US-China strategic rivalry, South Korea’s strategic choices, and implications for German and South Korea cooperation

As a peninsula located between the continental and maritime powers, Korea has historically suffered from great power rivalries. Hans Morgenthau once characterized the Korean peninsula as a classic example of a victim of balance of power determinism among great powers. Nevertheless, South Korea has enjoyed the benefits of the end of the Cold War. Under American patronage, South Korea could normalize diplomatic ties with China and tap the immense Chinese markets without necessarily impairing its alliance with the U.S. However, worsening strategic rivalry between Beijing and Washington in recent years has placed South Korea in a very difficult position.

China-U.S. Strategic Rivalry and New Divides

China and the U.S. have entered a fierce strategic rivalry. Most critical is their geopolitical contestation. The U.S. has taken a strategic offensive to encircle and even contain China’s military expansion by pursuing its Indo-Pacific strategy and strengthening its alliances in the region, as exemplified by the so-called Quad (involving the U.S., Japan, India and Australia) and the AUKUS defense arrangement (involving Australia, the UK and the U.S.). The Taiwan Strait, the South China Sea, the East China Sea, and even the Korean Peninsula have emerged as dangerous flash points.

The second front of strategic rivalry is the geoeconomic arena involving trade and investments. The U.S. has sought a decoupling strategy that aims to isolate China from the global supply chain. Washington has urged its allies and partners in the region to re-shore, near-shore, and friend-shore its investments in China by joining the Indo-Pacific Economic Framework for Prosperity (IPEF). China responded through a coercive economic diplomacy, a ‘dual circulation’ strategy (relying on exports as well as domestic consumption), and ultimately a self-sustaining economy.

Third, technology has become another source of fierce competition. Clash of techno-nationalism between China and the U.S. has become more pronounced than ever before. Realizing the acute technological challenge that China poses in terms of competitiveness, national security and technology standards, the U.S. has taken tough measures against China by restricting its access to American core technologies as well as forming a technology alliance with like-minded countries. The Biden administration initiated the Chip 4 alliance with Japan, South Korea, and Taiwan in coping with China’s challenges in the semiconductor sector. And as in the case of Huawei, the U.S. has exerted pressure on its allies and partners in the region to take a unified action against China’s dominance in 5G technology.

Values, if not ideology, have emerged as another troublesome front. Collision between American universal values and China’s particularistic ones in the areas of human rights, democracy, and rule of law has become visible. The U.S. mobilized the support of other countries to criticize deteriorating conditions of democracy and human rights in Hong Kong and among Uyghurs in Xinjiang through the formation of a coalition of democracies. China, for its part, denies any human rights violations and emphasizes its own version of democracy with Chinese characteristics.

Finally, contending visions of regional order between China and the U.S. have mattered.  China advocates the Asia-Pacific regional order by underscoring multilateral security cooperation, open regionalism, and civilizational pluralism. Meanwhile, the U.S. has championed the Indo-Pacific vision framed around alliance and collective defense, closed regionalism, and a coalition of democracies. Such confrontation has complicated South Korea’s strategic positioning.  

South Korea’s Choice: Domestic Debates and Contending Strategic Options

South Korea is torn between the two sides. The U.S. is South Korea’s ally, while China is its strategic cooperative partner. Although Seoul wants to maintain the status quo, mounting pressures from both sides has placed South Korea in a delicate situation. Washington has been pressing Seoul to endorse its Indo-Pacific strategy and participate in related military activities; to join American decoupling efforts in trade and investment; to form a technological alliance to cope with China’s challenges; and to support America’s campaign to criticize Beijing’s violation of democracy and human rights. In contrast, Beijing has sent a subtle warning to Seoul that although it does not want South Korea to take sides with China, it should stay neutral. If Seoul allows the U.S. to strengthen its missile defense assets in South Korea such as augmenting its THAAD (Terminal High Altitude Area Defence) missile system and/or the deployment of American intermediate-range ballistic missiles, China will treat South Korea as an enemy and take corresponding measures.

Economic decoupling is not easy either because China accounts for almost 25 percent of South Korea’s total trade, whereas the U.S. and Japan account for 12 percent and seven percent, respectively. Moreover, economic interdependence between China and South Korea formed through global supply chains is deep and wide. More than 20,000 South Korean companies are currently doing business in China. Technology seems less problematic because South Korea’s technological cooperation with China has been limited. For example, South Korea is not dependent on 5G technology of Chinese origin. But cooperation in semiconductors and batteries for electric cars has become a source of American concern, and the U.S. has urged South Korea to take its side in coping with China’s technological rise. Up till now, Washington has not been explicit in calling for South Korea to take an anti-China stance on democracy and human rights. Nevertheless, the U.S. has reminded South Korea that the South Korea-US alliance goes beyond its military dimensions and includes shared values. At the same time,  Seoul’s room to maneuver is constrained by the ‘one China policy’ and the principle of non-interference in domestic politics it pledged at the time of diplomatic normalization. 

Conservative pundits and media in South Korea favor a pro-American ‘balancing’, which refers to taking sides with the U.S. to balance the rise of China as a revisionist power. They contend that China as a rising power cannot help but be aggressive, and that the re-emergence of China is a potential and substantive threat to the Korean Peninsula, leading to its ‘Finlandization’, in which South Korea will lose its autonomy by being subjugated to China. Negative public perceptions of China stemming from its past invasion, domination, and participation in the Korean War against South Korea contributes to support for this pro-American option. In addition, they argue that values are another reason why South Korea should strengthen its alliance with the U.S. The current Yoon Seok-yol government takes a similar position. On the occasion of his state visit to Washington, D.C. in May this year, President Yoon characterized the ROK-US alliance as a value alliance that comprises security, economic, technological, cultural, and intelligence alliances.

Its proponents call for active participation in U.S.-led regional military activities, joining the decoupling strategy in trade, investment and technology, and voicing greater objections to China’s violation of human rights and democracy. It is expected that the balancing act will enhance South Korea’s conventional and nuclear deterrence against North Korea and China and prevent the ‘Finlandization’ trap.

However, this approach is not without substantial costs and limitations.  Contrary to their expectations, South Korea’s security could be jeopardized rather than stabilized, not only because China will emerge as a direct threat, but also because close military cooperation between Beijing and Pyongyang, including the supply of weapons and logistic support, will make North Korea a more formidable additional threat to South Korea. China’s economic retaliation—such as the formal and informal economic and cultural sanctions imposed by China on South Korea after it allowed the deployment of the THAAD missiles in 2017—could deal a critical blow to the South Korean economy.

The opposition Democratic Party of Korea that holds a majority in the National Assembly prefer the status quo strategy via muddling-through that is predicated on a simultaneous pursuit of an alliance with the U.S. and a strategic cooperative partnership with China. Since the days of President Kim Dae-jung in the late 1990s, governments in South Korea have followed this strategic line in the name of a balanced diplomacy or a diplomacy of ‘anmi gyeongjung’ (security with the U.S., economy with China). Its proponents claim that although the U.S. should remain the top priority as the most valuable ally, it should not be at the expense of China. They also argue that such ‘double-hedging’ is the best way to ensure national security, maximize economic benefits, and balance national interests and values. Such ‘muddling through’ may work when relations between the U.S. and China are congenial. But political scientist Stephen Walt warned a decade ago that ‘If Sino-American rivalry heats up – as I believe it will – then Beijing and Washington will press Seoul to choose sides.’ That is what is currently happening in the Korean context. The U.S.-China relationship is deteriorating, and the status quo strategy is reaching a breaking point, especially on the U.S. side. American pressure is not limited to the security area, but extends to the economy, technology and values. A moment of truth is approaching, and South Korea may have to make an agonizing choice.

Then there is the band-wagoning with China strategy, which could facilitate peace and stability, particularly if the U.S. disengages from the Korean Peninsula. However, short-term risks resulting from transitional strategic uncertainty, fear of ‘Finlandization’ (if not absorption) by China in the long term, and the high economic opportunity costs of taking sides with China, while shrinking or losing economic ties with the U.S. and Japan, could shake South Korea’s security and economic foundations. In addition, silence on human rights in China could severely damage South Korea’s global reputation. More importantly, strong anti-Chinese public sentiment in South Korea will limit its feasibility. Moreover, Beijing does not seem to welcome such a sudden shift in Seoul, because it prefers the status quo.

Some in South Korea champion a standing alone strategy for a more autonomous diplomatic space: breaking away from the influence of the big powers.  There are two contending approaches. The right-wing nationalists doubt the reliability of the American nuclear umbrella and its extended nuclear deterrence strategy and maintain that South Korea should become a middle power with nuclear armaments. For them, South Korea’s military independence backed by nuclear weapons is the only way to effectively manage the whims of big powers and to ensure national security and dignity. In stark contrast, however, the left-leaning pacifists argue that South Korea should be free from the influence of strong powers by declaring a permanent neutral state. They call for the withdrawal of American forces from South Korea and the termination of the alliance with the U.S. Both approaches might appeal to nationalist or pacifist sentiments but neither are practical nor feasible. Being too idealistic, they are not likely to gain public support.

Of the four contending strategic options, pro-American balancing seems readily available but not necessarily desirable because of high security and economic costs. And there are doubts about American capabilities and commitment to protecting South Korea. Weak public support and transitional uncertainty make the bandwagoning with China strategy neither feasible nor desirable. Standing alone might sound appealing, but its feasibility seems inconceivable. The most desirable approach seems to be the continuation of the status quo via muddling through. But its feasibility is growing dimmer because of worsening China-U.S. relations.

I argue that while adhering to a prudent harmonizing between the pro-American balancing and the status quo options, Seoul needs an imaginative and innovative approach to go beyond it. In this regard, I propose a ‘transcending’ diplomacy approach. Paul Schroeder coined the term ‘transcending’ to describe the attempt by weak states to ‘surmount international anarchy and go beyond the normal limits of conflictual politics; to solve the problem, end the threat, and prevent its recurrence through some institutional arrangement involving an international consensus or formal agreement on norms, rules, and procedures for these purposes.’ Transcending diplomacy could be a useful option to mitigate the rivalry and confrontation between China and the U.S. because it proposes multilateral security cooperation as well as the restoration of multilateral regimes to resolve pending trade and technology problems. The same can be said of human rights.

Such transcending diplomacy poses a daunting challenge, and South Korea alone cannot initiate this effort. It should work with other middle powers that face a similar dilemma: Japan, Australia, Canada, France, Germany and Italy. This group should forge a new international consensus on norms, rules, and procedures to prevent U.S.-China conflicts in geopolitics, geoeconomy, technology and values. They are all American allies and at the same time major economic partners with China. Their collective action is the only viable way to take China and the U.S. out of their ‘game of chicken’ and to restore international order through multilateral cooperation.

Implications for German-South Korean Cooperation and A Call for German Leadership

My understanding of the German China strategy is that it is of much debate and discussion. For some, China is a partner, and for others, a competitor and a systemic rival. Members of the current governing German coalition (the SPD, Greens and FDP) have divergent perceptions and policy prescriptions on China’s rise. The Social Democrat Chancellery seeks a pragmatic approach by pushing for continued engagement with China within a diversification strategy, whereas the Green Foreign Minister favors de-risking and a more robust value-based confrontation.

Germany under Chancellor Scholz has so far pursued a reasonable China policy by combining pragmatism with value diplomacy. His visit to China in November 2022 underscores this point. Right before the visit, notwithstanding opposition from other coalition members, he approved the purchase of a stake in the port of Hamburg, Germany’s largest, by the China Ocean Shipping Company (COSCO), sending a positive signal to Beijing. His visit, which was accompanied by a huge delegation of German industrial leaders, yielded successful outcomes for bilateral economic relations.  It can be seen as the continuation of ‘Wandel durch Handel’ (change through trade). Chancellor Scholz was rightly skeptical of American-led decoupling, while emphasizing diversification. It seems quite logical given the German economy’s excessive dependence on China.

Although Chancellor Scholz was not shy of raising issues related to human rights, unequal market access, use of nuclear weapons, and vaccine distribution, he has been much more prudent regarding China’s core interests involving Taiwan and the South China Sea. It is not clear to what extent the German government will get involved in Taiwan and South China Sea-related issues. However, sending another battleship on a ‘Freedom of Navigation’ voyage through the South China Sea could remind Asians of the old ‘gun boat diplomacy’ by Europeans. Incumbent conservative governments in Japan and South Korea might welcome the idea of NATO extension into the Indo-Pacific region, but many East Asians might be wary of such a move.

What then are the prospects for German-South Korean cooperation?  Chancellor Scholz visited Seoul in May 2023 after attending the G-7 Summit in Hiroshima. Being the first German Chancellor’s visit to Seoul in 30 years, he was much welcomed. President Yoon and Chancellor Scholz agreed on enhancing bilateral cooperation in trade and investments, global supply chain network protection, semiconductor and clean energy, and other technology fields.  Both leaders also underscored the importance of bilateral cooperation in the pursuit of common values and Indo-Pacific strategy. 

But there are some limitations. Yoon’s preoccupation with value diplomacy, nuclear extended deterrence, and decoupling (now on the de-risking bandwidth) may not match well with Scholz’ emphasis on pragmatism, cooperative security, and diversification. Despite the differences, there is a strong case for the German government to seek robust bilateral cooperation with the Yoon government. However, it seems desirable for the Social Democratic Party, if not the German government, to resuscitate and enlarge inter-party cooperation with the Democratic Party of Korea and ties with civil society in South Korea that share common visions and interests with the SPD.

Finally, let’s consider some implications and suggestion for German foreign policy in light of the evolving situation:

(1) The German government should play a role of proactive mediator in preventing the coming clash between China and the U.S. through transcending diplomacy;

(2) The German government should also cultivate a coalition of ‘the middle’ that includes not only American allies, but also major countries of Global South including ASEAN;

(3) The German government should convene an international conference for the ‘sandwiched countries’ to address global dilemma and subsequent collateral damages originating from the US-China rivalry and to find common solutions.

Note: This article has been written before the publication of Germany’s China Strategy