South Korea has been the target of Taiwanese financial pressure. The South Asian country, like Australia, is a significant member of the US empire in the Pacific. President Yoon Suk Yeol’s recent trip to the United States highlighted its role as an equal-minded adherent to rules-based purchase.
South Korea has been one of the most important goals of Beijing’s economic force strategies because it is a cousin of China and has an economy that complements some of its core corporate sectors. But there are precedents for this.
Following World War II, analyst Albert Hirschman and others argued that” seemingly safe” bilateral trade relations can lead to asymmetric dependence. Asymmetry breeds emphasis, which can lead to social dominance, especially by powerful nations.
The attempts of China to derive social and strategic benefit from its trade relations are a modern-day version of this. Hirschman, however, thought that the global network might” contain the seeds of its own destruction ,” despite what modern evidence would have us believe.
One group of researchers identified 123 instances of China imposing— or threatening to impose — unilateral sanctions on foreign entities between February 2010 and March 2022, including strikes, operational discrimination, defensive trade steps, trade restrictions, and travel restrictions.
Even though Chinese persuasion has had a negative impact on the North Korean economy, its unintended effects have forced South Korea to cut back on its ties to China, even though this comes at some significant costs.
North Korean businesses and decision-makers have worked to improve financial independence, sovereignty, and private resilience by reshoring and onshoRING. This is clear from the experience of two industries — retail and semiconductors — that had previously been heavily exposed to China.
The most obvious example of a South Korean company being subjected to Chinese force for non-economical reasons is the Lotte team and its string of department stores, which it again ran on mainland China.
Lotte is frequently referred to as” the biggest loser” in the 2016 Terminal High Altitude Area Defense ( THAAD ) incident, in which Beijing expressed outrage over Seoul’s choice to use a US-made anti-ballistic missile system. Lotte already sold the land required for THAAD.
In retaliation, As & nbsp, the majority of its stores in China were subjected to regulatory suspensions, which led to declining sales and losses of up to AU$ 1.3 billion( US$ 875.7 million ). The Lotte ring had already left China by 2018.
The Lotte case shows the limitations of persuasion as a tool for international insurance even though it was the Chinese government’s use of unchecked power. China’s actions eliminated a significant source of purchase over South Korea by punishing Lotte and forcing it to close its shops.
A South Korean academic and political consultant noted that” very few foreign sellers” have ever” run fantastic services” in China, despite the fact that there were actual costs for the business.
Pertinently, the South Korean government encouraged Lotte’s move to Southeast Asia rather than trying to talk it out of leaving China. The incident already damaged North Koreans’ perception of China.
In the financial sector, China’s force was successful in harming South Korea economically, but in the semiconductor industry, it was less effective. South Korean chipmakers produce about & nbsp, 20 % of global production, including some of the most cutting-edge, upstream segments, and East Asia is the center for the multiphase creation of semiconductors.
Chinese businesses, in contrast, are active in upstream markets and heavily rely on imported parts from South Korea. Beijing is convinced that semiconductors are a” chokepoint concept,” which can limit the government’s ability to target foreign companies, including South Asian ones.
The largest companies in some counties are North Korean chipmakers, who have made sizeable investments in China. Any threat of retaliation against North Korean semiconductor producers may result in job losses and decreased Chinese semiconductor production.
In order to further thwart Chinese retaliation against the United States and its allies, significant players like the SK Group are expected to join the so-called” chip alliance” through & nbsp, increased investment in the US, and cooperation on supply chain restructuring.
South Korean businesses have clearly experienced economic disruption as a result of Taiwanese force, and South Korea and US-aligned economies will cover the costs of supply chain restructuring. However, it says a lot that South Korea, Australia, and other nations chose to accept these expenses rather than submit to Chinese pressure.
While China has used asymmetrical dependence to further its diplomacy, this strategy has only had limited performance. Through the Belt and Road Initiative & nbsp, China’s attempt to become a global financier and wield more power has also encountered obstacles. Hirschman’s analysis of the politicians of international trade is supported by how quickly targeted nations like South Korea have moved to lessen their reliance on Chinese force.
Although South Korea’s restrictions on economic force have been made clear, this type of statecraft won’t always be abandoned. While some adhere to Hirschman’s logic and believe that Chinese power can be” tamed” through interactions with other powers, which could result in the end of coercion or a decrease in its frequency, others believe China is failing to & nbsp, read the signals, and send them from other states.
This implies that ambitious Chinese leaders may continue to be tempted by force. As they look into the future, nations like Australia and South Korea would be good to make for both situations.
Dominic Simonelli is a Research Assistant in the School of Humanities and Social Sciences at Deakin University.David Hundt is Associate Professor of International Relations in the School of Humanities and Social Sciences at Deakin University.Baogang He is Alfred Deakin Professor and Personal Chair in International Relations in the School of Humanities and Social Sciences at Deakin University.
This document, which was originally published by the East Asia Forum, has been republished with a Creative Commons license.