President Xi of the People’s Republic of China, and a large entourage of Chinese businessmen (Alibaba, Baidu), are currently visiting South Korea. The PRC is hoping for improved business ties but this time, there is, IMHO, the possibility of a sea change on the Korean peninsula.
Why and how?
China wants to change that status quo – they want to do so through money and through a redefinition of regional security – without American influence.
First, in business, China is proposing the foundation of a $50 billion “Asian Infrastructure Investment Bank”, first proposed by President Xi in October 2013, during a tour of Southeast Asia. This bank would have the PRC holding a fifty-percent stake in this bank and has hinted at benefits to those nations that participate and Xi’s visit to Seoul, currently under way is very much about the benefits to South Korea. (we will get to what South Korea might actually want from joining this venture shortly). South Korea has expressed an intent to become an offshore trading centre in Chinese currency (renminbi) and this current meeting is expected to address this as well.
For South Korea, this is useful and important since South Korea’s two-way trade with China was $229 billion last year, exceeding the combined value of South Korea’s trade with the U.S. and Japan. Xi told reporters after the 2013 summit that the two countries will strive to boost their trade to top $300 billion (cite). This trade has been hampered by the fact that both countries transactions have been based in US Dollars (because the Yuan and Won are not directly traded) which costs more and reflects the indirect influence of things American in Asia. A statement from South Korea’s finance ministry and central bank said the South Korean won will become directly exchangeable with the yuan, joining major currencies such as the U.S. dollar, Japanese yen and euro that are convertible with the Chinese currency. The decision also makes the yuan only the second currency after the U.S. dollar that is directly convertible with the won. (cite)
China has also given consent to South Korea’s investment of tens of billions of yuan (billions of USD) in Chinese bonds and stocks. The PRC Government is encouraging businesses to invest in Korea as well. Chinese investors are highly interested in cultural content, software and real estate development, thus would explain the drive by the Korean side to have Chinese investment in the so far failed Saemangeum Project (cite) or the attempt at luring Chinese investment in the Yeosu – Dadohae Haesang National Park area, as well as some yet to be announced projects.
There is also the issue of the recent Conference on Interaction and Confidence Building Measures in Asia (CICA) and the PRCs desire to exclude powers – such as the U.S. – from regional security, suggesting an arrangement, guided by the PRC that is more than a little reminiscent of the Greater East Asia Co-Prosperity Sphere plan of Showa Japanese origin. As reported in The Diplomat:
Xi called for the creation of a “new regional security cooperation architecture.” He proposed that CICA become “a security dialogue and cooperation platform” for all of Asia, from which countries can explore the possibility of creating a regional security framework. He further indicated that China would take a leading role in exploring the creation of a “code of conduct for regional security and [an] Asian security partnership program.”
In promoting China’s vision for a new regional security framework, Xi took specific aim at the basis for the current status quo: military alliances. Xi tied such alliances to “the outdated thinking of [the] Cold War.” “We cannot just have security for one or a few countries while leaving the rest insecure,” Xi said. “A military alliance which is targeted at a third party is not conducive to common regional security.” Xi in turn offered an alternative vision for Asia, one based on an all-inclusive regional security framework rather than individual alliances with external actors like the United States.” (cite )
The real horse dealing that is not hinted at in the Korean press (which has been very quiet yet unmistakably pro-Chinese) is how will the PRC, under Xi, will resolve the issue of reunification between the two Koreas. The South Korean Government reportedly wants substantial help from Xi for making reunification a reality – in both financial aid and in the momentum that can only come from the DPRK’s only substantial supporter. Though many believe that the PRC will likely not destabilize the DPRK, if the ROK buys into the Chinese sphere of financial and political influence, rejects the American presence in the region and further guarantees their responsibility in dealing with the potential North Korean refugee problem, I honestly don’t see how a belligerent DPRK could possibly avoid change and reunification with the southern half since it would be a matter of survival to do so.
I suppose this is logical; solving Korea’s problem long-standing problem with the north and the cost of unification, while resulting in the exit of America’s influence in Korea and pushing the US further out of the region and likely gaining more support for the egregious regional claims made by the PRC. There is little America can do about this too, since the Chinese have the means to deliver the reality of unification to South Korea and whereas the U.S. can not.
Looking into a Sino-Korean future; also worrisome is the shortage of personnel to staff the larger Korean projects and the increased likelihood that more Chinese will see living and working in Korea as business ties and opportunities grow in the future. What impact this will have on Korean society remains to be seen and considering the tremendous potential influx of money into Korea, the Korea of fifty years from now will likely be a very different one from what we observe today in terms of world view and its relationship with Europe and the US. Some may even talk about Korea as being a Chinese colony, wistfully remembering the days when their elders talked about how Korea was really an American colony.