South Korea’s tumult is a symptom of China-US strife

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A sudden, six-hour declaration of martial law in South Korea that stunned its general public and baffled the wider world was not, as the Wednesday morning cliché had it, on anyone’s 2024 bingo card.

That includes the cards of some very seasoned players. At the same time that president Yoon Suk Yeol was initiating the shortlived gambit that now looks destined to topple him, senior academics, diplomats and military brass from South Korea and its closest allies were meeting in Seoul to talk geopolitics. Nobody in the room, admitted one participant, would have put money on martial law by bedtime.

But the cards themselves are now thoroughly marked by the rise of China and the return of Donald Trump in a way that skews towards exactly this brand of unpredictable. Individual incidents may shock; the greater ambush of expectation should be treated as a permanent, rolling reality. Particularly so for South Korea, though the factors behind the event — and its still unquantified political impact — will resonate around the region and beyond.

The fact that Yoon’s move was so shocking is to Korea’s credit. As is the speed with which the democratic process (via a vote in the legislature) forced him to reverse position. In the 40-plus years since martial law was last imposed, the South Korean economy shines as a great rarity for having been officially upgraded (in 2021) to developed status. 

It has produced fiercely competitive global companies in key growth areas. Korea’s sovereign bonds are scheduled to join the FTSE Russell World Government Bond Index from November 2025. Wednesday’s 1.44 per cent dip in the Kospi index of Korean stocks was modest, said fund managers, because the affair (for now, at least) offered a buying opportunity for quality names.

But Korea is also a concentrated illustration of the often zero-sum impact of China’s rise, and of its capacity to rapidly and savagely destabilise the certainties of earlier times. If Tuesday’s madness was, via the process that installed the outsider Yoon in the first place, a pathology of deepening public despair at the capacity of politics to solve the big issues, China is among the reasons that many of those issues seem so intractable. 

In economic terms, Chinese companies and their steady ascent up the value chain now mount a formidable challenge in areas such as semiconductors, white goods, consumer electronics and automotive. This is tough for everyone, but these are sectors that have been disproportionately responsible for Korea’s industrial miracle, and thus disproportionately pain-inducing.

The geoeconomic course Korea must navigate, as even icons of competitiveness like Samsung are made to look languid, is fraught with risk and paradox. Korea, like Japan, has been a huge beneficiary of the old, globalisation-friendly world order. Now, it may be forced not only to pick sides, but also to decide, excruciatingly, that its best hopes rest on the US becoming maximally hostile to Chinese imports. 

In geopolitical and security terms, China’s rise and the ever hardening US response to it place Korea in a complex position. The societal divide between those who would position the country even closer to Washington and its allies, and those who favour something looser is deepening.

Swirling around this are tightly connected concerns. These include the fear of being sucked into any conflict erupting around Taiwan. There is also the anxiety that the recent deployment of North Korean troops in Russia is symptomatic of a greater reset of the co-operation calculus between Moscow, Pyongyang and, ultimately, Beijing.

And now, looming over these geopolitical and economic tangles, is the unanswerable question of how Trump’s presidency will dictate Korea’s course through all this or, if the most pessimistic interpretation of “America First” comes true, make the old certainty of US support feel suddenly fragile.

Yoon’s inexperience as a politician and emergence from outside that much decried pool was, to a significant extent, what won him the presidency. It was also, in all likelihood, why he even considered martial law as an option. For all the political destabilisation that South Korea has brought upon itself, it is an example of a developed economy enduring more broadly destabilised times. China’s rise is only one of the factors here, but it is an immovable one into which South Korea cannot afford to crash, particularly when its home grown crises of age and fertility demand so much attention.

Yoon’s gambit was an extreme weather event; the underlying climate change is more troubling.

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