Beyond History: Japan, South Korea, and the Shadow of China
From rivalry to reliance, Japan-South Korea relations are rapidly changing as China and North Korea dig their heels into Asia.
Over the next half-decade, Japan and South Korea’s relationship will gradually normalize as the risks of external, regional threats outweigh their personal rivalry and grievances. China’s efforts towards expanding its influence in Asia and North Korea’s increased nuclear provocations will catalyze a deeper security-based economic, political, and technological fusion between Japan and South Korea, with the US as an instrumental mediator. However, two constraints are limiting their cooperation.
The first is unresolved tension between South Korea and Japan during the latter’s occupation of the former in WWII. The discord has deteriorated bilateral relations and affected key areas of economic policy that pose larger, technology-based security risks beyond Asia.
The second is China. The gravity of the Asia giant’s economy in the region has South Korea and Japan in its orbit, thereby giving Beijing economic leverage, should both countries get too close. Both Seoul and Tokyo have walked on a diplomatic tightrope, balancing their economic dependence on China and their security ties with the US - but that is now changing.
Resolving the resentment will be a long process, but the bitterness of past historical wounds will likely yield to current and future, mutually-aligned security concerns. Reconciliation - and especially, cooperation - will ruffle Beijing’s feathers, potentially putting both South Korea and Japan at risk of economic coercion.
However, China will have to be careful to not overextend its hand and risk a policy backfire. In the interim, pronounced uncertainty in Asian relations amid growing US-China tensions, likely means a sustained period of elevated uncertainty that will cloud regional economic and political affairs for the next five years - and likely beyond.
The main constraint limiting cooperation between Japan and South Korea is the ongoing bitterness over their shared history in WWII. In 1965, both countries normalized relations, with additional progress made in the 1980s and bilateral hope reaching a high point in 1998.
Then-South Korean President Kim Dae-jung and Japanese Prime Minister Obuchi Keizo announced a joint declaration to forge a new “future oriented” relationship.
Over time, however, optimism began to wilt, and bilateral relations deteriorated at a commensurate rate, with a notable acceleration in the past 5-7 years. In 2015, after extensive negotiations, Japan agreed to pay a $8.3 million restitution to South Korean “comfort women '', who were used as sex slaves in WWII by Japanese soldiers during their occupation.
In 2017, under then-President Moon Jae-in, the agreement was deemed invalid by South Korean courts, and required a renegotiation. A year later, legal authorities ruled that Mitsubishi Heavy Industries and Nippon Steel had to compensate Korean forced laborers and their descendents. Both firms refused, citing the Treaty of Basic Relations as a sufficient landmark for compensation.
In 2019, tensions escalated when the Japanese government removed South Korea from a whitelist of trade partners who were exempt from export controls for products with national security implications.
Japan wields significant leverage in this area vis-a-vis South Korea: the country produces around 90% of the world’s supply of fluorinated polyimide and photoresists used for extreme-ultraviolet lithography, and about 70% of hydrogen fluoride, all of which are essential inputs used in South Korea’s semiconductor industry.
Shinzo Abe’s government at the time cited noncompliance and regulatory issues, though unofficially, many viewed it as retaliation for the South Korean court ruling in 2018.
In response, Seoul scrapped the word “partner” in its description of Japan in a defense white paper in 2021. The tit-for-tat continued, with boycotts, condemnations by state officials, and reduced tourism hurting businesses and social relations on both sides.
Despite the tension, intelligence sharing around North Korean missile threats and other risks never stopped. Japan-South Korea relations frequently oscillate with the party in government.
Liberal-leaning South Korean leaders tend to have a more hawkish attitude towards Japan, and strategic ambiguity in US-China relations, whereas their conservative counterparts are the inverse.
The current conservative government under President Yoon Suk-yeol is working to thaw relations with Japan and strengthen cooperation. The government recently put forth a plan to launch a fund to compensate war victims with voluntary contributions from Japanese firms. If successful, it would mark a notable step in normalizing relations.
While there is a risk relations could deteriorate again in the next general election in 2027, demographic changes may solve the problem. The impetus to press on war crimes may weaken with fewer surviving victims and more pressing, current affairs. While the tension may not go away completely, I anticipate it will yield to growing regional security concerns.
The second constraint hampering cooperation between South Korea and Japan is their strong economic dependence on China, the largest trading partner of both countries. Despite their close political relationship with the US, roughly 25% and 20% of South Korea’s and Japan’s exports head to China, respectively.
Both Seoul and Tokyo are cautious about pursuing political endeavors which may antagonize their largest trading partner. Beijing has shown it has no hesitation in weaponizing interdependence to pressure countries - both allies and foes alike. In 2021, China imposed sanctions on key Australian exports after Canberra called for an independent panel to investigate the origins of COVID-19.
South Korea and Japan are both getting a small taste of this kind of coercion now. After China reopened its economy, infections skyrocketed, and in response, Tokyo and Seoul implemented stricter controls for Chinese visitors coming from the mainland.
In retaliation, Beijing subsequently stopped issuing short-term visas for Japanese and South Korean nationals. The diplomatic fallout could dampen economic activity for both parties: annual spending by Chinese tourists abroad before the pandemic reached $250 billion, with South Korea and Japan as the primary shopping destinations.
However, Beijing must be cautious in their approach: frequently changing economic policies whenever the government feels slighted could accelerate their increasing-isolation. Interconnectedness and globalization fostered strong growth in China for decades, and unraveling that system will hurt their economic dynamism in the long run.
Furthermore, Japan and South Korea’s technological edge in Asia, combined with stricter US export controls on goods like semiconductors, means China cannot afford to isolate key partners. This may give room for South Korea and Japan to expand coordination with each other and the US.
Trilateral cooperation is already widening and deepening between the US, Japan, and South Korea, specifically on policies relating to technology and security in Northeast Asia.
Both countries are critical nodes in the global supply chain for integrated circuits, and as such, provide strategic technological value to US foreign policy in the Indo-Pacific region. While trade with each other is relatively-low, they are part of a larger, Asia-based supply chain carefully curated by US foreign policy strategists in the 1960s.
The motivations back then are similar to what we are seeing now: the containment of hostile forces and creation of a political-economy alliance around hegemony-defining technology.
The US is teaming with Japan to establish a joint research center specializing in 2-nm technology for semiconductors, as well as a new program to bring back cutting-edge semiconductor manufacturing as part of a broader security strategy.
South Korea’s “strategic clarity” approach complements US efforts to contain China’s technological advancement, and therefore, their influence in regional affairs. By emphasizing the preservation of a rules-based international system and condemning unilateral efforts that challenge the status quo, Yoon is echoing the threat Beijing poses to Washington and its allies.
Furthermore, the Biden administration’s Indo-Pacific Economic Framework for Prosperity (IPEFP) fits well with South Korea’s strategy to become a bigger regional player. The 2022 Phnom Penh Statement on US – Japan – Republic of Korea Trilateral Partnership for the Indo-Pacific demonstrates growing momentum for trilateral collaboration across a wide range of areas beyond the threat of North Korea.
These include resuming military drills such as the Pacific Dragon trilateral missile search and tracking exercise, as well as deepening cooperation on critical economic and technology areas such as supply chain resilience, the latter of which strongly resonates with Biden’s IPEFP. This comes despite the “Three Nos'' from China, which include:
No additional deployment of the US-made Terminal High Altitude Area Defense anti-missile system in Korea;
No participation in a US-led missile defense network;
No involvement in a trilateral military alliance with the US and Japan.
Their defiance of these principles suggests security concerns trump diplomatic scoldings and economic coercion - but this is not unique to Northeast Asia. Rather, it is part of a broader trend of prioritizing security over economic efficiency - as evident by recent US semiconductor policies.
While South Korea and Japan may not be overly excited about US attempts to domesticate parts of this industry, the alternative of facing a more aggressive China without allies is a far bigger threat.
Reconciliation and cooperation between South Korea and Japan would also allow the US to divert resources to focus on a potential conflict in the Taiwan Strait. Security-based cooperation between South Korea, Japan, and the US will therefore continue to vex China, and the uncertainty of Beijing’s response will cast a shadow on regional economies.