The Koreas

South Korea’s Relations With China and the US Under President-elect Yoon

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South Korea’s Relations With China and the US Under President-elect Yoon

Can Yoon Suk-yeol have his cake and eat it too when it comes to China policy?

South Korea’s Relations With China and the US Under President-elect Yoon
Credit: Depositphotos

The presidential election in South Korea was a close call. President-elect Yoon Suk-yeol from the People Power Party won the election with a margin of 0.8 percentage points over Lee Jae-myung of the ruling Democratic Party. The election has been portrayed in the South Korean press as choosing the least unpopular candidate.

Any regular election in South Korea primarily focuses on domestic issues and this election was no different, even if some international issues played a role. That said, South Korea’s relations with China and its alliance with the United States will determine much of its future political and economic future, so it is always essential to understand how the new president will change his policy regarding China and the South Korea-U.S. alliance.

Yoon has been very clear that, as president, he will increase cooperation with democracies, especially the United States, and resist autocracies and the formation of an illiberal order, with China in the driving seat. This is very promising, but how much can president-elect Yoon accomplish with China being South Korea’s largest trading partner – accounting for 27 percent of its total exports in 2021 – and a domestic situation dependent on continuous economic progress. Russia’s invasion of Ukraine and the negative impact on energy resources and increased food prices globally will increase costs for households and keep down economic development, something that will further decrease the maneuvering space for the new administration.

Riding With the U.S.

Initially, it must be said that the election of Yoon was good news for the South Korea-U.S. alliance and South Korea’s support of a liberal order. President-elect Yoon is determined to strengthen cooperation with the United States in various fields, not only the military alliance and bilateral trade but also the Biden administration’s Indo-Pacific Economic Framework and support for a democratic order. There will be little concern that the new administration will flirt with China at the expense of the alliance or that South Korea will try to free-ride on the coalition. It seems rather that the new administration will reengage with the United States, strengthen its military capacity, and commit to more global engagements such as in the Indo-Pacific. Yoon also seems to be ready to pick up the pace for military exercises, which current President Moon Jae-in put on the back-burner to create incentives for North Korea to engage in dialogue.

Yoon will increasingly engage with democratic and like-minded nations to increase South Korea’s economic, military, and geopolitical security. This will be attempted through multilateral networks of resilient supply chains, technological cooperation among democracies (including on 5G networks), and cooperation on the issues of climate change, development, and global health. This is not to say that relations with China will be cut (on the contrary, as we will see). Still, Yoon is ideologically camped with the United States and other democracies and will seek to increase cooperation as much as possible. In addition to this, there is a great deal of pressure from Washington to commit to a policy of more strongly condemning Chinese activities in Xinjiang, Taiwan, and Hong Kong, as a few examples, in addition to the supply change and economic dependency challenges.

The Southern Policy under the Moon administration will continue as part of a more committed policy in the Asia-Pacific, and South Korea will be work more directly with the United States in the extended region – partly as North Korea will not continue to have the same importance for Yoon. The new administration has indicated that they are very optimistic about the role of the Quad and that they eventually would like to seek membership. There is seems to be little doubt that South Korea has more firmly taken side with the democratic states, something that was not as evident before when North Korea was the primary focus and other relationships became hostages of the Moon administration’s commitment to improve inter-Korean relations.

Yoon has even stated that he would like to enhance security cooperation with the United States’ other main ally in the region, Japan, something that has proven difficult amid strained Japan-South Korea ties. This is something that fundamentally could increase security for South Korea in the long term, especially as tension with China is deemed to be rising.

China as the Villain…With Cash

Under Moon, we have seen a long-term attempt to decrease South Korea’s dependency on China, and this will continue and possibly strengthen to some extent. Still, realistically it is not possible for South Korea to quickly refocus its economic trajectory. It would be devastating for the South Korean economy to anger China too much, something that was demonstrated in the 2017 THAAD crisis, when China severely affected the South Korean economy with sanctions after Seoul agreed to deploy the U.S. missile defense system. That said, it might be possible for Yoon to seek further cooperation with the United States to strengthen the THAAD system to increase the security of South Korea, but his administration will have to be prepared for more economic coercion from Beijing.

Strengthening democratic alliances and becoming a focal point in a supply chain oriented toward democratic states might be Yoon’s vision, but the reality is that shifting South Korea’s economy away from China and instead home-shoring or alliance-shoring industries and dependencies will be a process that takes years if not decades. The reliance on China is too great to cut immediately without sacrificing economic growth. The South Korean economy is dependent on a constant increase in trade with China, and this trade pattern needs to be changed, but any redirection and decreased dependency will be costly, both in economic and political terms and there might not be enough political or economic capital to secure such a transition. This reality is hardly the recipe for decreased reliance on China. Still, there are a few short-term opportunities and efforts that can be made to ensure that critical industries and products are removed from Chinese or Russian influence, such as energy, microchips, medications, etc.

The reduction of Chinese influence and impact on the South Korean supply chains is in line with the South Korean public’s negative perceptions of China, which will not only increase as China is seen as assisting Russia in its invasion of democratic Ukraine. China will most assuredly meet a more assertive South Korea in coming diplomatic talks, but South Korea hardly can afford to lose too much trade with China in the short term. This said, it is also very likely that South Korea will face criticism and actions from China as punishment, especially if South Korea follows suit with the United States and criticizes and even acts against China’s actions in Xinjiang, Hong Kong, and Taiwan – areas Beijing insists are purely internal matters.

Really Committed, but Realistic

Yoon stands firmly on the side of the United States and the liberal economies, at least in words, and has spoken out against China and illiberal states. There are no doubts that Yoon is ready to change South Korea’s foreign policy direction, but the president-elect is caught between a rock and a hard place. He will need to manage his ideological inclinations and pressure from the United States to act against China, but also maintain good trading relations with China to maintain South Korea’s economic growth. South Korea’s trade is to a high degree in the hands of China today and this will limit what Yoon can do in practice.

Despite this, during his administration we can expect that the South Korean commitment to the U.S. (willingly and unwillingly), and the liberal economies will increase, not least because the anti-Chinese sentiments in South Korea are continuously strong, and with Chinese support of Russia in its invasion of Ukraine and possible Chinese pressure on South Korea, this trend will only deepen. There is also strong bipartisan support for Seoul’s attempt to decrease its economic and political dependency on China, but then again we have the economic reality to face.