” in This Week In Asia. He is among the critics who argue that Korea is too early to celebrate, given concerns about the danger that it could come under heavy pressure from both China and the United States.

U.S. and Korea’s diplomacy align through strategic investment

President Lee Jae Myung, right, and U.S. President Donald Trump walk to their summit venue at the Gyeongju National Museum in Gyeongju, North Gyeongsang, on Oct. 29. [JOINT PRESS CORPS]

Korea agreed on a trade deal with the United States in which Seoul committed $350 billion to critical U.S. industries and markets — $150 billion toward shipbuilding and $200 billion in overall investments, providing $20 billion annually.

The agreement was finalized with the White House publishing a Joint Fact Sheet on Nov. 13. In return, the deal reduced the U.S. "reciprocal" tariffs previously imposed on Korean industries such as the auto industry from 25 percent to 15 percent — thanks to Korea’s promise of investment in the U.S. — reassuring Korea’s competitiveness in the U.S. market.

Even though the agreement also included not only the Korea-U.S. Technology Prosperity Deal to expand bilateral science and technology cooperation with an emphasis on AI exports, AI standards, 6G, biotech supply chains and quantum innovation while also authorizing Korea to build nuclear-powered submarines — a strategic concession from Washington that had been off-limits for decades — critics have questioned whether Korea extracted sufficient value from the arrangement.

Some experts claimed this was a crucial step toward strategic interdependence, with Seong-Hyon Lee, a senior fellow at the George H.W. Bush Foundation for U.S.-China Relations, arguing that “Korea is no longer merely buying U.S. security; it is integrating its industrial base with that of the United States to form a single, strategic-economic bloc.”

However, other critics have questioned whether Korea extracted sufficient value from the arrangement. Analysts like Park Jung-min of the Sejong Institute warned that such deep economic alignment risks narrowing Korea’s diplomatic autonomy.

According to Park, “this level of economic dependency on the United States may limit Seoul’s flexibility in navigating its relationships with China and other APEC members, effectively tethering Korea’s diplomacy to Washington’s strategic calculus.”

While U.S. President Donald Trump described the partnership made at the APEC as a “great deal,” the investment commitment has raised concerns about economic strain on Korea. The $350 billion investment deal with the United States, according to critics such as Heo Yoon from Sogang University Graduate School of International Studies, carries potential financial risks for Korea, as it may further drive up the already high exchange rate of 1,470 won per dollar due to insufficient policy coordination.

New step for Korea and Japan

President Lee Jae Myung, right, shakes hands with Japanese Prime Minister Sanae Takaichi ahead of a bilateral Korea?Japan summit in Gyeongju, North Gyeongsang, on Oct. 30. [JOINT PRESS CORPS]

Many media outlets in Korea paid attention to the APEC meeting between Korea and Japan. This attention was mainly driven by two factors. One was about Sanae Takaichi, who is the newly elected prime minister of Japan. She serves as the president of the Liberal Democratic Party. This was her first diplomatic conference in her prime minister career. This drew increased interest from several international media outlets.

Additionally, public interest in both Korea and Japan increased ahead of the APEC summit due to the earlier remark. Prime Minister Takaichi claimed that Dok-do, an island that Korea and Japan claim sovereignty over, “Takeshima is Japan’s inherent territory,” before the summit, which drew criticism in Korea. These remarks prompted discussions about the state of bilateral relations in the period leading up to her election.

However, at APEC, Korea and Japan began and ended the meeting by reaching the conclusion that they should solve future problems together rather than maintain an antagonistic mindset towards each other.

Considering all the takeaways that Korea got from APEC, CNN has evaluated that Korea has demonstrated pragmatic middle power leadership by mentioning recovering the damages of martial law and returning to the international stage in ten months. The New York Times concluded that Korea had achieved more successful outcomes than Japan by achieving negotiations that were overall less burdensome.

The data shows that Korea’s planned $350 billion investment in the United States — smaller than Japan’s $550 billion. In contrast, Japan handed over the decision-making authority on investment targets to President Trump and even accepted the accompanying tariff risks, leading the paper to say that Korea’s negotiation skills stand out.

Most of the Korean politicians who participated in the conference were satisfied with their results, as the Ministry of Foreign Affairs stated that “both sides assessed that the positive momentum in Korea–Japan relations is continuing.”

The Nikkei has made an evaluation that Japanese Prime Minister Takaichi and President Lee avoided confrontation and “pursued a pragmatic course in diplomacy.” Furthermore, Japanese news reported that Prime Minister Takaichi has tried to dampen the image of a "female Abe," referring to a leader who had taken a hardline stance to Korea, as a previous prime minister of Japan. Takaichi added that she did not change her policy of pursuing stability in South Korea-Japan relations.

Korea’s strategic task now is to convert this conditional approval into an enduring capability, ensuring that the autonomy acquired through the alliance is not simultaneously constrained by it. As the French think tank IRIS asserted, Seoul has long balanced its security dependence on the United States with the economic weight of China and the 2025 APEC summit marks a deliberate pivot.

The relationship is transitioning from a patron-client dynamic to a critical test of whether the alliance can mature into a genuinely co-equal partnership grounded in shared technological capacity and strategic confidence.

BY LEE CHAE-MIN, KEH YUN-YOUNG, JUNG YOON-SUN, KIM GUN-YOUNG [[email protected], [email protected], [email protected], [email protected]]

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