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As Ties to China Increase, South Korea Risks Falling into Beijing’s Sphere of Influence

South Korea, which earned early praise for its handling of the coronavirus outbreak, is not only struggling to contain a resurgence in cases which risks overwhelming the health system, but is also staring down the barrel of a painful economic contraction. According to several think tanks and financial institutions, South Korea’s projected economic growth has been slashed across the board. The state-run Korea Development Institute (KDI) now foresees a 1.1% contraction by Christmas—a remarkable blow given that as late as May it was predicting that South Korea’s economy would grow this year. As confidence in Seoul’s ability to control the virus has dimmed, KDI economists have acknowledged that “the Korean economy is unlikely to see a V-shaped economic rebound.”

The latest dire predictions may help explain indications that Seoul is looking to mend relations with Beijing, South Korea’s largest trading partner. Indeed, South Korea’s recently inaugurated unification minister, Lee In-young, reached out to China directly last month in the hopes of reviving bilateral relations. Lee lavished praise on China for its diplomatic efforts on the Korean Peninsula and invited Beijing to help “develop inter-Korean relations into a peaceful, economic and biotic community.” The question is whether the PRC can be trusted as a geopolitical and economic partner for Seoul?

Scorned by Washington, into Beijing’s embrace?

Naturally, China has embraced the initiative and a potential Xi-Moon summit is already on the table. At a recent meeting between senior Chinese lawmaker Yang Jiechi and top South Korean national security adviser Suh Hoon, both sides of the Yellow Sea committed to upholding multilateralism and continued cooperation in efforts to keep COVID-19 under control. With unification minister Lee suggesting joint initiatives between China and the two Koreas to combat the pandemic, it seems that even Pyongyang is being welcomed into the fold.

Seoul’s rapprochement with Beijing is no doubt informed by deteriorating relations with Washington. Amidst harsh rhetoric from U.S. President Donald Trump about how old allies like Seoul are ripping off the U.S. at an “unbelievable” level—the president even used his recent nomination speech to excoriate rival candidate Joe Biden for supporting a free trade agreement with South Korea. Cost-sharing negotiations over the 28,500 U.S. troops stationed in South Korea have ground to a standstill, and the U.S. has repeatedly considered significantly reducing its military presence in South Korea.

Tensions between South Korea and its most significant ally has been building for a while. Now that U.S. soil falls within the range of North Korea’s ever-expanding nuclear arsenal, the probability that the U.S. would prioritize domestic security over South Korea’s has inched ever higher, particularly given Donald Trump’s “America first” credo. U.S. Senator Lindsey Graham laid the situation out in particularly stark terms in 2017: “[Trump must] choose between homeland security and regional stability. Japan, South Korea, China would all be in the crosshairs of a war if we started one with North Korea. But if [North Korea gets] a missile they can hit California – maybe other parts of America…If thousands die, they’re going to die over there, they’re not going to die here.”

A partner with its own interests in mind

Sidling up to Beijing, however, is a problematic response to the Trump administration’s hostility for a number of reasons. For one thing, a concerted pivot towards China could fundamentally change the balance of power in East Asia, upending old alliances and leaving neighbours like Japan out in the cold.

For another, China—as North Korea’s most vital ally and biggest trading partner—has despite its stated support for a unified Korea, been of limited help in deescalating the situation on the Korean Peninsula, one of South Korea’s most important foreign policy priorities. As one former Chinese government official explained, Xi Jinping’s priority is “to keep North Korea under Chinese influence.” It’s likely that the only Korean reunification brokered by Beijing would be one that allows China’s sphere of influence to stretch across the entire peninsula—something which most South Koreans seem to recognize. A recent survey by the Carnegie Endowment showed that a mere 26.9% of South Koreans trust Beijing to help bring about unification, while 54.4% of respondents believed that China would be the single greatest threat to a unified Korea.

If closer geopolitical ties to China risk allowing Beijing to set the terms of engagement between the two Koreas, Moon’s administration has also opened a backdoor for China in the economic sphere. The coronavirus pandemic has prompted many of South Korea’s Western allies, including European powerhouses France and Germany, to reduce their dependence on Chinese products. During the public health crisis, however, South Korea’s reliance on China for exports and foreign investment has ratcheted up sharply.

China’s share of South Korea’s exports has increased by 1.5% since last year, while the rise in Chinese foreign direct investment (FDI) was even more alarming. Overall FDI into South Korea nose-dived in the first half of 2020—while funding from Beijing surged. In the first half of last year, Chinese FDI made up only 3% of foreign investment in the South Korean economy—this year, some 11.2% is from China.

As any number of countries who signed up to China’s Belt and Road Initiative quickly learned, Beijing’s financial largesse often comes with strings attached. It’s understandable that with its vital relationship with the U.S. under strain and its economy facing severe pressure as its control on the virus is slipping, Seoul is tempted to edge closer to the regional hegemon. Past experience, however, indicates that Beijing is likely to be an unreliable ally with its own interests close at heart.