Just as in the Philippines, a leadership change in Seoul has helped to markedly improve South Korea's relations with China, roiled since Seoul allowed the United States to park the Terminal High Altitude Area Defence system, or Thaad, on its soil. The anti-missile system was meant to help protect against an attack from North Korea but bothered China and Russia, because of its ability to peer deep into their territories as well. China retaliated with a series of economic measures against South Korea that saw its retailers curbed on the mainland and emptied resorts of Chinese tourists on Jeju Island. Against that pressure, Seoul blinked. South Korean President Moon Jae In travelled to Beijing to see his counterpart, Mr Xi Jinping. There has been a thaw. Chinese tourist groups will not be discouraged from visiting South Korea and retail giants like Lotte will not have their operations crimped. There is more ground to travel in the bilateral relationship, but a new beginning has clearly been made.
It must be said, though, that despite China's attempts to take punitive measures against its fellow East Asian nation, the cost to South Korea cannot be said to have been prohibitive. The impact of lost China business is estimated at no more than 0.3 percentage point growth, or less. Indeed, South Korean exports to China in the first 10 months of 2017 increased 12.5 per cent year-on-year to US$114.3 billion (S$154 billion), boosted by increased Chinese demand for South Korea's semiconductors and chips that ride in Chinese electronic goods. It is to the credit of Beijing's diplomacy that it has successfully projected the notion that its trading partners need it more than it needs them.
One lesson that Seoul has imbibed from all this is the need to swiftly diversify its export markets. Currently, China takes fully a quarter of its exports. The big emerging markets of South Asia and South-east Asia are an obvious target. Mr Moon, quite correctly, has begun his New Southern Policy with a state visit to Indonesia, Asean's largest nation and economy. In tandem, he is also moving to build on his nation's strong ties to China by expanding them to Japan, Russia and Mongolia - the New Northern Policy. Along with a push to build ties with the European Union, Mr Moon thus hopes to bring "balance" to his nation's external policy.
Economic ties can never fully run counter to strategic realities. Witness how Australia, which sends about a third of its exports to China, is scrambling to refresh its foreign policy. But they do play a vital role in cooling things down when temperatures rise elsewhere. Seoul's multi-directional foreign policy thrusts therefore are a useful pointer to a worthy pragmatism. Indeed, they may even be said to have been inspired in some measure by the open architecture that Asean has practised as it handles its own external world.
