China's THAAD strategy

By Lee Seong-hyon

South Korea should buckle up for a long, arduous ride against China's tidy incremental economic pressure to backpedal on THAAD. China will continue to ratchet up its "economic card" as the primary means to inject pain into South Korea's economic bloodstream because it proved very effective in making other countries surrender. China won't stop, much less pause, because it also believes that there is a real chance for South Korea's next administration, likely under a progressive president, to reverse the decision. South Korea's strategists should map out a plan in which its economy can sustain itself without the Chinese market. The challenge shouldn't be underestimated.

When then U.K. Prime Minister David Cameron met with the Dalai Lama in 2012, it sparked fury in Beijing. China canceled senior Chinese leader Wu Bangguo's trip to the U.K. All ministerial contact was suspended by China for 14 months. Trade plummeted.

One year later, it was the U.K. that surrendered. Cameron dispatched a pleasure squad of politicians to China in an undisguised charm offense to woo Beijing. Cameron sent a signal to China that he had "no plans" to meet with the Dalai Lama again. The British media were enraged. Many Brits felt humiliated.

"Kowtowing to China's despots is morally wrong," said a column in the British newspaper The Guardian. "Instead of sucking up to the despots of Beijing, we should stand up to them. For moral reasons and on the grounds of national and international security," it said.

Later China's Communist Party leader Xi Jinping visited the U.K. with £40bn worth of deals. Cameron said the U.K. is China's "best partner in the West." Cameron even took Xi to a 16th-century Buckinghamshire pub to stage a bromance scene. Xi said Britain made a "visionary" choice to become China's best friend.

Diplomatic flirtation sometimes looks like a humiliating job. But such may be reality too. After receiving the huge sum of the Chinese deals and investment, Cameron said, "What this really means is jobs, it means livelihoods."

Today, the UK is China's largest investment destination in Europe. Cameron remains a controversial figure.

A series of countries rose up to question and challenge China's behavior in recent years, on the issues ranging from human rights, the Dalai Lama, sovereignty, the Nobel prize choice, and territorial disputes. They include the U.K, France, Norway, Taiwan and Mongolia. To all of them, China used the same tool for punishment: ban them from access to the Chinese market and investment. It remarkably worked well. So, China will use the same tool against South Korea. Will South Korea be any different?

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The paramount task for South Korea's economic strategists is to assess whether South Korea's economy can decouple from the Chinese market and survive? Even if South Korea can claim a moral victory over China by accusing the latter of behaving as a bullying "hegemon" that treats South Korea as if it were a "vassal state," the task needs to be implemented urgently and objectively.

It is also likely that China will find a way, as it did so with other countries, to either dodge or stonewall the criticism that China's economic retaliation to South Korea is in violation of WTO, FTA rules. The international community won't likely come to South Korea's rescue. They are listless bystanders.

So far, there is only one country that didn't kowtow to China and still survive: Japan. After facing China's economic retaliation following the conflict over Senkaku (Diaoyu in China) Islands, Japan sped up the process of reducing its economic overdependence on China, by diversifying production facilities and investment to Southeast Asia.

For Japan, it was not short-term therapy, but a long-term organic process. For instance, Japan's education ministry provided generous scholarships to Southeast Asian students. At Japanese universities, they became fluent in the Japanese language because the language requirement was linked as a condition for the continuation of the scholarship. After graduation, these students returned to their home countries and worked for Japanese companies. Japan has found this model sustainable.

Japan also paid special attention in upgrading their tourism industry, by putting up ubiquitous Chinese language translations even in remote local tourist villages. Despite the Chinese government's various tactics to discourage Chinese tourists from visiting Japan (for instance, oral instructions, no documents, so as not to leave any paper trail that may later incriminate the Chinese government), Chinese tourists have been flocking to Japan.

Chinese tourists' shopping appetite is enormous. China's state-controlled TV lamented about the "unpatriotic" Chinese shoppers in Japan who even bought electronic toilet seats that heat up their butts. More reserved Chinese academics quietly admire Japanese society's good-citizenship, social etiquette, rule-of-law practice, and friendliness.

Since China also needs advanced Japanese technology for upgrading its own industry, it also grudgingly patched up relations with Japan, while still diplomatically cold-shouldering it.

Faced with the THAAD retaliation, can South Korea become another Japan? South Korea should decide whether it wants to score the moral victory over China over the THAAD issue. But equally important, it should also realistically anticipate the opportunity cost that will entail.

South Korea should also stop entertaining wishful thinking, for instance, about U.S. Secretary of State Rex Tillerson's upcoming visit to China. Tillerson will be in Beijing to primarily prepare for a summit between Donald Trump and Xi Jinping, not mediate the THAAD dispute. Be realistic. China thinks time is on its side and it will be South Korea that will first say "ouch!" So, buckle up. It will be a long, winding, bumpy ride. Also make sure to use skillful communicators who understand Chinese culture and their way of doing things. Mishandling of communication and ineffective use of strategic ambiguity on THAAD was poignantly overlooked by the South Korean media.

Lee Seong-hyon, Ph.D., is a research fellow at the Sejong Institute. Reach him at sunnybbsfs@gmail.com