The Limits of China’s Economic Leverage Over South Korea

the chorea | Economy | east asian

South Korea’s economy is certainly vulnerable to Chinese economic coercion. But such pressures rarely induce countries to change their foreign policy outlook.

South Korea’s economic dependence on China is a well-documented fact. Despite Beijing’s decision in 2017 to embargo Korean goods and services as punishment for Seoul’s deployment of US anti-missile batteries, South Korea’s dependence on Chinese imports has only grown since then. South Korean industry is particularly dependent on Chinese suppliers for critical components such as high-capacity batteries.

Most Korea watchers in Washington see this economic dependency as a major vulnerability in South Korea’s national security amid the Sino-American surge. competition. Some, like the Cato Institute doug bandow, goes so far as to suggest that South Korean “shrimp” will eventually be forced to “choose” between American and Chinese “whales.” This line of thinking implies that South Korea, like America’s European partners, is sure to collapse as soon as its economic lifeline is threatened by bad faith actors in Beijing.

However, such rhetoric does not reflect the actual influence China has over South Korea, which is not as significant as Bandow and others make it out to be. The economy of the country is certainly vulnerable to hardship when subjected to Chinese economic coercion. But such pressures rarely induce countries to change their foreign policy outlook. The current fear surrounding Seoul’s economic orientation also overlooks that Washington has the ability to shape South Korea’s responses to Beijing.

Cases throughout history show that economic coercion rarely works. Randall Newhams analysis of Russo-German relations demonstrates how the economic leverage exerted by a richer state generates limited geopolitical benefits. Successive governments in Berlin and Bonn found it extremely difficult to induce favorable behavior from Russia or the Soviet Union through the use of monetary incentives. Just as Chancellor Otto von Bismarck failed to undermine a burgeoning Franco-Russian alliance by blocking Russian bonds from 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 1963.

China also has a poor record of using its economic weight to change the behavior of foreign nations. Seoul still deployed US anti-missile batteries despite the informal Beijing embargo. Although painful, these measures also did not prevent the incoming South Korean administration from considering deploying additional US batteries to the country. In addition, South Korea has continued to strengthen its security alliance with the United States, both militarily, through major naval exercises in Juneand diplomatically, through the NATO Summit in Madrid.

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When coercion fails to capitalize on economic leverage, Newnham argues that positive economic reinforcement is more successful in fostering changes in a country’s foreign policy outlook. But, she qualifies this thesis with extremely specific conditions that must exist for the richest country to effectively use its economic advantages. For example, the Federal Republic of Germany won the consent of the Soviet Union absorb the Soviet satellite state of East Germany by granting generous loans and general economic aid. Positive aid was effective because it occurred at the same time as the economic and political collapse of the Soviet Union, which left Moscow more vulnerable to Bonn’s comparative economic influence. This case study demonstrates that even if China were to use positive incentives, they would be ineffective unless South Korea is under extreme economic pressure.

Therefore, Chinese attempts to use Sino-Korean economic relations as leverage, whether through direct coercion or positive incentives, are unlikely to have the effect desired by Beijing and feared in Washington. If anything, continued Chinese economic coercion will likely have the opposite effect of encouraging South Korea to align itself more closely with the United States in a more comprehensive alliance.

However, the resilience of South Korea-US relations despite Chinese efforts does not mean that Seoul and Washington should rest on their laurels. China is capable of causing massive economic damage against South Korea, even if that coercion is unsuccessful. And although economic pressure rarely produces favorable results for the inciting country, host countries can resist it more easily when they have partners who can substitute 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 call on French help.

It is here that the United States has the initiative to shape the geopolitical realities in the Indo-Pacific. Let us remember that the hesitation of the Trump administration to support its allies weakened The United States is located in Asia, which only adds to the region’s expanding economic ties with China. Along the same lines, proactive support from Washington can more effectively shape Seoul’s risk-reward calculus in its engagements with Beijing.

Such responsibility is both empowering and daunting. It is even more critical that Washington accurately understand South Korea’s economic security concerns with China. The Yoon administration has put economic security at the center of its foreign policy agenda, and advocates specifically Name United States as a key partner. The Biden Administration Will Developing multilateral responses to Chinese economic coercion is therefore an encouraging sign for South Korea-US relations. Whether future US administrations can continue to do so will be critical not only to safeguarding South Korea’s economic security, but also to further thwarting the effectiveness of Chinese economic coercion.

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