[Column] S. Korea needs to remain neutral in emerging US-China Cold War to prosper

Posted on : 2020-08-30 13:51 KST Modified on : 2020-08-30 13:51 KST
Korea needs to abandon US neoliberal models of growth and focus on redistribution

The year 2020 that we are living through right now may be remembered for two things in the future. It is likely to be recalled as the year of a new depression, but I think it will be remembered more than anything else as the year that the conflict between China and the US emerged to the fore, deepening into something on par with a new Cold War. The Korean Peninsula is a place that was divided during the past Cold War, bearing the brunt of a brutal regime rivalry between two garrison states. For a peninsula that has yet to even put an end to its Cold War framework, the new Cold War has the potential to have truly devastating consequences. In order to respond well, we first need to bear in mind a few important facts about the new Cold War.

First, we should not let ourselves be deceived by the two sides’ labels. In China’s case, “socialism” is nothing more than a historical pretext. The Chinese regime right now is one of state bureaucracy capitalism, with a degree of inequality that renders the “socialist” tag meaningless. The Gini coefficient is used as a measure of inequality, with income distribution more equal as the number approaches zero and more unequal as it approaches one. At the time of the last announcement, China’s Gini coefficient was 0.467, indicating worse income inequality than South Korea (0.345), and even the US (0.414).

Meanwhile, the US bills itself as a “multi-party democracy,” but with the richest 1% accounting for 38.6% of national wealth and exerting decisive influence on the policies of both the Republican and Democratic Parties, it would be naïve to think of it as a place where the “people” truly are sovereigns. In truth, both China and the US should rightly be viewed as oligarchical societies, the only difference being a historical one in the ways in which the oligarchies operate. Their rivalry is not an ideological confrontation, but a scramble over interests.

China unlikely to attain military, financial dominance over US in upcoming decades

Second, the US and China occupy different positions within the global system, and China could not -- and shows no signs of trying to -- take over the US’ place any time soon. In the first place, the US controls the global market along military lines with its military hegemony. The US currently has around 600 military bases in 70 or so countries, with 170,000 of its troops stationed overseas. In contrast, China has but one overseas military base. Also, the US military dominates a global financial system that uses the dollar as its key currency. Even now, fully 61% of the foreign exchange reserves of the different countries of the world are in US dollars. In contrast, the Chinese yuan accounts for only around 2% of the world’s foreign reserves -- less than half the level of the British pound (4.4%), let alone the dollar. China is still a production power first and foremost, not a military or financial one. China accounts for 28% of global industry production, compared with less than 16% for the US. While this production power may strive in the future to expand militarily or infiltrate the international financial system, that is something that will happen primarily in the regions surrounding it, and then only gradually. Realistically, it will remain impossible for China to acquire anything like the US’ global military and financial dominance for the next few decades.

New Cold War unlikely to have same bloc vs. bloc dynamic

Third, the new Cold War era is unlikely to have the same sort of orderly bloc vs. bloc geographical division of the world that characterized the US-Soviet Cold War. Not a single country is “pro-China” with perfect consistency. China’s only official military ally is North Korea, but even North Korea’s leading class actually hopes to form diplomatic relations with the US and Japan and to reduce their trade dependence on China. Similarly, it has become realistically impossible to be perfectly pro-US. For example, while Australia recently introduced a few measures aimed at strengthening its military alliance with the US to counter China, China accounts for 24% of Australia’s external trade to the US’ 8%. Any pro-US gesture it might make will obviously be limited to whatever allows it to preserve this trade structure.

Ultimately, most of the “rest of the world” will be forced into a delicate tightrope walk amid China-US tensions. To be sure, each country may show a different level of friendliness toward China or the US depending on its geopolitical position. While Russia and Kazakhstan appear likely to maintain their partnership relationships with China for the time being, South Korea and Japan are likely to remain military allies of the US. That being said, South Korea is clearly in need of a few forms of “diplomatic distancing.”

First, it will need to distance itself from the de facto oligarchy models of China and the US. China’s current model bears no real historical connection with South Korea, whereas the US neoliberal model has had an enormous impact on South Korea over the past two decades or so. The dominance of South Korea’s wealthy has not yet reached US levels, but things are more and more coming to resemble the US model, which has been failing catastrophically. Back in 1987 when institutional democracy was introduced and student demonstrators were calling for the dissolution of the chaebols, the top 1% -- including the chaebol families -- only accounted for around 9% of total income. Today, the top 1% represent 16% of all income, while the top 10% represent 50%. Housing prices continue to rise due to land speculation by the top 10% and others, to the point where it will eventually become impossible for ordinary South Koreans to own their own home. There is no future for South Korea unless we fully abandon the US model and proceed down the path of higher taxes for the wealthy and higher corporate taxes for large companies. Instead of the failed US model, South Korea desperately needs a model that is based on national redistribution and includes free healthcare and education.

S. Korea has nothing to gain by being entangled in US-China hostilities

Second, it will need to avoid getting entangled in the two sides’ hostile actions toward one another. Realistically, South Korea is not in a position to damage its alliance with the US, but it also has nothing at all to gain from being a party to the US’ provocations against China. A confrontation between a military/financial power and production power stands to go on for a very long time, and is very likely to lead to the emergence of a more multipolar international order where military and financial dominance is divided among various powers. What South Korea will need to adapt well to this sort of multipolar international order is not blind loyalty toward one side, but reciprocal relationships with various sides -- and, if possible, a reduced dependence on the outside in all its international relationships.

Indeed, it is stronger cooperation between South and North that represents the best option for both sides in the global landscape to come. As inter-Korean cooperation allows the North to reduce its economic dependence on China and the South its military dependence on the US, this will greatly aid both sides in finding a firm footing under the new global order. This is why we need to pursue inter-Korean cooperation much more boldly than we are doing now, no matter what sort of objections come from the US.

During the Cold War, the neutral countries of Australia, Finland, and Sweden all enjoyed peace and prosperity. In this way, the winners in the end are those who do not get caught up in the fighting. Then as now, it is an ironclad rule that applies to all.

By Pak Noja (Vladimir Tikhonov), professor at the University of Oslo

Please direct comments or questions to [english@hani.co.kr]

button that move to original korean article (클릭시 원문으로 이동하는 버튼)

Related stories

Most viewed articles