The limits of China’s economic influence on South Korea

Korea | Economy | East Asia

The South Korean economy is certainly vulnerable to Chinese economic coercion. But such pressure rarely prompts countries to change their foreign policy views.

South Korea’s economic dependence on China is a well-documented fact. Despite Beijing’s decision in 2017 to impose an embargo on Korean goods and services as punishment for Seoul’s deployment of U.S. anti-missile batteries, South Korea’s dependence on Chinese imports has only increased since then. The South Korean industry is especially dependent on Chinese suppliers. critical components For example, high capacity batteries.

Most Korea watchers in Washington view this economic dependency as a major vulnerability to South Korea’s national security amid the growing Sino-US conflict. competition. Some, like the Cato Institute Doug Bandow, go so far as to suggest that the South Korean “shrimp” will eventually be forced to “choose” between American and Chinese “whales”. This train of thought implies that South Korea, like the United States’ European partners, is certain to give up once its economic life is threatened by unscrupulous players in Beijing.

However, such rhetoric does not reflect China’s real leverage over South Korea, which is not as significant as Bandow and others make it out to be. economics of a country certainly vulnerable to deprivation when subjected to Chinese economic coercion. But such pressure rarely prompts countries to change their foreign policy views. Current concerns about Seoul’s economic orientation also overlook the fact that Washington is capable of shaping South Korea’s response to Beijing.

Historical cases show that economic coercion rarely works. Randall Newnham analysis Russian-German relations demonstrates how the economic levers used by the richer state bring limited geopolitical returns. Successive governments in Berlin and Bonn found it extremely difficult to achieve favorable Russian or Soviet behavior through monetary stimulus. Just as Chancellor Otto von Bismarck failed to undermine the nascent Franco-Russian alliance by blocking Russian bonds in the German market in 1885, Chancellor Konrad Adenauer also failed to force the Soviet Union to dismantle the Berlin Wall by imposing a unilateral grain embargo in Germany. 1963

China also has a bad record of using its economic weight to change the behavior of foreign states. Seoul is still deployed US anti-missile batteries despite Beijing’s unofficial embargo. Although painful, these measures also did not prevent the incoming South Korean administration from considering placing additional US batteries in the country. Moreover, South Korea has continued to strengthen its security alliance with the United States both militarily and through major naval exercises in Juneand through diplomatic channels NATO summit in Madrid.

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Where coercion cannot benefit from economic leverage, Newnham argues that positive economic reinforcement is more successful at driving a country’s foreign policy change. But he justifies this thesis by the extremely specific conditions that must exist in order for a richer country to effectively use its economic advantages. For example, the Federal Republic of Germany. received the consent of the Soviet Union absorb the Soviet satellite state of East Germany by providing generous loans and general economic assistance. The positive aid was effective because it occurred at the same time as the economic and political collapse of the Soviet Union, leaving Moscow more vulnerable to Bonn’s comparative economic influence. This case study shows that even if China were to use positive stimulus, it would be ineffective unless South Korea was in an extreme economic crisis.

Thus, China’s attempts to leverage Sino-Korean economic relations—whether through direct coercion or positive incentives—are unlikely to have the effect that Beijing wants and fears in Washington. If anything, China’s continued economic coercion is likely to have the opposite effect, encouraging South Korea to work more closely with the United States in a more comprehensive alliance.

However, the resilience of South Korean-American relations, despite China’s efforts, does not mean that Seoul and Washington should rest on their laurels. China is capable of inflicting enormous economic damage on South Korea, even if this coercion fails. And while economic pressure rarely produces favorable outcomes for the instigator country, recipient countries can resist it more easily when they have partners who can replace the economic role of the coercive actor. Newnham cites that Bismarck’s attempts to use coercive economic policies against the Russian Empire in the late 19th century failed decisively because Russia was able to refuse French aid.

It is here that the United States holds the initiative in shaping geopolitical realities in the Indo-Pacific region. Recall the Trump administration’s hesitation in supporting its allies weakened The US is gaining ground across Asia, only strengthening the region’s vast economic ties to China. In the same vein, Washington’s active support could more effectively shape Seoul’s risk-and-reward calculus in its relationship with Beijing.

Such responsibility is as inspiring as it is frightening. It is all the more important that Washington understands exactly what South Korea’s concerns about economic security vis-à-vis China are. The Yun administration has placed economic security at the center of its foreign policy agenda, and its supporters in particular name USA as a key partner. Biden administration readiness Thus, the development of multilateral responses to China’s economic coercion is an encouraging sign for the relationship between South Korea and the US. Whether a future US administration can continue to do so will be critical not only to protecting South Korea’s economic security, but also to further reducing the effectiveness of Chinese economic coercion.