As members of the Asian Tigers, Taiwan and South Korea have long been rivals vying for the region’s top seat.
Although South Korea was an important stronghold for pushing back communist forces during the Cold War, it has long adopted a middle course of not picking sides between the US and China.
However, Seoul has recently undergone a major transformation.
Taiwan’s GDP per capita has surpassed South Korea’s for the first time since 2004, which has ramped up economic pressure on the country.
South Korea has also put an end to its own version of “strategic ambiguity” by tilting toward the US and away from China, while relinquishing its appeasement policy for North Korea, which reinforces the idea that peace can only be achieved through strength.
Seoul’s shift in foreign and economic policy has become a model for Taiwan to follow.
The two nations share quite a few similarities: Both are under the threat of communist neighbors, were positioned on the front line of the Cold War, are endowed with a political regime that has gone from an autocracy to a democracy and have export-driven economies.
However, relations between them have soured as economic competition intensified, under which not only profits, but also the status and prestige of a country were at stake.
South Korea had adopted a “Nordpolitik” policy to reach out to socialist countries such as North Korea, China and Russia. It also regarded China as its most favorable partner, an “open and reformed” country that promised huge market potential and offered counterbalancing with influence over North Korea.
After Seoul ended diplomatic ties with Taiwan in 1992 to form diplomatic relations with China, the wrangling led to the downgrading of each other’s trade status and bitter sentiment.
In response to the recent US-China rivalry, South Korean leaders before President Yoon Suk-yeol mostly favored China over Japan, which complicated Washington’s efforts to build a stronger alliance in the Indo-Pacific region to better cope with rising Chinese influence.
However, the events of the past few years have triggered a series of shifts.
As South Korea’s security jitters have risen since North Korea test-fired dozens of missiles last year, China seems to have turned a blind eye, if not acquiesced to North Korea’s saber rattling. Ever since signing the China–South Korea Free Trade Agreement in 2015, Seoul thought it had secured its economic interests, but then for the first time in almost 30 years, South Korea quietly recorded its largest trade deficit with China in May last year.
Taiwan, worried about being marginalized when South Korea and China signed the agreement, has had an average annual economic growth of 3.2 percent for the past decade, outpacing South Korea’s 2.6 percent. Taiwan’s GDP per capita was US$32,811 last year, more than South Korea’s US$32,237, which marks the first time Taiwan’s GDP per capita has surpassed South Korea since 2004.
Meanwhile, China’s growing military footprint in the Indo-Pacific region with increasing drills and muscle-flexing has put South Korea further on edge.
All of these factors have contributed to South Korea’s massive shift in policy, which had Yoon patching up relations with Japan despite the countries having been at odds with each other over the course of history. Yoon also made a clear stance of siding with the US-led alliance system, the opposite camp of China.
In view of these, how does South Korea’s swerve become a model for Taiwan?
For one, South Korea used to be fairly tolerant with its bellicose northern neighbor, previously signed the Sino–North Korean Treaty of Friendship, Co-operation and Mutual Assistance and Joint Declaration of the Denuclearization of the Korean Peninsula.
Further, South Korea’s once proactive efforts of enhancing ties with China were carried out in the hopes that Beijing could help reign in North Korea by playing the role of mediator and police in the region.
However, the efforts proved to be futile as North Korea showed no signs of slowing the expansion of its nuclear arsenal with medium and long-range missiles, sending tremors not only throughout South Korea, but also Japan and the US. China’s pursuit of “national rejuvenation” has echoed North Korea’s expansionism.
In view of a new axis of autocrats bringing China into ever tighter collaboration with North Korea, South Korea has had such a rude awakening that it turned its back on Beijing and joined the democratic camp.
Yoon has been a contrast to the pro-China supporters in Taiwan, who spread skepticism of the US and promote appeasement, saying “bargained peace is still a kind of peace.” Instead, on the day of the South Korea-US summit, Yoon and US President Joe Biden adopted a joint statement called the “Washington Declaration” and underscored the notion that the two countries can “achieve peace through the superiority of overwhelming forces and not a false peace based on the goodwill of the other side.”
Addressing a joint session of the US Congress, Yoon said that his country’s 70-year alliance with the US has been “the linchpin safeguarding our freedom, peace and prosperity,” and paid tribute to the US soldiers who fought in the Korean War for helping his country defend its democracy.
Had South Korea not had the US’ help in fighting the communist forces in the north back then, it would have disappeared from the map altogether. As history never fails to provide lessons, Seoul’s trust in Washington has ensured its survival and existence.
South Korea’s wishful thinking of tapping into the Chinese market has not worked wonders on its economic development, and it is now forced to endure the consequences. In contrast, the Sunflower movement against the government’s handling of a cross-strait service trade agreement in 2014 has not impeded Taiwan’s economic growth.
South Korea recorded a trade deficit — meaning it imported more than it exported — of US$5.1 billion with China in January and February, whereas it enjoyed a US$55.6 billion trade surplus with China in 2018. As South Korea logs the biggest fall in exports, data showed that its exports to China suffered the biggest drop.
As the slump shows no sign of easing, commentators have said that the deficit was due to South Korea’s overreliance on the Chinese market, while its major competitive edge of exporting intermediate goods has been overtaken by Chinese firms.
As South Korea reels from structural issues in its trade relations with China, the irreversible trend is highly similar to Taiwan’s predicament with China.
As Taiwan’s GDP exceeds South Korea’s, new challenges have emerged. Imports in March fell 20.1 percent from a year earlier and exports to China dropped 30 percent, indicating that Taiwan shares similar structural issues with South Korea. Both countries had to bear the ramifications of China’s shrinking market.
China has also continued to use economic coercion, blocking imports of seafood products and agricultural products from Taiwan since March 2021. On April 12, Beijing initiated a trade barrier investigation involving 2,455 types of products from China, which undermined Taiwan’s chances of making an economic recovery.
As exports account for 70 percent of Taiwan’s GDP, it has had a succession of seven deficits, leading to negative growth in two consecutive quarters. In the first quarter, it deteriorated to minus-3.02 percent, which would greatly increase the difficulty of maintaining economic growth of 2 percent.
Meanwhile, cross-strait tensions have become more acute than ever. As peace between Beijing and Taipei concerns global trade and the continued existence of democracy in Taiwan, the free world should come together to address the issue, while the public should be wary of pro-China voices spreading anti-US narratives and appeasement sentiments, which are designed to weaken their will and morale to push back against China. Given Seoul’s major transformation, it is high time for Taiwan to learn a thing or two from its long-term rival.
Translated by Rita Wang
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