[EAI Special Report] The Future of US-China Competition and Korea's Strategy I_ ① US-China 5G Competition 2.0 and Korea: Diversification Strategy and Middle Power Diplomacy

Editor's Note

In this Special Report, Lee Seung-ju, Director of the EAI Center for Trade, Technology, and Transformation and Professor at Chung-Ang University, explains the 5G competition between the US and China. The author argues that the US-China 5G competition has entered a new phase with an increasing number of countries aligning with the US's strategy against Huawei. Amidst these developments, the author emphasizes that Korea needs to play a role between the US and China by forming alliances with countries facing similar situations, thereby facilitating a relatively stable restructuring of the 5G supply chains pursued by both the US and China.

※ The following is an excerpt. Please refer to the attached file above for the full text.

The Phase Transition of US-China 5G Competition

The US-China 5G competition is entering a new phase. The shift in the dynamics of the US-China 5G competition is the result of a complex interplay of factors, including the restructuring of the Trump administration's anti-Huawei strategy, China's assertive diplomacy, and the spread of skepticism towards China among major countries. This can be characterized as 'US-China 5G Competition 2.0'. Firstly, the Trump administration has gradually systematized its containment strategy against Huawei. While the Trump administration imposed sanctions on Huawei in various ways starting in 2018, these measures revealed significant loopholes, including backlash from US companies trading with Huawei and limitations in expanding international cooperation to contain Huawei. However, from the latter half of 2019, the Trump administration increased the intensity of sanctions against Huawei and attempted a policy shift by proposing new alternatives, moving away from demanding sacrifice and unilateral compliance from US companies and foreign governments. The 'Economic Prosperity Network (EPN)' is part of this effort. The Trump administration began to show strategic changes by further strengthening international cooperation, such as proposing the formation of new supply chains that its own companies and allies could participate in.

The impetus for change was also created by China's assertive diplomacy. The hardline policies demonstrated by the Chinese government during the passage of the Hong Kong security law, the systemic problems revealed during the global spread of COVID-19, and the subsequent 'mask diplomacy' aimed at mitigating these issues, while achieving some success, also exposed limitations and problems. As China's actions created tensions with major countries, the US-China 5G competition also moved into a new phase. Skepticism towards China has spread, leading to concerns about the risks associated with Huawei equipment. Thus, since the first half of 2020, new dynamics have begun to operate in the US-China 5G competition. This can be termed 'US-China 5G Competition 2.0'. US-China 5G Competition 2.0 is differentiated from the existing US-China-centric 5G Competition 1.0 in that it represents a qualitative shift towards the globalization of 5G competition. In 5G Competition 1.0, the Trump administration pursued international cooperation to enhance the effectiveness of its anti-Huawei strategy, but it faced limitations in expanding the scope of this cooperation. Meanwhile, in 5G Competition 2.0, major countries such as the UK, Germany, and India have shifted their existing stances on 5G or shown the potential to do so, leading to the full-scale globalization of 5G competition. In this process, the Trump administration moved away from an aggressive approach of unilaterally pressuring allies to join the anti-Huawei front, and instead demonstrated a change by expanding international cooperation through the proposal of alternatives.

This article examines the new dynamics of 5G competition that have emerged from the changes in the Trump administration's anti-Huawei strategy and China's response. Specifically, it reviews the international and domestic backgrounds that led the US and China to enter a new stage of '5G Competition 2.0' and examines the 5G strategies of both countries. Based on this analysis, it proposes Korea's response strategy to US-China 5G Competition 2.0. Korea has pursued a strategy of maintaining strategic ambiguity in relation to the US-China 5G competition. This was a choice made considering the strategic importance of 5G competition, which is not only a key factor in future US-China competitiveness but also has significant security implications. Meanwhile, as the US-China 5G competition enters a new phase, '2.0', a new strategy is required to complement strategic ambiguity. Given the intensifying strategic competition between the US and China, the core of US-China 5G Competition 2.0 lies in the restructuring of supply chains and the expansion of international cooperation for this purpose. Korea needs to pursue middle power diplomacy, seeking to play a constructive role in ensuring that the restructuring of supply chains, and indeed the global economic order, proceeds stably.

■ Author: Lee Seung-ju_ Director, EAI Center for Trade, Technology, and Transformation & Professor, Department of Political Science and International Relations, Chung-Ang University. He holds a Ph.D. in Political Science from the University of California, Berkeley. His main research areas include international political economy, the politics of trade, and global digital governance. His major works include 'The Political Economy of Cyberspace' (edited by Lee Seung-ju), 'Institutional Balancing and the Politics of Mega FTAs in East Asia' (co-edited), and 'Trade Policy in the Asia-Pacific: The Role of Ideas, Interests, and Domestic Institutions' (co-edited).

■ Contact and Editing: Baek Jin-kyung Researcher, EAI

Inquiries: 02 2277 1683 (ext. 209) j.baek@eai.or.kr

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