Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Korea's two-track diplomacy between U.S., China losing luster
A truck driver holds an empty bottle of diesel exhaust fluid at a service area in Yongin, Gyeonggi Province, Wednesday. Korea Times photo by Shim Hyun-chul
By Nam Hyun-woo
By Nam Hyun-woo
The government's two-track diplomacy of separating its national security and economic interests is raising some serious questions on its efficacy, after Seoul experienced some negative consequences in recent weeks that seem to be byproducts of the ongoing diplomatic row between the U.S. and China.
So far, the government has engaged in a “balancing act” between the two superpowers ― standing as an ally of the U.S. on security matters, while partnering with China for economic reasons. However, experts say the U.S.-China conflict is now blurring the line between national security and the economy, making Korea's conventional strategy outdated.
In recent weeks, Korea has been suffering from a nationwide shortage of diesel exhaust fluid (DEF), an additive used in diesel engines to reduce emissions. The shortage is largely attributable to a row between the U.S. and China that also involved Australia. After China banned coal imports from Australia, a strong ally of Washington, it created a sudden shortage of coal that it uses for domestic power generation.
To address this Beijing restricted the use of coal for any other purpose, affecting coal-related exports that included urea, a byproduct of burning the fossil fuel and the main constituent of DEF. Korea's inventory of DEF, also called “urea water,” plunged because the country heavily relies on China for imports of urea.
Though the government managed to come up with a stopgap measure by getting China to comply with contractual agreements to export 18,700 tons of urea to Korea, Wednesday, there is the chance of further unexpected issues arising. This is especially so regarding the price of urea ― also used in fertilizers ― which is surging and could result in a rapid increase in crop prices and consumer goods containing them.
“As global value chains become more complex, it is becoming increasingly difficult to predict what kind of consequence we should expect from a certain event,” said Sung Tae-yoon, an economics professor at Yonsei University. “There have long been concerns that the U.S.-China conflict could affect the stability of global supply chains and cause an impact on domestic economic activities. There are many possibilities for the conflict to bring economic consequence in the future.”
gettyimagesbank
The recent U.S. demand for chipmakers to submit semiconductor-related data is another case where the U.S. and China are both seeing economic issues become further intertwined with national security.
On Nov. 9, Samsung Electronics and SK Hynix ― Korea's top two memory chip firms ― along with other global top-tech companies submitted this information demanded by the U.S. Department of Commerce. According to Korea's industry minister, the U.S. explained it was an “inevitable request" to address imbalances in the semiconductor supply chain, but the move has been widely interpreted as Washington's effort to develop a U.S.-centric global supply chain and besiege Beijing economically.
This, however, was a tough choice for the Korean tech giants, which have to be wary of a retaliation from China, which stands as one of their largest markets.
Global Times, China's state-run news outlet, reported Nov. 8 that “Samsung has partnerships with Chinese firms including Huawei” and most of the information the U.S. demanded “largely falls under commercial secrets and product parameters, and some Chinese mainland firms are among them,” adding there was the possibility of “legal action from Chinese firms in the event of losses.”
With uncertainties growing on diplomatic and national security issues affecting the economy, analysts are saying that Korea's approach of separating its national security and diplomacy from economic issues is no longer viable.
“While the government is taking a strategy of separating the economy and diplomacy as a balancing act between the U.S. and China, private companies are now affected by diplomatic and national security issues, which are problems that they cannot handle alone,” an official at a domestic conglomerate said. “If the government keeps its diplomacy away from the economy, there will be further disturbances stemming from the collapse of global supply chains.”
Against this backdrop, U.S. President Joe Biden and his Chinese counterpart Xi Jinping are expected to hold a virtual summit Nov. 15, according to U.S. media reports. Though Washington and Beijing announced a joint statement on their climate response during the 2021 United Nations Climate Change Conference in Glasgow, Wednesday (local time), experts said this will not divert the two countries from an inevitable collision.