[EAI National Security Panel Report] Top 10 Tasks for Korean Diplomacy in 2020: Executive Summary

An Executive Summary report containing key policy proposals from the “Top 10 Tasks for Korean Diplomacy in 2020” project, undertaken by the National Security Panel (chaired by Ha Young-sun, Chairman of the East Asia Institute), has been published. The National Security Panel conducted complex research considering the networked connections between issues, focusing on four clusters: ‘Governance,’ ‘Security,’ ‘Economy,’ and ‘Environment,’ to prospect and analyze the challenges facing Korean diplomacy in the 2010s from a mid-to-long-term perspective and propose concrete policies.

This report is based on the following NSP Report series.

Governance Cluster

Changes in US-China Relations and Future Diplomatic Tasks for Korea

Chung Jae-sung (Seoul National University), Ju Jae-woo (Kyung Hee University)

Security Cluster

Future Security Order in Asia and Korea's Response Strategy

Lee Dong-sun (Korea University)

Changes in Chinese Politics and Economy and Prospects for Stability

Lee Dong-ryul (Dongduk Women's University), Seo Bong-kyo (Dongduk Women's University)

Kim Jong-un's North Korea and Co-Prosperity/Complex North Korea Policy

Kim Sung-bae (Institute for National Security Strategy)

Tasks and Prospects for Korean Maritime Policy in the 2010s

Goo Min-kyo (Seoul National University)

Economy Cluster

The Spread of FTAs in Asia and Korea's Strategy: Focusing on the Potential for Multilateralization of Bilateralism

Kim Chi-wook (University of Ulsan)

The Changing Global Financial Order and Korea's Choices: Linking Regional and Global Multilateralism

Lee Yong-wook (Korea University)

Changes in the Architecture of Development Cooperation in the 21st Century and Korea

Lee Seung-joo (Chung-Ang University)

Environment Cluster

International Politics of Environment and Climate Change and Korean Diplomacy

Shin Bum-sik (Seoul National University)

Population Aging and Security in Northeast Asia

Shin Sung-ho (Seoul National University)

The New Global Energy Architecture and the Direction of Korea's Energy and Resource Cooperation Diplomacy

Kim Yeon-gyu (Hanyang University)

Environment: Changes in the Diplomatic Environment and the Construction of a New World Order

Changes in the Diplomatic Environment of the 2010s

The first decade of the 21st century witnessed a history of tumultuous changes. We experienced the 9/11 attacks, the global financial crisis originating in the US, and the Eurozone debt crisis. We witnessed the relative decline of traditional developed countries and the rapid rise of emerging economies, and experienced a crisis in global governance. These changes occurred along with the grand currents represented by globalization, informatization, and democratization, and it is anticipated that the next decade will also see complex changes in terms of power distribution structures, global political issues, actors, and power resources.

First, the gap between nations that actively utilize the changing tides of the era and those that do not is widening, leading to changes in power distribution structures at the global and regional levels. Particularly since the 2008 global financial crisis, the US, Japan, and Europe have been on a path of relative stagnation, while emerging countries, led by China, have recorded solid growth and increased their standing in the international community. Consequently, a search for a new world order to replace the US-centric unipolar system is underway.

Second, amidst the currents of globalization, informatization, and democratization, the number and influence of non-state actors such as terrorist groups, corporations, non-governmental organizations, and individuals have rapidly increased, making the establishment of complex networks with various actors beyond state-to-state relations an important diplomatic task.

Third, globalization, informatization, and demographic changes are presenting new sets of global problems such as environmental degradation, the proliferation of weapons of mass destruction and terrorism, resource depletion, and inequality. These problems are linked with traditional problem sets, creating chain reactions of crises. The ability to closely understand the patterns of linkage between issue areas and respond complexly is required.

Fourth, to respond to the challenges associated with the emergence of new actors and issue areas, it is necessary to strengthen state actors through network power and wisely combine traditional hard power resources such as military and economic strength with new soft power resources such as cultural power, environmental power, knowledge power, and governance power.

Architecting New Governance

The current architecture of global and regional order faces difficulties in properly accommodating the new changes in power distribution, actors, issue areas, and power resources. 21st-century world politics is experiencing network governance, where diverse state and transnational actors are networked across multiple issue areas to autonomously manage and coordinate problems, along with the participation of emerging countries rapidly rising alongside the relative decline of US hegemony in global and regional governance. In other words, the 21st-century world order is becoming complex with the overlap of modern order, characterized by power struggles and balance of power, and post-modern transition, characterized by governance through networks.

In the 2010s, the world must architect new governance to address the immediate challenges amidst rapidly changing realities. In Korea's case, to revitalize the global economy, which has entered a path of long-term recession due to the Eurozone debt crisis following the 2008 financial crisis, it must undertake the crucial tasks of rebuilding global governance in issue areas such as finance, trade, energy/resources, development, and environment, while simultaneously overcoming conflicts between geopolitical competition and economic interdependence to build a new order in East Asia and the Korean Peninsula suitable for the 2010s.

Challenges: A New Order in East Asia in the US-China Era, Kim Jong-un's North Korean Regime and the Korean Peninsula, and Joint Participation in Global Governance

Amidst various changes in the diplomatic environment, including shifts in the East Asian power distribution structure, the emergence of new international political issues, diversification of actors, and changes in power resources, Korean diplomacy in the 2010s must prioritize addressing three immediate challenges. First, the task of rebuilding the changing regional order in East Asia amidst the deepening geopolitical competition and economic interdependence between the US and China. Second, the task of establishing a new strategic relationship with Kim Jong-un's North Korean regime and preparing for future Korean Peninsula governance. Third, the task of actively participating as a middle power in the construction of global governance in areas such as trade, finance, development cooperation, energy/resources, and environment. In particular, the future of the Korean Peninsula in the 21st century will be determined by future strategic planning and implementation regarding the new order in East Asia in the US-China era and the denuclearization of the Kim Jong-un regime.

A New Order in East Asia in the US-China Era

The most notable change in the current world order is China's rapid increase in national power. In terms of economic strength, China's Gross Domestic Product (GDP) is projected to surpass that of the United States in the 2020s. Due to its rapid economic growth, China has emerged as the largest trading partner for major Asian countries such as Japan, South Korea, Taiwan, and Australia over the past decade, and has surpassed the US in trade volume with most Asian countries, excluding the Philippines and Malaysia. Particularly since the 2008 global financial crisis, China has expanded its economic dominance in the region beyond being a production network hub, leveraging its vast foreign exchange reserves and financial power.

In terms of military power, China has increased its defense budget by over 15 percent annually. In 2011, China's defense spending ($120 billion) ranked second globally, representing one-sixth of that of the United States ($698 billion). China will continue to narrow the military spending gap with the United States, which must reduce its military expenditure by $478 billion over the next decade. Furthermore, China is actively pursuing military modernization, including the development of spacecraft, missile defense, strategic weapons such as missiles and nuclear weapons, deployment of state-of-the-art fighter jets, and construction of nuclear submarines and aircraft carriers.

While China's national power is growing significantly, a more cautious assessment of its relative standing compared to US national power is necessary. First, simple great power competition and hegemonic competition are fundamentally different issues. Unlike simple great powers, a hegemon must possess overwhelming power compared to other nations and the ability to shape the international order and gain the consent of other nations for it. Therefore, hegemonic competition includes competition for leadership in the world order. It remains uncertain whether the current US-China competition will remain a simple great power competition or escalate into full-fledged hegemonic competition. It is unknown whether China, despite its rapid rise in economic and military power, will possess the capacity to grow into a hegemon that can replace the US. Moreover, given that China itself emphasizes that it does not aspire to hegemony, the potential for US-China competition to become hegemonic competition requires careful consideration.

Second, when considering factors beyond simple economic and military figures, such as the levels of science and technology, information, and knowledge, which will significantly influence national power in the 21st century, the reduction of the power gap between the US and China will proceed over a longer term. For example, while globalization may impose a heavy burden on the US for maintaining hegemony, accelerating its relative decline, it could also bring structural benefits favorable to the US, potentially leading to the long-term maintenance of US hegemony. In terms of military power, considering resource allocation beyond simple military spending comparisons, China, which must maintain a strong army for geopolitical reasons, cannot focus on developing its navy and air force, whereas the US, which does not border major powers, can concentrate its defense budget on developing its navy and air force. Therefore, it is also possible that the US, superior in naval and air power, will exert leadership in maritime regions, while China, with its superior army, will exert leadership in adjacent continental regions.

Meanwhile, the US is struggling to maintain its global leadership amidst a relative decline in its national power. The Bush administration's eight-year primacy or hegemonic strategy has concluded, and the Obama administration has shown a tendency towards a strategy of selective engagement based on multilateralism. Following the security and legitimacy crises after the 9/11 attacks and the economic crisis of 2008, it has become difficult to pursue the existing hegemonic strategy. Notably, following its declaration of an "Asia Pivot," the US has taken active steps to restore its position and status in the East Asian region. Furthermore, the US emphasizes that its Asian policy goals are values such as economic growth, regional security, democracy, and human rights promotion, and its main policy tools are bilateral alliances, partnerships with emerging countries like China, and multilateral institutions.

In the short term, the US is seeking a framework of engagement and cooperation between great powers, adjusting the timing of its balancing strategy towards China. However, in the long term, to prepare for the possibility of China challenging US hegemony, it is striving to both bind China within the US framework and establish mechanisms to check China.

China is likely to maintain a unique state of 'fragile stability' for a considerable period by adhering to its resilient authoritarian system. On one hand, it will secure legitimacy through economic growth, social welfare, administrative efficiency, achievements in foreign policy, and the promotion of Chinese nationalism. On the other hand, it will maintain the system through strict internal controls. However, as there are no clear solutions yet to address the grievances of marginalized groups such as workers and farmers, social unrest and instability are likely to become increasingly severe.

The Chinese economy also faces a high probability of a sharp slowdown in the short term, but it faces the challenge of expanding private consumption, reducing income inequality, and controlling inflation at an appropriate level in its growth model. The instability of external variables is also a significant threat.

The Chinese Communist Party and government have the will and expectation to overcome these political and economic crisis factors, which do not pose a fundamental threat to the system, by realizing China's rise. Over the next decade, China will focus on achieving a moderately prosperous society in all respects (全面小康社會), concentrating on stable economic development, boosting domestic demand, and resolving domestic economic inequality. To achieve this, it is wise to avoid pursuing excessive hegemonic competition with the US prematurely. Nevertheless, through the discourse of "core interests," it clarifies that there are core interests that cannot be absolutely compromised at the national strategy level, including: first, the political system (國體), form of government (政體), and political stability of China; second, the security of China's sovereignty, territorial integrity (完整), and national unification; and third, ensuring the sustainable development of China's economy and society.

From this perspective, China also has no intention of actively employing a full-scale balancing strategy against the US in the short term. While it is true that US leadership has weakened due to the economic crisis, joint efforts to resolve crises at the national strategy level align with China's grand strategy. In the short term, China will pursue cooperation between great powers and prioritize economic development. However, whether China will pursue hegemonic power transition by challenging US hegemony in the long term, or whether it will remain a competitive relationship between great powers, will largely depend on how the new order in East Asia is constructed.

While existing international relations theories such as power transition theory, offensive realism, liberalism, and constructivism present optimistic and pessimistic views regarding the power transition between the US and China, the US-China relationship is expected to continue in a phase of overall cooperation in the short term. However, as seen in issues such as arms sales to Taiwan, the Dalai Lama's visit to the US, joint US-ROK maritime exercises following the Cheonan incident, and disputes in the South China Sea and the Senkaku Islands, despite the existence of significant reasons for both countries to pursue structural cooperation, strategic distrust and competition can easily escalate over various issues related to China's defined core interests, and this can spread to related countries. Furthermore, if memories of such strategic competition and distrust accumulate, the possibility of triggering hegemonic competition between the US and China in the long term, as suggested by power transition theory or offensive realism, cannot be entirely ruled out... (continued)