[EAI Commentary No. 17] South Korea After the US-China Summit: Asymmetric Strategies of Alliance with the US and China, and the Pursuit of a Denuclearized Peace Regime on the Korean Peninsula

Chinese President Hu Jintao paid a state visit to the United States. This visit garnered more global attention than any other in over 30 years, since Deng Xiaoping's visit to the US. Firstly, there was interest in whether the US-China relationship, which had experienced notable difficulties since President Obama's state visit to China in November 2009, would improve following this summit. Secondly, there was interest in how the US, seeking to overcome a crisis of relative decline, and China, rapidly emerging, would shape the global order in the longer term. Simultaneously, the summit's significant focus on the peace issue on the Korean Peninsula as a regional challenge also captured global attention. However, diverse analyses and predictions are being offered regarding the summit's outcome. Alongside optimistic projections that the US and China will advance as cooperative partners, as stated in the joint statement, there are also pessimistic predictions that they will repeat the pattern of conflict and containment seen since November 2009. The situation is similar concerning the Korean Peninsula. Perspectives suggesting that inter-Korean relations will improve and the Six-Party Talks will resume soon coexist with views that the conflicts have merely been papered over. Nevertheless, rather than hasty optimism or pessimism, there is a need to present a complex response strategy that transcends narrow political interests, based on a precise analysis of the summit's outcomes.

US-China Relations After the Summit

The outcome of the US-China summit can be interpreted in two ways. One can focus on whether the US-China relationship will proceed smoothly or repeatedly experience conflict, or one can concentrate on which side, the US or China, the strategic balance is tipping towards.

Optimism and pessimism coexist regarding the future of US-China relations. Firstly, given the continuous friction in 2010 caused by issues such as arms sales to Taiwan, meetings with the Dalai Lama, RMB appreciation, the Cheonan and Yeonpyeong Island incidents, and Liu Xiaobo's Nobel Peace Prize, the summit is expected to serve as a positive catalyst for improving bilateral relations. As symbolized by the extensive joint statement comprising 41 articles across six sections, the US and China reached principled agreements in a considerable number of areas. While the 2009 joint statement merely emphasized "strategic trust" for the development of US-China relations, this summit clearly defined the relationship as a "cooperative partnership" based on mutual respect and common prosperity. Chinese Foreign Minister Yang Jiechi even described it as a "journey to pioneer a new phase of cooperative partnership between the US and China."

However, a closer examination reveals that the core issues that caused friction in 2010 have either been superficially resolved without fundamental solutions or their disagreements have been openly exposed. Although the US stated it would adhere to the "One China policy," reports indicate that it still plans to proceed with arms sales to Taiwan worth $4 billion. Arms sales to Taiwan were a sensitive issue that caused discord in US-China relations last year. Regarding human rights, similar to the 2009 joint statement, this joint statement also acknowledges the differences between the two countries on human rights issues, with China emphasizing that there should be no interference in internal affairs. It is predicted that US-China relations will either transition to a fully cooperative relationship befitting the era of "Chimerica," or, rather than simply repeating conflicts like in 2010, they will expand cooperation while harboring inherent elements of conflict.

It is difficult to argue that either the US or China was dragged along by the other's pace during this summit. The US, while calling for "seeking common ground," urged China to play a responsible role befitting a major power. President Obama boldly raised issues such as Tibet and human rights, eliciting from President Hu an acknowledgment of "recognizing and respecting universal human rights." Economically, the US secured tangible benefits with the sale of American goods worth $45 billion. On the other hand, China did not yield to US pressure on core issues such as human rights, exchange rates, and trade imbalances. It succeeded in highlighting its national status as an equal partner to the US by emphasizing principles of "mutual respect" and "equality." The US accorded President Hu the respect befitting a leader of a G2 nation and made efforts to foster pride among the Chinese people by highlighting images such as the President's daughter learning Chinese and Americans learning the Chinese language. Rather than a complete victory for either side, it was a compromise between the US, which called for "seeking common ground," and China, which emphasized "coexisting with differences."

The background to the US and China's efforts to mend relations and reach a compromise lies in the changing trends of their national power. As seen in the aftermath of the 2008 global economic crisis, a kind of balance has been formed based on the perception that the US's decline is not as steep as anticipated and China's rise will take longer than expected. More directly, domestic political variables in both countries provided an opportunity for compromise. Both President Obama and President Hu face power transitions in 2012. President Obama's re-election in December 2012 is a paramount objective, and President Hu also needs to be remembered as a leader who enhanced China's national standing to maintain his political influence after his retirement in 2012. Had a minimal agreement not been reached at this summit and had the competition and conflict of 2010 continued into 2011, it would have imposed a significant political burden on both sides. However, neither side could afford to back down on core issues. Issues such as exchange rates, trade, and human rights were impossible to compromise on from the outset, and both sides focused on international political achievements aimed at their domestic politics.

Given the adjustments in US-China relations due to internal and external factors surrounding both countries, a cooperative relationship is expected to be maintained for a certain period. In the short term, this trend will likely continue until the power transition period in 2012 for both sides, and in the medium to long term, until the changes in their national power trends become significantly pronounced.

The Korean Peninsula Situation After the US-China Summit

The issue of the Korean Peninsula was a key agenda item at this summit. As clear progress was difficult to achieve on economic issues such as exchange rates and trade, attention focused on the Korean Peninsula issue. An unusual situation occurred where an amount of time comparable to that spent on US-China economic issues was invested in the Korean Peninsula issue during the leaders' dialogue. Despite mutual containment and confrontation between the US and China throughout 2010 regarding the Korean Peninsula issue, they sought to make this summit a turning point for the situation on the peninsula, believing it would be relatively easier to reach an agreement compared to other issues. The agreement reached at the US-China summit on the Korean Peninsula issue reflects their existing positions while also showing signs of "seeking common ground" to explore dynamics for change.

In summary, the agreement between the US and Chinese leaders expresses shared concern for the importance of peace and stability on the Korean Peninsula and the recent easing of tensions. As a first step, they urge sincere and constructive inter-Korean dialogue, and as a next step, they call for measures to expedite the resumption of the Six-Party Talks. Notably, they express concern over North Korea's Uranium Enrichment Program (UEP). Among these points, sincere and constructive inter-Korean dialogue is something that South Korea and the US have consistently demanded, while the resumption of the Six-Party Talks is something China has emphasized. Therefore, the summit's outcome represents a compromise of their positions. Consequently, for the summit to become a decisive turning point for the Korean Peninsula issue, additional efforts from the US, China, South Korea, and North Korea are necessary.

China's agreement that sincere and constructive inter-Korean dialogue is an essential measure is expected to exert pressure on North Korea to change its attitude. The North Korean nuclear issue and the Six-Party Talks, which had been virtually sidelined amidst the confrontation between South and North Korea and between the US and China, have now returned to the center of the Korean Peninsula issue. While the Cheonan and Yeonpyeong Island incidents were not explicitly mentioned in the joint statement, the September 19 Joint Statement and the Six-Party Talks were each mentioned three and two times, respectively. In particular, the expression of concern over North Korea's UEP in the joint statement is likely to serve as a catalyst for change. This will provide a motive for the US to actively pursue the resumption of the Six-Party Talks and is likely to lead to flexibility in the interpretation of "sincere inter-Korean dialogue" by South Korea and the US. The inclusion of the UEP issue in the joint statement is positive from the US perspective, but it is not necessarily burdensome for China. Given that North Korea itself disclosed its UEP, China had no reason to hesitate in acknowledging it. Consequently, the UEP issue will positively contribute to the US's participation in the Six-Party Talks.

The US reaction to the agreement to hold high-level inter-Korean military talks is also noteworthy. The White House explained that the expression of concern over North Korea's UEP at the US-China summit created conditions for South Korea to initiate inter-Korean dialogue thereafter. Statements have also begun to emerge within the South Korean government suggesting that the resolution of the Cheonan and Yeonpyeong Island incidents is not a prerequisite for the Six-Party Talks.

The significant attention given to the Korean Peninsula issue at the US-China summit stems from the fact that both countries perceive the recent situation on the peninsula as quite serious. Paragraph 18 of the joint statement, which addresses the Korean Peninsula issue, begins by stating the critical importance of "peace and stability on the Korean Peninsula."

China absolutely requires peace and stability on the Korean Peninsula for its sustained development over at least the next decade, before it enters into an equal power structure with the US. This aligns precisely with the "peace, stability, and denuclearization" rhetoric summarized by Chinese Foreign Minister Yang Jiechi as China's policy toward the Korean Peninsula. Peace and stability on the peninsula are the top priorities, with the improvement of inter-Korean relations and denuclearization of the peninsula viewed as first and second steps, respectively. The emphasis on the Six-Party Talks also falls within this context. Despite the limitations revealed over the past decade, where the Six-Party Talks failed to contribute substantially to North Korea's denuclearization, it is considered a useful framework for the stable management of the Korean Peninsula situation.

The US policy priorities are not fundamentally different. Maintaining peace and stability on the Korean Peninsula through the strengthening of the ROK-US alliance and deterrence aligns with US national interests. The call for improved inter-Korean relations is a consideration for its ally, South Korea. While denuclearization of the Korean Peninsula is important, preventing the proliferation of North Korean nuclear weapons is more urgent. In that sense, if North Korea and China accept the UEP issue, which is conducive to nuclear proliferation, as an agenda item for the Six-Party Talks, there is no reason for the US to avoid it. Furthermore, the Obama administration needs to demonstrate tangible progress on the North Korean nuclear issue and non-proliferation at the Second Nuclear Security Summit scheduled to be held in Seoul in 2012.

North Korea's proposal to hold high-level military talks, as if awaiting the outcome of the US-China summit, and its willingness to discuss all military issues, including the Cheonan and Yeonpyeong incidents, reveal North Korea's intentions. It aims to move towards the Six-Party Talks and US-North Korea talks. The goal is to obtain China's political and economic support for the North Korean succession and political approval from the US. It was already fully anticipated that North Korea would rapidly shift from "gunboat diplomacy" regarding the Cheonan and Yeonpyeong incidents to peaceful diplomacy. In the same vein, the possibility of resuming aggressive diplomacy remains if its objectives are not met.

From the perspective of the South Korean government, the outcome of the US-China summit is not unsatisfactory. The strategy of strongly linking the Six-Party Talks and inter-Korean dialogue over the past few years can be assessed as having achieved some results. Conditions have been created to address all pending issues, whether it be the Cheonan and Yeonpyeong incidents or denuclearization, through inter-Korean dialogue.

In conclusion, the outcome of the US-China summit is assessed as having secured a certain momentum for change in the situation on the Korean Peninsula. It is difficult to predict whether this momentum will actually lead to progress in inter-Korean relations and the resumption of the Six-Party Talks. The situation on the Korean Peninsula will depend on North Korea's attitude in the upcoming inter-Korean talks, how the South Korean government responds, and whether North Korea faithfully implements the measures required for the resumption of the Six-Party Talks.

The International Economic Order After the US-China Summit

Although the US emphasized "seeking common ground" and China emphasized "coexisting with differences" at this summit, the political and economic sectors showed slightly different aspects. While China's emphasis on "coexisting with differences" was prominent in the political sphere, the US's "seeking common ground" was prominent in the economic sphere. In the economic sphere, China, while citing the logic of "coexisting with differences" due to differing stages of economic development, was more defensive than offensive. China fundamentally accepted the logic of "seeking common ground" based on the ideology of a free market economy and the balance of interests. However, it maintained a reserved stance on exchange rate and trade imbalance issues, from the perspective that it would inevitably have to "seek common ground" as it develops over the next decade.

While China did not accept the demand for RMB appreciation, it agreed to promote a transformation of its economic development strategy by stimulating domestic demand, expanding the role of the market in resource allocation, and increasing the flexibility of the RMB exchange rate. Furthermore, it agreed to protect intellectual property rights using legitimate software and to ensure that Chinese government procurement processes do not discriminate against US companies.

The US pledged to reduce its fiscal deficit and strengthen monitoring of excessive exchange rate volatility. It agreed to continue negotiations on a Bilateral Investment Treaty (BIT), accelerate consultations for granting China Market Economy Status (MES), and reform its export control system. It also agreed to support the Chinese government's efforts to include the RMB in the Special Drawing Rights (SDR) basket.

If one focuses solely on RMB appreciation or trade imbalances, the agreements in the economic sphere may not seem particularly noteworthy. However, China's promise to strengthen the role of the market in resource allocation and exchange rate policy, thereby transforming its economic development strategy to better align with the liberal market economy order, should not be underestimated. A compromise has been reached where China seeks to "seek common ground" with the liberal market economy while prioritizing development. China has bought time, and the US has secured checks and balances.

Significant changes in the international economy centered around the US and China are not expected as a result of this summit. There will be no drastic exchange rate fluctuations or corrections in trade imbalances; rather, a gradual change is anticipated where American elements are incorporated into China's development path. Global governance systems like the G20 are also gradually taking shape, and China is adapting to them. The rapid rise of China does not directly challenge the ideology of the liberal market economy or the economic development model itself.

South Korea's Response Strategy

As explicitly stated in the summit's joint statement, the US-China relationship today is "very important and complex." The US-China relationship is evolving into a complex one that encompasses competitive and conflictual elements while simultaneously increasing interdependence and expanding motivations for cooperation. While 2010 was a period where competitive and conflictual elements were foregrounded, the need for cooperation is being emphasized after the summit. An asymmetric balance will be maintained, rather than a rapid shift in power distribution and dominance towards either the US or China.

Amidst these changes in US-China relations, the path we must choose appears clear. It is an 'asymmetric strategy of aligning with both the US and China' (聯美聯中), based on the ROK-US alliance, that actively embraces China. Groundless binary thinking is not only inaccurate but also dangerous. China's rise is an international political reality, but employing an asymmetric strategy of aligning with both the US and China, within a structure where the US's superpower status is bound to persist for a considerable period, is the way to broaden our options.

Alignment with both the US and China is also unavoidable in the international economic sphere. While continuously strengthening economic cooperation with China, our largest trading partner and trade surplus country, we must address the problems stemming from excessive dependence on China. By ratifying the ROK-US Free Trade Agreement (FTA), we should increase the proportion of the US in our economy, while simultaneously strengthening G20 diplomacy, which is transforming into a global economic adjustment mechanism, to expand our relative position in future US-China economic adjustments.

The adjustment phase in US-China relations is acting as a subtle catalyst for change in the situation on the Korean Peninsula. China's desire for peace in its periphery for economic development and the US's desire to maintain influence in Northeast Asia based on the North Korean threat are subtly converging. This is immediately manifesting as pressure for the improvement of inter-Korean relations and the resumption of the Six-Party Talks. The issue is that complete denuclearization of North Korea may not be the top policy priority for either the US or China.

Given that North Korea intends to use inter-Korean dialogue as a catalyst for the Six-Party Talks and US-North Korea talks, it is unlikely to disrupt the process for the time being. It is also possible that North Korea will agree to inter-Korean dialogue to discuss the North Korean nuclear issue. However, it is highly unlikely that North Korea will sincerely apologize for the sinking of the Cheonan and the shelling of Yeonpyeong Island, promise to punish those responsible, and pledge to prevent recurrence, or take steps toward denuclearization in inter-Korean dialogue. Furthermore, if it deems its peace offensive ineffective, the possibility of resuming aggressive diplomacy remains.

Amidst the signs of change on the Korean Peninsula, our response strategy must be complex, considering war and peace, inter-Korean relations and relations with the US and China, and short-term and medium-to-long-term perspectives simultaneously. First, the most fundamental aspect is to possess robust deterrence based on the ROK-US alliance to prevent North Korea from repeating its patterns of peace and war offensives. North Korea will engage in dialogue more seriously and predictably when it judges that its violent diplomacy is no longer effective. However, careful consideration is needed to avoid sending the wrong signal to China that our deterrence efforts are escalating tensions on the Korean Peninsula.

Second, it is necessary to view the Korean Peninsula issue, including the North Korean nuclear issue and inter-Korean relations, not merely from the perspective of North Korea strategy but from a global strategy perspective, and particularly to approach it in conjunction with China strategy. If our goal for North Korea strategy is not to await North Korea's collapse but to achieve its denuclearization and reform and opening, then strengthening strategic cooperation with the US and China, beyond inter-Korean relations, is essential for its realization. It is paramount to ensure that China, while approving the North Korean succession, links it to denuclearization and reform and opening. An isolationist approach, arguing that the Six-Party Talks are meaningless until a decisive turning point is reached through inter-Korean dialogue, is undesirable. A four-party game involving inter-Korean dialogue, the Six-Party Talks, US-North Korea dialogue, and North Korea-China relations should be pursued simultaneously to promote change in North Korea.

Third, it is necessary to clearly set short-term and long-term goals and visions for inter-Korean dialogue. With North Korea's proposal for high-level military talks and our acceptance of it, the future situation on the Korean Peninsula will primarily depend on the unfolding of inter-Korean dialogue. The problem is that North Korea is likely to use this as an opportunity to discuss a peace treaty, rather than sincerely apologize for the Cheonan and Yeonpyeong incidents, punish those responsible, and promise to prevent recurrence. In that case, the question arises whether this will be considered insincere inter-Korean dialogue, thus deeming the conditions for the Six-Party Talks immature. Of course, the Cheonan and Yeonpyeong incidents cannot be simply swept under the rug. However, it is strategically undesirable for the South Korean government to give the impression of being an obstacle to the Six-Party Talks. Rather than a fundamentalist approach that makes the complete resolution of the Cheonan and Yeonpyeong incidents a prerequisite for the Six-Party Talks, it is time to consider a strategy of continuously pursuing these issues through inter-Korean dialogue while simultaneously engaging in the Six-Party Talks.

Specifically, it is necessary to achieve some progress on the North Korean nuclear issue within the context of inter-Korean relations. It will be difficult to find a breakthrough as long as North Korea views the resolution of the nuclear issue as contingent upon the "abandonment of the US hostile policy toward North Korea." Therefore, efforts must be made to ensure that the Kim Jong-un succession, rather than inheriting Kim Jong-il's "military-first" nuclear policy, cautiously explores a new denuclearization survival strategy for the 21st century. In this context, the government's call for inter-Korean denuclearization talks is appropriate. To seriously discuss a denuclearized peace regime on the Korean Peninsula in future inter-Korean dialogue, North Korea must first take measures such as suspending nuclear tests and missile launches, after which South Korea and North Korea should begin to concretely review a 21st-century denuclearized security system.

North Korea has designated 2012 as the first year of a "strong and prosperous nation" and will seek to consolidate the Kim Jong-un succession system on this occasion. The problem is that if the Kim Jong-un succession system inherits Kim Jong-il's "military-first" nuclear line, not only inter-Korean relations but also North Korea's own future will be bleak. While inheriting the "military-first" nuclear line might help Kim Jong-un maintain power in the short term, it will ultimately lead to North Korea becoming a failed state. The failure of North Korea or its sudden collapse would not be strategically beneficial to anyone, including South Korea or China, and would cause serious problems in East Asia. Therefore, it is time to pursue a strategy for North Korea's advancement, guiding the Kim Jong-un succession system towards denuclearization and reform and opening. Alongside North Korea's own pursuit of change, collaborative efforts from the outside are necessary. It is important to proactively envision a non-nuclear peace regime that North Korea can choose instead of the "military-first" nuclear system and to work towards its realization in close cooperation with relevant parties, including the US and China. ■

Chairman

Ha Young-sun, Seoul National University

Members

Kim Sung-bae, Institute of National Security Strategy

Kim Chi-wook, Sejong Institute

Lee Dong-ryul, Dongduk Women's University

Lee Sang-hyun, Sejong Institute

Chun Jai-sung, Seoul National University

Cho Dong-ho, Ewha Womans University

Han Suk-hee, Yonsei University

The East Asia Institute (EAI) has been selected as a core research institution for the MacArthur Foundation's "Asia Security Initiative" program and receives financial support. [EAI Commentary] aims to provide in-depth analysis and practical alternatives through a balanced perspective on major domestic and international issues. When quoting [EAI Commentary], please be sure to cite the source.