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Foreign Policy

South Korea Seeks Its Own Reset with China

Apr 08 , 2013

At the inaugural Asan-China Forum this past December, a Chinese scholar raised the dilemma that every South Korean president faces – how to maintain healthy relations with the United States and China? While the United States remains Seoul’s most important security partner, China has become its most significant economic partner and continues to grow in influence in East Asia.

However, since upgrading their relationship to a strategic cooperative partnership in 2008, relations between Seoul and Beijing have begun to deteriorate. They have found themselves at odds over regional priorities such as North Korea and the nature of the U.S.-Korea alliance, as Beijing watched Seoul expand its economic ties with the United States and European Union.

While North Korea has consumed much of the attention in the early days of Park Geun-hye’s presidency, the new administration has indicated that it places a priority on improving relations with China. Improving ties with China is something Park may be well placed to achieve. She is viewed favorably in China and has the advantage of being able to speak Mandarin. She also appears to have a willing partner in Xi Jinping.

However, improving relations with China will require her administration to build off of the already strong economic relationship between South Korea and China, while addressing the tensions that have developed in the relationship in recent years.

Since formalizing relations, China and South Korea have built a dynamic economic relationship that has seen two-way trade rise from a mere $6.3 billion in 1992 to $215.1 billion last year. In little more than a decade China surpassed the United States as South Korea’s largest trading partner, while two-way trade today outstrips South Korea’s combined trade with the United States and Japan.

Economic ties should only continue to grow in the years ahead as China shifts its economy towards greater levels of domestic consumption. Currently, much of South Korea’s trade with China is processing trade. As China shifts towards more domestic consumption additional opportunities for South Korean producers to sell into China’s domestic market will develop.

South Korea and China are also in the process of negotiating a series of free trade agreements (FTA). Last year, Seoul and Beijing launched talks on a bilateral FTA and recently held the first round of discussions with Japan on a trilateral FTA. The trilateral talks should help to lay the groundwork for a common set of rules and standards for the region to deepen economic integration. At the same time, both South Korea and China are taking part in the Regional Comprehensive Economic Partnership which would bring together the ASEAN + 6 nations under a common FTA.

While the Park administration will be able to continue to strengthen South Korea’s economic ties with China through its FTA negotiations, developing a deeper strategic partnership may prove more challenging. In recent years, a series of disputes and challenges related to North Korea, the United States, territorial concerns, and values and perceptions have hindered moves to develop a deeper strategic relationship.

These disputes have led to a declining public perception of China among South Koreans. According to recent polling by the Asan Institute for Policy Studies, only 49.8 percent of South Koreans view relations with China as cooperative in nature, with a nearly equal percentage viewing them as competitive. In contrast, 80.2 percent of South Korean’s view Seoul’s relationship with Washington as cooperative. Additional polling by the Asan Institute has shown that 61 percent of South Korean’s view China as a threat post-unification, as opposed to only 26 percent for Japan and 9 percent for the United States. As a whole, South Koreans tend to view China’s military and economic rise as a threat.

However, the most difficult challenge for improving relations is North Korea. While Seoul and Beijing work together to maintain stability on the peninsula and discourage provocations or nuclear tests by North Korea, there has been a growing dissatisfaction with each side’s approach to dealing with Pyongyang more broadly.

Despite an economic relationship with China that is nearly 35 times larger than North Korea’s, South Korea still finds that Beijing values the stability of the Kim regime in Pyongyang over its economic relationship with Seoul. For Beijing, concerns about instability impacting the development of its own northeastern provinces, refugees from a potential collapse, and the prospect of a U.S. ally on its border still guide its policy.

However, China’s approach has created tensions with Seoul in the past. In 2010, North Korea sank the Cheonan and later shelled Yeonpyeong Island; leaving South Koreans surprised that China would seemingly side with North Korea despite its aggression against the South.

Beijing’s handling of refugees from North Korea has also been a sore point in the relationship. China views North Koreans who have illegally crossed its boarder as economic migrants and repatriates them to North Korea rather than aiding in their transit to the South.

At the same time, China began to grow frustrated with South Korea’s move away from a policy of engagement with North Korea under the Lee Myung-bak administration.  From the Chinese perspective, the best way to handle the challenge of North Korea is through engagement and to address the regime’s insecurities. However, China’s own economic engagement, at a time when Seoul has cut off almost all economic ties with North Korea beyond the Kaesong Industrial Complex, has created concerns about China’s long term economic influence on the North.

Park’s approach to North Korea may help to mitigate these tensions with China. Generally referred to as “trustpolitik,” Park has proposed greater engagement with North Korea through a process of mutual trust building. While premised on the concept of starting small and building to larger forms of engagement, it could, in time, put Seoul’s approach to North Korea more in line with Beijing’s preferred policy. At the same time, China has also indicated a willingness to take steps to improve inter-Korean relations.

Of all of the relationships in Northeast Asia, the one between South Korea and China may be the most complex. While the United States remains South Korea’s primary security partner, South Korea’s economic growth has become increasingly tied to China’s own economic fortunes. Similarly, real progress on North Korea requires the cooperative involvement of China. If Park’s approach is able to improve relations with China while maintaining strong ties with the United States, she will not only have achieved what her recent predecessors have not, but also have improved South Korea’s economic and security prospects.

Troy Stangarone recently completed a Council on Foreign Relations Fellowship in South Korea at the Asan Institute for Policy Studies. He is currently the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are his own.

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