South Korea Stuck between United States and China

The United States and China are putting pressure on South Korea to take sides in their ongoing trade war. In other words, both the South Korean government and South Korean companies are exposed to the risk of retaliation on the economy side as well as national security.

U.S. Ambassador to the Republic of Korea Harry Harris said on June 5 that it is important for South Korea to work with a reliable 5G equipment supplier and Chinese equipment and technology are not free from security problems. Earlier, an official at the Ministry of Foreign Affairs of China said that South Korean mobile carriers need to make prudent decisions without being influenced by pressure from the United States.

The South Korean government, in the meantime, is refraining from intervening in enterprise affairs. This is because taking sides is rather burdensome with South Korea relying heavily on both the United States and China in economy and national security alike.

The United States Department of Commerce said in its recent report that the United States needs to work more closely with South Korea, Japan and the European Union with China weaponizing rare earth elements. The U.S. government has urged Japan and European countries not to adopt Huawei equipment. The alliance between the United States and South Korea will crack if a South Korean mobile carrier adopts the equipment. Then, high tariffs will be imposed on South Korean cars and issues will be raised concerning defense cost sharing.

China will get even if South Korea joins the anti-Huawei campaign. In fact, this month, the Chinese government became more meticulous than before in business visa screening targeting South Koreans. In addition, zero subsidies for companies not using Chinese electric vehicle batteries and antitrust investigations in the semiconductor sector can be prolonged.