South Korea caught between US and China in trade war

A preliminary tariff deal with President Trump called for a large investment in the United States, while China has warned Seoul not to side with Washington, writes Daisuke Wakabayashi from Seoul

- Daisuke Wakabayashi

When South Korea's newly elected president, Lee Jae Myung, visited Washington in August, he was asked about anmigyeongjung, the nation's well-established policy of maintaining strategic neutrality between the United States and China.

The Korean phrase, loosely translated as "the United States for security and China for the economy," refers to how the country must balance its reliance on America for national defence and the economic importance of China as a critical market for South Korean companies.

But the intensifying US-Chinese competition makes it hard for South Korea to count on both. "It is no longer possible to maintain that type of logic," Mr Lee said. Increasingly, South Korea must choose, and it has not been in a position to deviate from the policies of the United States, he acknowledged.

Like many countries confronted with a more fragmented global economy, South Korea has been thrust into the middle of an acrimonious trade war, and forced into a no-win position navigating export controls, sanctions and tariffs.

Now the dilemma is especially thorny for South Korea. It maintains its critical alliance with the United States, even as it is struggling to meet President Donald Trump's onerous demands to complete a trade deal that the two countries agreed to in principle in July.

On the other side, its giant neighbour, China, is the main target of Trump's economic grievances. It is also South Korea's largest trading partner, accounting for a quarter of its exports when Hong Kong is included.

Ahead of an expected meeting this week between Trump and Xi Jinping, China's top leader, on South Korean soil at the Asia-Pacific Economic Cooperation summit, Seoul has been confronted with the heavy cost of siding with the United States.