The Chinese aircraft carrier Liaoning is representative of rising Chinese power – which is causing problems for nations that are reliant upon China for trade, but are allied to the US. Photo: AFP

SEOUL – As China and the United States square off across the region, what path can those middle powers that rely on Beijing for trade and Washington for security take?

This vexed issue was the subject of a webinar held on Wednesday by the Korean and Australian branches of the New York-based Asia Society, “Australia and Korea: Middle Powers in Uncharted Waters.”

The timing was fortuitous. It had been revealed a day prior, that South Korean President Moon Jae-in would be visiting Australia late this year – the year the two countries celebrate 60 years of diplomatic relations.

Canberra and Seoul have much in common. They both fought on the same side, under US leadership, in the Korean and Vietnam Wars. They are complementary economies, with Australia a raw materials producer and South Korea a finished goods exporter.

Perhaps most critically, the two liberal democracies must juggle their security partnerships with Washington and their heavy trade reliance upon Beijing. They are doing so at a time when a gulf of distrust divides the US and China in Indo-Pacific region, said Yvonne Kim, who directs the Seoul branch of the Asia Society.

As China’s military and economic power rises to match that of the US, Washington is increasingly leaning on its allies in terms of both economics and security. But in the latter area, Canberra and Seoul share little ground.

Anglosphere Australia has taken a confrontational approach, which has seen it upgrade regional military alliances with the US while pushing back hard against Chinese economic retaliation.

Conversely, China’s neighbor South Korea has sought to keep its head below the parapets. Seoul has declined to join China-facing alliances, even though Chinese economic blows hammered South Korean investments and exports in 2017 after the deployment of a US THAAD anti-missile battery on its soil.

But economic blows have come from another direction, too. Now Washington is pressuring South Korea not to deploy advanced semiconductor technologies to China.

Overall, this region-wide competition is eroding the ability of middle powers to act independently. If they are to retain relevance outside the spheres of the superpowers, they need to find common ground, create pragmatic linkages and speak with united voices, the experts said during the webinar.

South Korean President Moon Jae-in has sought to keep his country clear of China-US animosities. Photo: AFP

Strategic differences

While the two countries agreed in June to upgrade their relations to a “Comprehensive Strategic Partnership,” Moon and Australian Prime Minister Scott Morrison may struggle, during their meet in Canberra, to plot a comprehensive course on regional strategy.

“South Korea and Australia’s trajectories to deal with China are so divergent, neither will see the other as taking the correct approach,” said Jeffrey Robertson, a visiting fellow at the Australian National University College of Asia & the Pacific, and an associate professor at Seoul’s Yonsei University.

Calling these approaches “fundamentally different,” Robertson said: “South Korea is balancing interests, Australia has aligned itself with the US. Until South Koreans and Australians understand each other’s points of views and their trajectories, there is not going to be a lot of cooperation that can proceed.”

Moreover, the two countries have customarily taken opposite approaches on national defense.

“Australia has always had a forward defense policy,” a person familiar with the situation told Asia Times. “We have always tried to push our defensive lines as far from our own borders as possible.”

Hence, Canberra dispatched combat troops to join US forces in Iraq and Afghanistan, and under the recent AUKUS agreement, will be positioned to deploy nuclear submarines on long, wide-ranging patrols in the flashpoint South China Sea.

South Korea – after the bloody experience of the Vietnam War, where it lost more than 5,000 people in what proved to be a losing conflict – has largely pulled back its perimeter to its own frontiers, where it is aligned against North Korea.

While Seoul has taken part in peacekeeping missions, humanitarian operations and anti-piracy patrols in such theaters as Iraq, South Sudan and the Red Sea, it has declined to join the kinetic expeditions its alliance partner the US so frequently engages in.

And while Canberra is a member of the Chinese-facing Quad as well as the AUKUS alliance, South Korea has been extremely careful not to irk China, its then-Korean War foe and now-leading trade partner.

This means that beyond joint, multinational exercises, the countries are far from aligned in their views on the exercise of power.

“Australia has sought to impose norms and rules, South Korea has sought to balance and counterbalance,” Robertson said. “These are different conceptions of what it means to be a middle power.”

Economic conundrums

Both US allies have had to respond to Chinese trade pressures applied under the Xi Jinping administration. The related risk of decoupling, which appeared during the Donald Trump administration and has transitioned seamlessly across to the Joe Biden administration, has led to fears that the golden days of unrestricted global trade have passed.

“As open trading nations, both Korea and Australia face growing pressure to mitigate geo-economic risks associated with our dependence on foreign trade,” said Choe Wongi, a professor at the Korea National Diplomatic Academy and the Asia Society’s Australia-Korea fellow. “For Korea, over 70% of GDP comes from international trade, so we are vulnerable to outside shocks.”

For an export-reliant nation, the risks of angering its leading export buyer are enormous. Perhaps due to these risks, South Korea has essentially sat tight under Chinese – and more recently, US – pressure, while deploying placatory diplomacy.

“The Korean approach so far is kind of taking a positon of strategic ambiguity,” Choe said. “The prevailing Korean approach is that this is an issue between two great powers so we should minimize the risk of entrapment.

“We Koreans have more things that we should learn from Australia than we can teach to Australians.”

But Australia’s more assertive policy has been no bed of roses. Having clearly sided with the US, it has consequently suffered far more from Chinese economic weaponizing.

“Australia has been subject to coercive economic measures, from coal to beef to barley to lobsters,” said Hayley Channer, senior policy fellow at the Perth USAsia Centre.

With economics now “meshed with security and diplomacy,” a key Australian response has been the diversification of export destinations. “When China exerted pressure on Australian coal – when China received coal from other markets – other buyers like South Korea, Japan and India sought Australian coal,” Channer said. “So that worked in a way China did not perhaps intend.”

But while these hedging measures may provide some relief, the sheer size of Beijing’s trade and investment in Australia cannot be gainsaid – meaning diversification efforts will be the work of years.

Australia’s Prime Minister Scott Morrison has pushed back hard against Chinese economic pressures. Photo: AFP / Thomas Samson

In the meantime, the Morrison administration’s confrontation with Xi’s Beijing is stressing Australia’s national polity.

“In Western Australia, 60% of trade is with China,” Channer said. “A lot of politicians in Western Australia think the government’s approach toward China is too harsh, and we should be more accommodating.”

Western Australia has a big voice. Its resource-rich state economy is critical to the wider Australian national economy.

Social stresses have appeared, too.

Noting that some 2.5% of today’s Australians were born in China, Channer said that the community is “… feeling this period much more acutely than other Australians.” And with an elected politician having publicly asked Chinese-Australians where their allegiances lie, she added that the debate is becoming “poisoned.”

But Channer’s analysis is that Beijing’s policies will not change.

With China engaging economic means to “fulfill its strategic ambitions,” she said, “in some areas it will be successful, in other areas, it will backfire.” And even backfires can be leveraged by Beijing domestically.

“China is really focused on domestic, internal messaging,” she said. So, regardless of disruptions to trade and diplomacy “… there is a net positive effect internally, when nationalism is ramped up.”

According to surveys, only 22% of South Koreans hold a positive view of China she said – and similar negative sentiments are being recorded elsewhere. But from the viewpoint of Beijing, this may not matter.

“China wants to be feared more than it wants to be loved,” Channer assessed.

All this is putting immense pressure on brainpower in multiple capitals and boardrooms.

“A lot of countries that are overly reliant and dependent on China are needing to rethink their foreign policy and defense and economic strategies,” she warned.

Evolving great power dynamics are also putting immense pressure on middle powers in general, and Australia and South Korea in particular.

Quo vadis, middle powers?

“All middle powers have interests in containing the power of those above, and imposing order on those below,” said Robertson. But in the changing environment of China-US competition, “lots of traditional middle power tools no longer work.”

 “In policy circles in South Korea, Australia is totally irrelevant,” he stated.

Indeed, South Korea’s diplomatic brain trust has traditionally focused on inter-Korean relations, as well as surrounding major rather than middle powers, Choe said: China, Japan, Russia and the United States.

“We Koreans frame the issue as we are being squeezed between two whales and we are a shall shrimp caught in the crossfire,” he said.

But South Korea’s global importance is rising. Not only does it occupy key strategic real estate, it is now a G10 economy and a critical player in the global supply chain. This means its future ability to play all sides is questionable.  

“The room we can maneuver in … is getting smaller and smaller,” Choe said.

Given the multiplicity of constraints, Robertson suggested areas where South Korea could, feasibly, expand.

He noted that South Korean diplomats or policymakers in Beijing or Washington argue for the national interest on the basis of a “sole, single middle power.” To increase leverage, he suggested Seoul cast a wider diplomatic net around like-minded states and non-state actors.

“I would go round to other places, to get the support of Sweden and Norway and Canada and Australia and NGOs – then go to Washington or Beijing,” he said. “That is coalition building and innovative mid-power diplomacy.”

The lack of a community of Australia-Korea experts in both countries, building ties and establishing shared interests, is problematic the three agreed. Still, there are a wealth of areas that could be focused upon in the upcoming Moon-Morrison summit.

Channer suggested that Moon and Morrison could begin discussions on a SOFA (status of forces agreement) between Australia and South Korea, which would enable upgraded armed forces ties. Related discussions are underway between Canberra and Tokyo.

Choe noted that there is ample ground for cooperation on hydrogen power generation – a key national priority for Seoul – and defense equipment sales. He also suggested that, with Seoul-Tokyo ties now dire, Canberra could argue for Seoul’s inclusion in the multinational Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade pact.

But Moon – who leaves office next May – is visiting Canberra very late in his term. “There is a big difference in continuity between Japanese politics and South Korean presidential administrations,” Robertson said, warning that whatever papers Moon signs may well be overlooked by his successor.

“These two states are ideal diplomatic partners, but maybe not strategic partners,” he said. “Working together on global governance and regional issues – that is where the real key for the two states lie.”