Seoul, Tokyo, foreign exchange

This year has been dramatic and dynamic so far, with the fallout over a dark political incident dominating the first quarter before giving way to a new president and administration.

Oddly and thankfully, Korea's cultural appeal rallied, thanks in part to the surprise Korea-themed hit film "KPop Demon Hunters," which brought in a massive influx of foreign tourists who raided not only Olive Young cosmetic shops but also the National Museum of Korea's gift shop. This helped, despite the Korean won depreciating against the dollar like never before.

There is a certain lighthearted ambience and a kind of global assurance that was sorely missing in the wake of the martial law declaration made by former President Yoon Suk Yeol on Dec. 3, 2024. Additionally, Korean society still remains sensitive to where it stands on the global stage and to the scope of its national power, either soft or hard.

Against this backdrop, tourism figures have been encouraging. The Korea Tourism Organization has counted the number of foreign tourists to Korea in the first half of the year at 8.83 million; the goal for the year is to reach 20 million foreign annual visitors.

On a recent visit to Japan's capital, I was surprised to see large groups of tourists filling every corner of major Japanese fast fashion retail shops such as Uniqlo and GU, and swarming theme parks as if they were popular subway stations. With a larger land area that's able to host a population of 123 million (compared to Korea's 52 million), the number of foreign tourists will also naturally be larger, as pointed out by an acquaintance who has resided in Tokyo for the past quarter-century. He perhaps meant that a simple comparison between the two neighboring nations rests on fallacy.

Nevertheless, the two nations' geographical proximity, as well as shared stakes, invariably triggers the urge to compare their respective staying powers, national competitiveness and national growth strategies. These ideas linger in the minds of policymakers, experts and writers as the two countries — neither exempt from the Donald Trump administration's aggressive tariff policies and trade battles — face pressure to invest in the United States.

In the case of Japan, the directive to invest $550 billion directly into the United States came in exchange for a tariff rate of 15 percent, and is a done deal. Despite criticism that Japan virtually handed over a blank check under pressure from Trump, Japan accepted U.S. terms to invest in sectors such as chips, metals, pharmaceuticals, energy and shipbuilding by January 2029. The country's top trade negotiator said that the investment would not impact Japan's foreign currency reserves.

On the other hand, Korea and the United States have yet to confirm the details of an investment deal reached in late July in exchange for a similar 15 percent blanket tariff on Korean imports, mainly because of disagreements over a $350 billion investment in the U.S., as Korean officials are concerned about its expected negative impact on the country's foreign currency reserves. In the past week, top Korean officials have trekked back and forth between Seoul and Washington, with the aim of reaching an agreement in writing, in tandem with the Asia-Pacific Economic Cooperation (APEC) Economic Leaders' Meeting in Gyeongju, North Gyeongsang Province, set for Friday and Saturday. A written deal remains elusive.

Both Korea and Japan, coincidentally, have leaders with strong ideological inclinations, as President Lee Jae Myung is regarded as a progressive leader while new Japanese Prime Minister Sanae Takaichi identifies as a hard-line conservative. However, in matters of diplomacy, they both frame their stances as "pragmatic," with national interest in mind. If the two leaders meet at the APEC summit, they will have an opportunity to learn from their countries' similarities and differences.