South Korea’s US pivot raises alarm for Beijing

Following domestic political turmoil, Lee Jae-myung was elected president of South Korea in June 2025. Given the traditional policy differences between the progressive and the conservative political forces in South Korea, one might expect Seoul’s China policy to soften, for example, if compared to Lee’s predecessor, Yoon Suk-yeol. After all, Lee Jae-myung’s campaign rhetoric and post-election policies emphasised “pragmatic diplomacy”, including prioritising economic cooperation and greater flexibility in regional affairs.

On the surface, Lee’s election and his pragmatism appear to offer Beijing a potential opportunity to regain certain influence over South Korea. The actual situation, however, may be more nuanced.

Lee’s administration now faces a more pressing regional and international situation than previous South Korean governments. Strategic competition between the US and China has escalated into a comprehensive confrontation in multiple areas, including trade, technology, regional/international order and sets of governance rules, leaving South Korea with less room for its once-adhered “middle way” diplomatic approach.

In this new environment, Lee’s pragmatism is not about playing both sides, maintaining neutrality, or blindly siding with the US. Rather, it is about focusing on long-term national interests and leveraging the opportunity to solidify the Seoul-Washington ties.

This means strengthening the ROK-US alliance while emphasising the development of its own national capabilities, ensuring the security of the regional and global supply chains of industries where South Korea has an advantage, and, more importantly, anchoring South Korea’s long-term and stable foothold in the new global strategic ecosystem being constructed by the US.

This subtle yet profound shift could have a far-reaching impact on Beijing. Two trends stand out in particular. First, under the pressure of competition between the US and China, South Korea’s strategic room for manoeuvre is shrinking, leading to a further and deeper “structural” strengthening of the ROK-US military alliance.

Second, at least for the next few years, South Korea will, with the tacit approval of the US, make breakthroughs in its defence capabilities in the field of high-end weaponry (such as the newly approved nuclear submarines), potentially allowing South Korea to demonstrate relatively greater autonomy in dealing with Korean peninsula issues. This could add a few more variables to the already delicate and fragile balance of power on the Korean peninsula.

In the past, although to varying degrees, successive South Korean governments have essentially maintained a “hedging strategy” between the two major powers, the US and China: relying on the ROK-US alliance for security and maintaining close economic and trade relations with China as much as possible. However, this room for manoeuvre is gradually shrinking.

First, although it has long been a consensus in South Korea to reduce its heavy reliance on the Chinese market and vigorously develop other markets including ASEAN (such as the “China+1” overseas market strategy and the Moon Jae-in administration’s “New Southern Policy”), the THAAD incident in 2016 and the subsequent economic retaliation from China hit home that, especially on issues related to Seoul’s own security dilemma, over-reliance on the Chinese market could expose the South Korean economy to a profound external crisis at any time.

More profoundly, against the backdrop of escalating strategic competition between the US and China, the structural strengthening of the ROK-US alliance seems to introduce a “side effect” on ROK-US economic and trade relations. This is manifested in the fact that, driven by alliance obligations, supply chain security and the combined needs of its own industrial development, South Korea has strengthened its economic and trade ties with the US, for example, since Trump’s first term. This is reflected not only in the increase in bilateral trade volume but also in the continuous growth of South Korean direct investment in the US. 

It is worth noting that, according to a report by the Korea International Trade Association (KITA), in 2023, South Korean direct investment in the US amounted to US$27.7 billion, accounting for 43.7% of South Korea’s total overseas direct investment, while direct investment in China was only US$1.9 billion in the same year, accounting for merely 2.9%.

A press release by the South Korean government also shows that in 2023, China was excluded from South Korea’s top five overseas foreign direct investment (OFDI) destinations for the first time since 1992. More significantly, at the recently concluded APEC summit, South Korea agreed to invest US$350 billion in the US, including US$150 billion investment in shipbuilding, an industry that the US in particular focuses on in its strategic competition with China.

Why does OFDI matter? Simply put, compared to total trade volume, OFDI better reflects investors’ confidence in the future economic growth of the destination country and the trend of closer integration with the destination country’s economy. Within the framework of the economic relations between China, the US and South Korea, the significantly larger flow of South Korea’s OFDI to the US seems quite telling, confirming both the driving forces and the pressures South Korea faces as well.

Recent analyses from prominent think tanks have also emphasised this pressure. For example, a report by the Center for Strategic and International Studies (CSIS) in October 2025 pointed out that as the US’s demands for technology, supply chains and alliance responsibility sharing become increasingly stringent, Seoul must now “minimise risk” and “maximise reward”.

This is not a dispensable or opportunistic priority, but rather an inevitable requirement imposed on the new South Korean government by the fundamental changes in the regional situation, especially brought about by the widening and deepening strategic competition between China and the US over the past decade.

From Beijing’s perspective, these potential and ongoing changes are significant. For a long time, South Korea has been a “swing” country caught between major powers in East Asia, making Seoul’s foreign policy susceptible to the influence of major powers, including China.

However, with the solidification and continuation of traditional security issues (such as the nuclear and missile threats from North Korea), Trump’s renewed demands for US East Asia allies to assume their responsibilities, and Washington’s increased efforts to restructure the global supply chain system (i.e. decoupling from China), Seoul’s economic tie with Washington seems to be growing increasingly close — regardless of whether South Korea is governed by the conservatives or the progressives. 

The question then becomes: how can Beijing again leverage economic relations to influence Seoul’s policy orientation? It is important to remember that, as Victor Cha pointed out in the CSIS report, South Korea has fought with the US in every war since the Korean War and is believed to have provided substantial arms aid to Kyiv during the Russia-Ukraine war. If, in a scenario where the Chinese economy slows down, and South Korea continues to reduce its investment in China while increasing it in the US — and Seoul and Washington become mutually anchored on both security and economic issues — would that not be a situation that Beijing really wants to avoid?

The 2025 APEC summit might have given Lee the perfect chance to showcase the true meaning of his pragmatic diplomacy. He used this international occasion to make a series of commitments to the US, including investment, technological cooperation and industrial transfer, which he believes to be essential to safeguard South Korea’s long-term national interest.

At the same time, a limited consensus with China on opening up tourism and supply chain cooperation was also reached. These collaborations may be useful in alleviating the economic chill between Beijing and Seoul, but strategically, they seem weak. For Beijing, this could be a warning sign: while Seoul is willing to cooperate with Beijing, it has not, and cannot, make any practical adjustments to the geopolitical structure in favour of Beijing. Remember, all of this occurred within a few months of the election of a South Korean president belonging to the progressive faction.

Lee Jae-myung has made his basic policy stance crystal clear. For example, he made two open comments in a speech delivered at CSIS on 25 August: First, “Korea relied its security on the US and its economic cooperation with China... it’s no longer possible to maintain that kind of logic;” and second, “We cannot act or make decisions that go against America’s basic policy stance.” His message was very straightforward: practically and pragmatically, his government is seeking a more consolidated alliance with the US, and this is not a seasonal gesture.

But Lee’s pragmatism may differ from South Korea’s past practice, as it appears to leverage Trump’s unconventional, business-oriented policy stance to advance deeper “self-reliance” while still practising “free-riding”. This is not an ideological or political restructuring movement targeting South Korea’s conservative political forces, but possibly a long-term strategy to enhance South Korea’s national competitiveness in the years to come.

In September 2025, South Korea’s Ministry of Foreign Affairs explained Lee Jae-myung administration’s five key diplomatic tasks: 1) pragmatic diplomacy with the US, Japan, China and Russia; 2) strengthening South Korea’s G7+ role; 3) enhancing economic diplomacy; 4) advancing denuclearisation and a peace regime; and 5) improving protection and support for overseas Koreans and global Korean communities.

A crucial point worth noting here is that the Lee administration did not interrupt the detente or reconciliation process with Japan, initiated by the previous conservative government. Instead, it prioritised “the development of a solid and mature ROK-Japan relationship” as one of the core national tasks.

This move is significant. From the perspective of the US, which currently favours maintaining an asymmetric bilateral (rather than multilateral) alliance structure in East Asia, substantive reconciliation between these two key East Asian allies may still benefit the future US dominance in shaping the region’s geopolitical landscape — provided, of course, that Washington successfully and firmly binds Seoul and Tokyo on both security and economic fronts.

More notably, the Lee Jae-myung administration has used the US$350 billion investment as a kind of “pledge of allegiance”, while the recent radical right-wing rhetoric by Japan’s new Prime Minister Sanae Takaichi aligns with the US’s strategic intention to contain China through its allies.

Meanwhile, judging from the joint statement issued by the top military officials of the US, Japan and South Korea in Seoul in July 2025 and another joint statement issued by the foreign ministers of the three countries in New York in September 2025, the extensive and close cooperation among the three parties in military, diplomatic and other fields is developing towards greater regularisation and institutionalisation. For Beijing, this deeper, broader and more institutionalised cooperation is far more challenging than sporadic diplomatic and military interactions.

Hence, Lee Jae-myung’s pragmatic diplomacy is not merely about reaffirming a much closer alliance with the US, but also about proactively easing relations with Japan in line with the US’s strategic adjustments, and embedding South Korea into Washington’s readjusted geopolitical, economic and technological frameworks. This is crucial because further stabilising and anchoring of an alliance with the US, for example, by a progressive president, be it rhetorical, pragmatic or practical, is obviously more significant than any policy outcomes generated by domestic wrestling among political factions in South Korea in the past.

What will become of ROK-China relations? On the surface, after years of relative coldness, relations seem to be quietly recovering. Tourism is picking up, mutual visa incentives have been introduced, and Chinese President Xi Jinping visited South Korea for the first time since 2014, holding a summit with Lee Jae-myung — both leaders showing bright smiles in front of reporters. But beneath these appearances, a more complex and subtle reality seems to be lurking.

China remains South Korea’s largest trading partner, for now, and Seoul naturally seeks to solidify its significant interests in the Chinese market. At the summit between Xi Jinping and Lee Jae-myung in November 2025, while some sensitive economic and security matters were discussed, such as China’s sanctions against Hanwha Corporation and South Korea’s plans to build nuclear submarines, the discussions appeared to be largely issue-based. In other words, the current focus between South Korea and China is largely and primarily on resolving existing practical problems. This reflects the relatively low level of strategic trust between the two sides. 

For Beijing, the existence of the ROK-US alliance is an undeniable geopolitical barrier; for Seoul, especially in the past few years, Beijing’s economic and trade retaliatory measures against Seoul’s deployment of the THAAD system have far-reaching implications and lingering impacts not only on Seoul’s diplomatic and economic relations with Beijing, but also in the socio-psychological sphere in South Korean society. Given that Seoul’s future security will continue to be anchored to the ROK-US alliance, and its economic structure may even continue to tilt towards Washington, Beijing’s existing influence will inevitably be subject to significant long-term consequences.

Looking ahead to the next few years, although South Korea is currently governed by a progressive government, the geopolitical environment in Northeast Asia may not be entirely favourable to Beijing. At least two points warrant special attention:

First, although Lee Jae-myung administration’s pragmatic diplomacy, at this time, resembles more of a proactive strategic adjustment to gain a certain degree of autonomy, it is however based on Seoul’s “loyalty” to the ROK-US alliance, meaning that the whole idea is more strictly confined within the extended framework of the ROK-US ties.

Against the backdrop of US-China competition, while Lee’s pragmatic diplomatic stance allows for engagement with China, the structural strengthening of the alliance is prompting Seoul to align with Washington on more issues, such as expanding from traditional security areas to cutting-edge industry security and the global readjustment of supply chains. Therefore, Seoul’s previously limited decision-making space, for example, in trade and economic policies with China, is now further constrained by multiple factors, including US-China technological competition, the global readjustment of US supply chains and the structural strengthening of the alliance system.

Second, trilateral cooperation among the US, South Korea and Japan is becoming more substantive and institutionalised. For China, this means that effective bilateral diplomatic communication channels on regional security issues may decrease, and the space for leveraging historical issues between South Korea and Japan may also gradually narrow.

Although an East Asian version of “NATO” may not emerge in the short term, broader and more institutionalised comprehensive cooperation among the US, Japan, and South Korea seems to be an unavoidable trend. This could further put Beijing in a geopolitical dilemma, to some extent, between “passively” acknowledging or simply deciding to join the so-called Russia-North Korea-China trilateral quasi-alliance, as many Western analysts have argued and discussed (here, here and here).

After the election, Lee Jae-myung faces a more complex and urgent regional situation than that of his predecessors. His pragmatism may appear on the surface to be a national policy of “pleasing everyone”, but in reality, it is a pragmatic strategy that focuses more on long-term goals and is consistent with South Korea’s long-yearned national autonomy (albeit limited).

For Beijing, the outcomes can be worrying: South Korea remains open to maintaining economic and trade cooperation with China, but strategically, at least for the foreseeable future, Beijing may have to confront a closer ROK-US alliance and an institutionalised trilateral cooperation among the US, Japan and South Korea.

Until some major shift occurs in the Northeast Asian situation, Beijing is likely to find itself facing a South Korea that maintains only a certain level of cooperation in economy and trade, but is gradually distancing itself from China not only in terms of ideology and security, but also in respect to geopolitical setting and even broader institutions.

Lastly, given that becoming a true middle power in international politics has been a long-term goal of successive South Korean governments, a “middle-of-the-road” or “neutral” foreign policy that attempts to please everyone will ultimately not be in South Korea’s long-term interests when the regional and international environment undergoes fundamental changes. Interestingly, however, this different kind of pragmatic diplomacy is being driven by a president from the progressive faction that traditionally maintains a relatively more rational and friendly stance towards China.

Therefore, with strategic competition between the US and China becoming deeper and more comprehensive, whether this proactive and even somewhat bold pragmatism will become a fundamental national policy for South Korea in the future is an important issue worthy of attention from all parties.

Related: South Korea rewrites the rules of economic security — with new alliances | Pragmatism vs power: Why Lee Jae-myung can’t pivot toward Beijing