[New Year Special Commentary Series] ③ Japan's Security Strategy Shift and South Korea's Diplomacy toward Japan: From Forced Labor Diplomacy to Strategic Diplomacy

1. Introduction

As US-China strategic competition expands from trade to advanced technologies, finance, politics, values, and even the military domain, countries like Japan and South Korea, situated between these two great powers, face deepening strategic dilemmas. Amidst this, Japan revised its three key security documents—the National Security Strategy, the National Defense Strategy, and the Defense Force Development Plan—in December, comprehensively adjusting its security strategy. The plan to respond through three aspects—(1) enhancing comprehensive national power including diplomacy, defense, economy, technology, and intelligence; (2) strengthening the US-Japan alliance and cooperating with like-minded countries; and (3) improving integrated deterrence through advanced technology development—somewhat resembles the US National Security Strategy (NSS) released last October, but tailored for Japan.[1]

South Korean media reactions to the security document revisions have focused on Japan's acquisition of 'counterstrike capabilities' or 'enemy base attack capabilities,' the potential for Japan to intervene militarily on the Korean Peninsula, or Japan becoming a nation capable of waging war. However, what truly warrants attention is Japan's designation of China as a security competitor and its plan to increase defense spending from the current 1% of GDP to 2% by 2027. The defense buildup is directed towards enhancing counterstrike capabilities on one hand, and investing in cyber, space, and electronic warfare capabilities for 'integrated deterrence' on the other. If Japan significantly bolsters its military power and establishes an integrated deterrence system with the United States, it will inevitably accelerate an arms race among major Northeast Asian powers, intensify economic security competition, and usher in a new phase for the South Korea-US-Japan security cooperation framework.

South Korean diplomacy toward Japan in 2022 was heavily focused on resolving the forced labor issue, with the expectation that resolving historical grievances would restore trust and enable future-oriented cooperation. While progress has been made in addressing the issues, leading to a clearer direction for improving relations, the international order has entered a period of great transformation due to events such as the war in Ukraine, shifts in US-China relations, and post-pandemic economic volatility. These changes present complex strategic challenges for both South Korea and Japan. Diplomacy toward Japan in 2023 must shift from focusing on forced labor to discussing security and economic strategies. Alongside progress on historical issues, it is time to implement genuine two-track diplomacy by creating opportunities for close exchanges at various levels on strategic agendas.

2. Japan's Foreign Policy Direction in 2023

Prime Minister Fumio Kishida declared that Japan is pursuing a "dramatic transformation" in its security policy at a "historical turning point" with the announcement of the three security-related documents. He stated that in an era of complex entanglement between "cooperation and division, collaboration and confrontation," Japan would "fundamentally strengthen its defense capabilities" in response to a "historical turning point" in the strategic environment, characterized by "strengthening of nuclear-missile capabilities by neighboring countries and regions, rapid military buildup, attempts to unilaterally change the status quo by force, and blurring lines between wartime and peacetime such as cyber attacks, with security concerns expanding into the economic sphere."[2]

The core target of this military buildup is China. The statement asserts that "current Chinese foreign policy and military movements are a serious concern for Japan and the international community, posing an unprecedented strategic challenge to ensuring Japan's peace and security and the peace and stability of the international community, and strengthening the international order based on the rule of law." Therefore, Japan will "respond through comprehensive national power and alliances with allies and like-minded countries."[3] Japan is clearly aligning with the United States on security matters to counter China.

In the National Security Strategy established in 2013 during the early Abe administration, China was referred to as a country of "concern" and a target for building "strategic reciprocal relations." However, nine years later, China has been reclassified as a "challenge." Consequently, to achieve strategic balance with China, Japan plans to invest a substantial 43 trillion yen (approximately 430 trillion won) over the next five years, doubling its defense spending from the current 1% of GDP to 2%. This investment will focus on strengthening defenses in the southwestern region, particularly the Nansei Islands facing China's maritime expansion. The so-called 'counterstrike capability' or 'enemy base attack capability' is primarily aimed at preparing for Chinese infiltration (amphibious operations) rather than North Korean missiles.

While Japan's defense spending increased by only 1.1 times over the past 30 years, China's defense spending surged by a staggering 39 times during the same period, now exceeding Japan's defense budget by more than fivefold. Therefore, even with a rapid increase in its own military capabilities in the near future, it is virtually impossible for Japan to achieve a balance of power with China, making the strengthening of the US-Japan alliance essential. A noteworthy aspect is Japan's commitment to invest in responding to risks in cyberspace, outer space, electromagnetic spectrum, and maritime domains. Japan's strategy to seamlessly connect various domains of warfare and spectrums of conflict aligns precisely with the US pursuit of 'integrated deterrence' as a strategy to contain China. Japan aims to upgrade its traditional military alliance system to a new dimension.

However, Japan is not entirely aligning with the US strategy toward China. While the US pursues integrated deterrence militarily and de-coupling economically, its ultimate goal or final orientation in US-China relations remains unclear. Consequently, the US is managing China across a relatively broad spectrum, from hardline approaches of military deterrence and economic de-coupling to structural engagement. Japan's approach to its relationship with China, while also lacking a clear ultimate objective, shows a relatively distinct strategic difference from the US. It pursues a dual strategy: a strategic competitive relationship with China in security matters, while maintaining a strategic reciprocal relationship or interdependence in economic matters.

Although Japan did not consider China a security competitor for a long time, it has been engaged in a competitive relationship since the clashes in the Senkaku (or Diaoyu Islands) waters in 2010 and 2012, increasing its military capabilities. Conversely, China is Japan's most important economic partner. As of 2021, the trade volume between Japan and China reached 1.6 times that of US-Japan trade, with China being Japan's largest export market and a key component of Japanese companies' global supply chains in terms of production. Therefore, while Japan naturally considers increasing defense spending in the face of security tensions, it seeks to avoid choices that would restrict economic exchange or entail economic sacrifices for the sake of security.

Therefore, the key variables determining Japan's foreign policy direction in 2023 will be US-China relations and the US strategy toward China. If the US leans towards a hardline military deterrence strategy and economic de-coupling in economic security, Japan's foreign policy will face a significant dilemma. If the "US-Japan vs. China" military competition, in which Japan actively participates, accelerates security dilemmas, pressure to reduce trade, investment, and technological cooperation with China will intensify under the guise of economic security. In this scenario, Japan would have to endure considerable economic sacrifices.

Conversely, there is a possibility that both the US and China will engage in "exploration" and "adjustment" to manage competition, avoid confrontation, and mitigate security dilemmas through sustained dialogue and constant crisis management. The temporary easing of US-China strategic competition observed at the US-China summit in Bali last November could continue throughout the year. The Biden administration will prioritize policies to control inflation and prevent economic recession, while the Xi Jinping administration will likely focus on domestic issues such as managing the aftermath of easing the zero-COVID policy, economic recovery, and political stability. In this context, the leaders of both the US and China may consider exploring and adjusting their relationship with the other country with a focus on domestic priorities. This scenario would provide Japan's foreign policy with greater room for maneuver and a rationale for maintaining its dual economic-security structure with China.

3. South Korea's Challenges

The issue lies with South Korea. Beyond the question of how to control North Korea's nuclear armament, how should South Korea respond if the US and Japan's integrated deterrence strategy toward China becomes more concrete and sophisticated? While South Korea-US-Japan security cooperation has historically served as a mechanism to counter North Korean threats, in February 2022, the foreign ministers of the three countries announced an expansion of cooperation, strongly opposing "any action that attempts to change the status quo and raises tensions in the region" and emphasizing "the importance of trilateral cooperation to strengthen the rules-based economic order and ensure prosperity in the Indo-Pacific region and the world." As an integrated deterrence system is established between the US and Japan through follow-up measures such as the revision of the US-Japan guidelines, pressure on South Korea to participate will increase. Particularly, if a Chinese invasion of Taiwan is contemplated, the US will demand joint deterrence functions from South Korea, the US, and Japan.

Is there a way for both South Korea and Japan to secure a military balance favorable to South Korea and the US without excessively provoking China, thereby preventing Japan's military buildup from escalating the Northeast Asian security dilemma? The situation demands strategic consultations far beyond the current discussions on resuming GSOMIA (General Security of Military Information Agreement). Discussions on South Korea-Japan security cooperation are entering a new phase.

The second challenge is strategic economic cooperation. The revised National Security Strategy incorporates the contents of the Economic Security Promotion Act, enacted in June 2022, emphasizing the strategic stability, superiority, and indispensability of its own industries and technologies to foster a virtuous cycle between security and the economy. By protecting and nurturing strategically important industries and technologies, Japan aims to secure strategic autonomy while also achieving economic benefits. Given that the Ministry of Economy, Trade and Industry essentially leads economic security policy, Japan tends to justify and pursue industrial policy interventions through security logic (e.g., policies to promote the semiconductor industry).[4] This industrial policy approach manifests as managed trade, which could contradict the objective of Japan's regional strategy, the "Free and Open Indo-Pacific (FOIP)," namely the establishment of an international economic order based on freedom and openness governed by rules.

In contrast, South Korea's economic security policy is largely characterized by a defensive response. It focuses on domestic and international efforts, such as establishing an early warning system to prepare for the vulnerabilities of the South Korean economy, which is deeply embedded in networks of economic interdependence—for instance, shocks from war, pandemics, or disasters, or the weaponization of interdependence by specific countries (i.e., economic coercion). Therefore, South Korea and Japan exhibit policy gaps in economic security, necessitating careful discussions to find common ground for cooperation.

The greater dilemma facing both South Korea and Japan is that as major powers engage in competition to secure economic security, an economic security dilemma arises between them, similar to the security dilemmas that emerge in military contexts. The US and China are competitively strengthening sanctions and strategically fostering technologies and industries where the other is vulnerable, accusing each other of misusing economic security to create threats. As this bilateral competition intensifies, other countries sharing supply chains will face pressure for unwanted strategic realignment, and the global economic order based on openness and free trade will fall into chaos. South Korea and Japan, which achieved high growth within the liberal world order and have also experienced the negative impacts of economic coercion, must now aim for reglobalization—a globalization that prevents the rollback of globalization and is inclusive and resilient, based on liberalism.

Beyond resolving micro-level issues such as the export control dispute (White List issue), South Korea and Japan must initiate mutual dialogue to counter the economic nationalism of major powers, prevent the excessive securitization of the economy, and establish rules and norms for reglobalization within the broader objective of defending the rules-based order. Specific areas for cooperation include defining the scope of dual-use technologies with significant national security implications, establishing criteria for industrial subsidies, defining national security exceptions, and establishing dispute resolution procedures.

Regarding policy toward China, while there is limited room for cooperation between Japan and South Korea in the security domain, there is potential for cooperation in the economic sphere. Although de-coupling from China may be unavoidable in areas requiring economic security considerations, such as advanced technologies with significant military-security implications, efforts are needed in other sectors to maintain the network of economic interdependence between South Korea and Japan. The CPTPP, to which China has applied for membership, can serve as a key mechanism for establishing rules and norms, as well as for incorporating China into the regional order of the Indo-Pacific and engaging with it structurally. To emerge as a rule-maker, South Korea should be able to apply for CPTPP membership in 2023.

4. Conclusion

Diplomacy toward Japan in 2023 must move beyond the issue of forced labor. Since the Supreme Court ruling on forced labor in 2018, the two countries have grappled with the forced labor issue, a key point of contention in South Korea-Japan relations, for four years. Prior to this, the controversy surrounding the comfort women agreement led to a crisis of trust between the two nations, and relations deteriorated further during the four years of conflict over forced labor. The Yoon Suk-yeol administration inherited the difficult task of resolving these issues under severe conditions of lost trust.

Although the Yoon Suk-yeol administration is fully engaged in bilateral diplomacy with the Japanese government and domestic stakeholders, it is difficult for the Kishida administration, which suffers from low approval ratings and lingering distrust toward South Korea, to pursue forward-looking compromises with South Korea. Similarly, if the South Korean government makes significant concessions to the Japanese government, which shows no signs of repentance regarding the forced labor issue, it is highly likely to face public opposition, including from victims. Therefore, even if both governments reach an agreement on the forced labor issue after immense effort, trust may not be restored to the desired extent, nor may future-oriented cooperation be initiated. The resolution of the forced labor issue is not a prerequisite for improving relations.

The South Korean government must not miss the larger trends of the era while focusing on resolving historical issues. While making progress on resolving pending issues, it must simultaneously and earnestly pursue strategic consultations on security and economic agendas arising from the great transformation of the international order.■

[1] Jeon, Jae-sung. 2023. “Changes in the World Order in 2023 and South Korea's Strategy toward the US.” EAI New Year Special Commentary Series ①. January 3.https://www.eai.or.kr/new/ko/pub/view.asp?intSeq=21656

[2] Prime Minister Kishida's Press Conference (12/16/2022)https://www.kantei.go.jp/jp/101_kishida/statement/2022/1216kaiken.html

[3] Ibid.

[4] Lee, Jeong-hwan. 2022. “The Dual Structure of Japan's Economic Security Policy Axis: The Latency of Diplomatic-Security Convergence and Debates on Growth Strategy Methodology.” *Journal of Japanese Studies* 55: 91-119.

■ Author: Yeol Son_ President of EAI. Professor at the Graduate School of International Studies, Yonsei University. He holds a Ph.D. in Political Science from the University of Chicago. After serving at Chung-Ang University, he is currently a professor at the Graduate School of International Studies, Yonsei University, and President of the East Asia Institute (EAI). He has held positions such as Dean of the Graduate School of International Studies, Dean of Underwood International College, Director of the Institute for Sustainability Studies, and Director of the Institute for International Studies at Yonsei University. He has also been a Visiting Professor at the University of Tokyo, a Visiting Scholar at the University of North Carolina (Chapel Hill), and the University of California (Berkeley). He served as President of the Korean Association of International Studies (2019) and President of the Association for Japanese Studies (2012). He has been a Senior Fellow at Fulbright, MacArthur, Japan Foundation, and Waseda University's Advanced Research Center. He has also served as a consultant for the Ministry of Foreign Affairs, the Korea National Diplomatic Academy, the Northeast Asian History Foundation, and the Korea Foundation, as well as a specialist member of the Committee for Northeast Asian Cooperation. His research areas include Japanese foreign policy, international political economy, East Asian international politics, and public diplomacy. Recent publications include *Conditions for Presidential Success in 2022* (co-edited, 2021), *Policy Recommendations for the New Government's Foreign Policy in 2022* (co-edited, 2021), *The Story of BTS's Global Appeal* (co-edited, 2021), *South Korea's Choices After the Crisis* (co-edited, 2021), Japan and Asia's Contested Order (2019, with T. J. Pempel), Understanding Public Diplomacy in East Asia (2016, with Jan Melissen), “South Korea under US-China Rivalry: the Dynamics of the Economic-Security Nexus in the Trade Policymaking,” The Pacific Review 23, 6 (2019), and *South Korea's Middle Power Diplomacy* (co-edited, 2017).

■ Editor: Hansu Park_ EAI Research Fellow

    For inquiries: 02 2277 1683 (ext. 208) | hspark@eai.or.kr