South Korean diplomacy needs to strike a balance between two sets of trilateral relationships — ROK-U.S.-Japan and ROK-China-Japan. It all boils down to pragmatism in domestic and international affairs.
When Lee Jae-myung formally assumed office as the President of South Korea, he ended the nearly six-month political crisis created by the declaration of martial law by former President Yoon Suk-yeol in December. With the absence of a functioning presidency, diplomacy in the Republic of Korea experienced a half-year of inaction. During these six months, the world has undergone significant changes. U.S. President Donald Trump’s global tariff war has had a major impact. America’s relations with China and Russia have shown signs of potential improvement. China-Japan relations are improving. And the strategic relationship between Russia and North Korea has become stronger.
If the old saying is true that “a day in the mountains is like a thousand years in the world,” it would be no surprise to find that the new South Korean president feels profoundly disconnected. The big challenge for South Korean diplomacy is figuring out how to balance two sets of trilateral relations — ROK-U.S.-Japan and ROK-China-Japan. Achieving balance will hinge on whether the country can consistently find pragmatic ways to handle domestic and international affairs.
First, diplomatic pragmatism is needed for the ROK to stabilize its internal politics and revive its economy. Anxiety in South Korean society mainly originates from concerns about economic growth, incomes and issues involving healthcare and care of the elderly. A central issue in the recent presidential election was poverty among the elderly, which has risen to 40 percent, with the ROK is at the bottom of the Organisation for Economic Co-operation and Development — the rich nations’ club.
Stalled pension and social welfare reforms have brought societal unease. People aged 65 and over account for more than 20 percent of the population in South Korea, and the country is expected to surpass Japan in 15 years as the country with the highest average age. Its fertility rate is a mere 0.75 percent, much lower than Japan’s 1.15 percent in 2024. Further, with multiple external factors, including international economic structural adjustments, the pandemic and geopolitics, South Korea has experienced increased inflation in recent years. With Yoon in office, real estate prices rose by 7 percent.
The martial law order at the end of last year triggered domestic political turmoil and, coupled with the tariff war, worsened the general economic situation. The Yoon administration acted ideologically in pursuit of a so-called values-based diplomacy, which was very much a black-or-white, friend-or-foe game. This led to extreme tension in inter-Korean relations and negative developments on the China front.
That said, there is a huge cognitive gap between the administration’s assertion that North Korea poses the greatest threat to the ROK’s national security and the public’s view that domestic economic welfare is the greatest source of insecurity. The new president must dedicate his diplomatic efforts to creating a peaceful and friendly environment for economic development and people’s livelihoods in South Korea.
Second, riding a new wave of regional integration, South Korea has come to realize that cooperation with China and Northeast Asia contribute to upgrading its economy and improving incomes. Under the shock of American tariffs, countries around the world are actively promoting regional economic cooperation to counteract risks. Markets are now a scarce resource in the global economy. American protectionism means an increasing need to find markets outside the United States.
China and ASEAN have completed negotiations for their Free Trade Agreement 3.0, signifying the emergence of a large market of 2 billion consumers. In May, the first ASEAN-China-Gulf summit was held in Kuala Lumpur, indicating an emerging cross-regionalism that involves the world’s second- and fifth-largest economies and important energy suppliers. In 2023, ASEAN attracted $230 billion in foreign direct investment, 17 percent of the global total. China had $160 billion and the GCC had $65 billion. The three together accounted for a significant 35 percent of total foreign direct investment globally.
China and ASEAN are one another’s largest trading partners, with two-way trade nearing $1 trillion, more than trade between China and the United States. Closer economic and trade ties in these emerging markets are not merely a short-term response to the Trump tariffs but represent a restructuring of the global distribution of power and realignment of industrial and supply chains.
For South Korea, the previous model of economic complementarity — utilizing low-cost labor and raw materials from developing countries for processing and then exporting final products to the U.S. — is no longer sustainable. The ROK must steer its economy toward a new position in restructured industrial chains as it rides the current wave of regional integration. Otherwise, its competitiveness will be greatly constrained.
Improving relations with China and promoting trilateral economic and trade cooperation with China and Japan will help South Korea to better connect with the vast markets of the Global South and gain a favorable position in the global economic restructuring process.
Third, in a polarized domestic political environment, the new South Korean president will inevitably pursue pragmatic diplomacy within a framework of continuity. The broad trend of diverse diplomacy will not mean weakening the alliance with the United States, nor will it completely reverse the previous administration’s policy of rapprochement with Japan. Although Trump imposed an additional 25 percent tariff on goods from the ROK and demanded that it significantly increase military spending, the reality that the U.S. is the ROK’s only strategic ally remains unchanged.
Conservatives within South Korea are highly vigilant and suspicious of any moves that might shake the alliance or ease relations with North Korea, and they easily politicize such moves.
Regarding relations with Japan, the new president is likely to strengthen trilateral cooperation with the U.S. and Japan and manage unresolved issues in parallel. Upon taking office, Lee stated that state-to-state relations should maintain continuity and not be pushed ahead upon any individual’s personal beliefs.
With a new administration, there is a major opportunity for South Korean politics and diplomacy to return to normalcy — improving ties with China and building cooperation across Northeast Asia. Admittedly, the counteracting forces pulling in the opposite direction are equally strong.
