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Japan-South Korea thaw underscores shared economic pain over China

Sam Kim, Bloomberg News on

Published in News & Features

SEOUL, South Korea — The repairing of ties between Japan and South Korea comes amid falling returns in trade from China and ramped-up U.S. efforts to corral its two allies deeper into a supply chain and security network amid rising geopolitical tensions.

China is the biggest export destination for both Japan and South Korea and has provided a major source of income for the region to ride out economic slumps for years.

Now as China ramps up its production capacity at home and moves up the value chain, Japan and South Korea are seeing trade with their giant neighbor growing less lucrative and more competitive overall. China’s economy last year grew at the second-slowest pace since the 1970s, which has also slowed business for many major players.

At the same time, the U.S. is seeking to bolster its economic ties while limiting the export of key technology to China.

Security is another factor likely feeding into the calculus behind the thawing relations. South Korea and Japan host the bulk of U.S. military personnel in the region, and the Biden administration has sought their help in building a united front to global threats.

North Korea continues to fire missiles as it hones its military capabilities and provides a regular reminder of the threat it poses. Meanwhile, China’s relations with the U.S. are deteriorating and Russia’s protracted war in Ukraine has changed perceptions about the likelihood of threats materializing.


“South Korea needs to go with Japan rather than China now as the two share the US as a security ally at a time economic and security interests are no longer separated,” said Lee Hong-Bae, a professor of international trade at Dong-eui University in Korea.

Japan has also seen its own business interests suffer from strained relations with South Korea and sees Seoul as a partner to better deal with security threats from North Korea to Russia, he added.

In a sign of the rapidly thawing bilateral relations since President Yoon Suk Yeol took office last year, he met Prime Minister Fumio Kishida on Thursday, for the first summit in Japan between leaders of the two countries since 2011.

Japan announced the same day it would lift export curbs on some technology-related materials to its neighbor that have been in place since 2019. For its part, South Korea said it would drop a complaint about the curbs lodged with the World Trade Organization. The announcements followed a deal earlier this month to resolve a contentious dispute over colonial-era labor that has plagued relations for years.


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