Dealing With Chinese Sanctions: South Korea and Taiwan

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Dealing With Chinese Sanctions: South Korea and Taiwan

Seoul can take some lessons from Taipei’s experience of living with Beijing’s displeasure.

Dealing With Chinese Sanctions: South Korea and Taiwan
Credit: REUTERS/JUNG Yeon-Je/Pool

After South Korea agreed to host the U.S. Terminal High Altitude Area Defense (THAAD) missile defense system last July, reports surfaced that China had begun sanctioning South Korea to pressure Seoul into reversing its decision. Chinese officials have repeatedly denied that there is any validity to such reports. However, evidence that Beijing has restricted Korean pop culture imports, ordered Chinese travel agencies to halt sales of travel packages to South Korea, blocked importation of Korean cosmetics, and leveled a number of other unofficial economic sanctions on South Korea has led the U.S. and South Korea to call China out for its coercive measures. Beijing, though, has shown no intention of lifting its sanctions, causing many inside and outside South Korea to wonder how much longer the country will be subjected to Beijing’s pressure. A look at Taiwan’s similar experience as a victim of China’s coercive tactics indicates that the sanctions might be lifted soon after the new South Korean president settles into office, but could also linger in one form or another for years, depending on the new South Korean administration’s strategic orientation.

China’s Hopes & Fears

China’s relations with Taiwan and South Korea share some important parallels. Beijing has long sought to draw both countries deeper within China’s orbit, and it has relied heavily on trade to do so. Taiwan and South Korea have the distinction of running the largest trade surpluses with China of any countries in the world. According to data from China’s National Bureau of Statistics, China in 2015 posted a $98 billion trade deficit with Taiwan and a $73 billion deficit with South Korea. Beijing, often accused of possessing an abiding faith in mercantilism, has been willing to endure large recurring trade deficits with these two advanced economies to bolster its position within global production and trade networks and to integrate its neighbors more deeply into a Sino-centric East Asian economic order.

In recent years, Beijing has doubled down on its economic integration strategy, sealing a number of trade agreements with Taipei including the monumental Cross-Straits Economic Cooperation Framework Agreement (ECFA) and signing China’s largest ever bilateral free trade agreement with Seoul.

While China’s leaders see great opportunities arising from economic engagement with Taiwan and South Korea, they are also heedful of the serious security challenges surrounding each country.

China’s political elite fear that de jure independence for Taiwan, or even the island nation’s prolonged separation from mainland China, could spell disaster for the ruling Chinese Communist Party (CCP). Xi Jinping, China’s president and head of the CCP, has made clear just how concerned the Chinese leadership is about Taiwan’s political future.

Less than a year after taking office, Xi told former Vice President of the Republic of China (Taiwan’s official name) Vincent Siew that the long-running dispute over Taiwan’s political status could not be handed down “from generation to generation,” implying that Beijing was not willing to wait indefinitely for Taiwan to choose unification with the mainland. Xi has also indicated that resolution of the Taiwan question is intimately linked to the China Dream, a highly publicized concept-cum-political cause that Xi himself put forth in November 2012 and that refers to the Chinese people’s collective desire to realize “the great rejuvenation of the Chinese nation.” And just last November, Xi reportedly confided to Hung Hsiu-chu, the China-friendly chairperson of Taiwan’s Kuomintang (KMT or Nationalist Party), that he believes the Chinese public would overthrow the CCP if China’s leaders were to mismanage the Taiwan independence issue.

As for South Korea, Beijing has two major security interests: maintaining peace and stability on the Korean Peninsula, and preventing South Korea from becoming more deeply embedded within the U.S. alliance system. Chinese officials frequently proclaim the former interest. In contrast, they tend to obliquely signal their opposition to a more robust U.S.-South Korea alliance by criticizing military alliances in general, occasionally chastising Seoul when its security cooperation with other countries appears to stray beyond recent norms.

China’s current leadership has upheld a Chinese foreign policy tradition of speaking out against military alliances without directly challenging the U.S.-South Korea alliance. At the Fourth Summit of the Conference on Interaction and Confidence Building Measures in Asia convened in Shanghai in May 2014, Xi gave a speech titled New Asian Security Concept For New Progress in Security Cooperation. In his speech, Xi argued that “[t]o beef up and entrench a military alliance targeted at a third party is not conducive to maintaining common security.” He went on to conclude that “it is for the people of Asia to run the affairs of Asia, solve the problems of Asia and uphold the security of Asia.” Such statements were widely seen at the time as thinly veiled denunciations of the U.S.-led security system that has prevailed in Asia for more than half a century.

More recently, amid the current rise in tensions on the Korean Peninsula, China’s Vice Foreign Minister Liu Zhenmin called for an alliance-free approach to regional security, telling attendees of the 7th Xiangshan Forum, a China-led dialogue platform on Asian security and defense issues, that “[a]ll countries should abandon the cold-war mentality, and work together to pursue a new path of dialogue and partnership, instead of confrontation, alliance, and enmity.”

Beijing has, at various times, expressed its disapproval of U.S.-South Korean joint military exercises. But its concerns about South Korea’s role in the U.S. alliance system have become much more evident over the past couple years.

Since Zhang Dejiang, the Chinese Communist Party’s third-ranking official, proclaimed China-South Korean relations to be at an all-time high in June 2015, South Korea has rapidly repaired its relations with Japan and enhanced South Korea-U.S.-Japan trilateral security cooperation, much to Beijing’s dismay. In December 2015, Seoul and Tokyo reached an agreement intended to finally settle a decades-long dispute over Korean women forced into sexual slavery for the Japanese military during World War II. The dispute over the sexual slavery issue had long impeded efforts by both sides to improve security cooperation. With the dispute behind them, Seoul and Tokyo moved forward last year with an intelligence sharing agreement that was initially expected to be finalized in 2012 but had stalled due to public opposition in South Korea. Also in 2016, South Korea joined the U.S. and Japan in their first trilateral ballistic missile tracking drills. The three countries held a similar exercise this past April. China, meanwhile, has publicly criticized virtually every step South Korea has taken over the past two years to enhance security cooperation with the U.S. and Japan.

Lessons from Taiwan

Over the years, China has used various means to try to coerce Taiwan into eschewing independence and deepening ties with the mainland. After former ROC President Lee Teng-hui referred to cross-Strait relations as “special state-to-state relations” in 1999, China made acceptance of the One-China Principle – the principle that the mainland and Taiwan both belong to the People’s Republic of China – a prerequisite for smooth cross-Strait relations.

Chen Shui-bian, Lee’s successor and Taiwan’s first president from the pro-independence Democratic Progressive Party, refused to accede to the One-China Principle during his eight years in office. Consequently, Beijing ratcheted up its efforts to peel off Taipei’s diplomatic allies and frequently blocked Taiwan from participating in international organizations. At the same time that China exerted diplomatic pressure on Chen’s government, it pushed to strengthen cross-Strait economic ties, much to the chagrin of Chen and others like himself who wished to halt, or at least slow, Taiwan’s growing economic dependence on the mainland.

In March 2008, KMT politician Ma Ying-jeou was elected president of Taiwan. During his presidential campaign, Ma had promised that he would work to improve cross-Strait relations, increase economic ties between the two countries and deepen engagement with Beijing. He and his party finessed the one China issue by adopting the “1992 Consensus” – or “one China, respective interpretations” – as the basis for revitalized engagement with the mainland. KMT officials had worked with the CCP to create this new framework for cross-Strait relations during Chen’s presidency, since the One-China Principle’s connotation that the mainland and Taiwan both belong to the People’s Republic of China was a political nonstarter in Taiwan.

Ma’s willingness to shift Taiwan’s strategic orientation toward the mainland was decisive in getting Beijing to lift its sanctions. After Ma was elected, China immediately put a halt to its practice of poaching Taiwan’s diplomatic allies and allowed the Association for Relations Across the Taiwan Straits, Beijing’s authorized non-governmental organization for carrying out day-to-day business with Taipei, to reconnect with its Taiwanese counterpart. Moreover, as Ma proceeded to fulfill his campaign promises to strengthen ties with the mainland, China allowed Taiwan greater and greater freedom of action in its international relations. For instance, Beijing permitted Taiwan to attend the World Health Organization’s annual World Health Assembly as an observer each year after Ma took office. It likewise allowed Taiwan to sit in on the triennial International Civil Aviation Organization Assembly in 2013. And, after concluding ECFA, China’s leadership looked the other way as Taiwan sealed free-trade agreements with Singapore and New Zealand – two countries that do not have official diplomatic relations with Taipei.

However, things changed in 2016 when the DPP gained control of both Taiwan’s executive and legislative branches for the first time ever.

Since the DPP’s landslide victory on January 16, 2016, China has returned to its old coercive tactics towards its island neighbor. In March of last year, Beijing established diplomatic relations with Gambia – which had severed its ties with Taiwan in 2013 – and later convinced San Tome and Principe, one of Taiwan’s three remaining African allies at the time, to switch its recognition to Beijing. China also blocked Taiwanese officials from attending last year’s International Civil Aviation Organization Assembly.

In addition to its old tactics, Beijing appears to have resorted to economic sanctions against Taiwan. Mainland tourism authorities reportedly ordered local tourism agencies to limit sales of Taiwan tour packages to Chinese citizens for the 31 days prior to Taiwan’s 2016 general election. Nevertheless, it wasn’t until last May, the month that Taiwan’s new president, Tsai Ing-wen, was inaugurated, that Taiwan witnessed a precipitous drop in its mainland visitors. According to Taiwan’s Tourism Bureau, the country saw 16 percent (or nearly 700,000) fewer mainland Chinese visitors in 2016 than in 2015.

As before, Beijing has stated its bottom-line for smooth cross-Strait relations: acceptance of the 1992 Consensus and its “core connotation” that both sides of the Taiwan Strait belong to one China. In her inaugural address Tsai tried, like her predecessor, to finesse the one China issue. But Beijing was not satisfied, calling her speech an “incomplete test answer.”

Ultimately, China’s decisions to sanction Taipei and Seoul derive as much from Beijing’s concerns about its broader relations with each government as from the specific issues of the “1992 Consensus” or THAAD’s possible implications for China’s strategic deterrent.

The One-China Principle became Beijing’s litmus test for Taiwan’s government only after cross-Strait relations deteriorated drastically during the mid- to late 1990s. Beijing was willing to work with the KMT to devise an alternative framework to the One-China Principle in order to improve cross-Strait relations and advance its economic integration strategy with a receptive Taiwanese administration. But China’s leaders probably see little that they can gain from Tsai since she and her party remain committed to reducing Taiwan’s dependence on China and to preserving the de jure independence option for their country. Therefore, rather than take a flexible approach towards Tsai and perhaps work out a new framework for cross-Strait relations, there is a good chance that Beijing will keep its sanctions in place for the remainder of Tsai’s presidency in the hopes that it can persuade Taiwanese voters that Taiwan’s future as an independent state is unsustainable.

South Korea may face a similar fate, depending on how willing South Korea’s new president is to accommodate Beijing on regional security matters.

There has been much debate as to just how big of a threat the THAAD system in South Korea actually posses to China’s nuclear deterrent. What is clear, though, is that South Korea crossed a Chinese red line by agreeing to let the U.S. deploy the missile defense system on its soil. Beijing had for years warned Seoul not to accept the THAAD system.

The South Korean government’s decision to finally host THAAD, over Beijing’s strong protests, represents a serious failure for China’s foreign policy. It demonstrates that years of deep economic engagement with South Korea has bought Beijing little influence with its neighbor when it comes to security affairs. And the missile defense system’s utility to regional missile defense cooperation among the South Korea, the U.S., and Japan is not lost on Beijing.

As with China’s sanctions on Taiwan, its sanctions on South Korea are aimed at producing a shift in the target country’s strategic orientation.

Taiwan’s similar experience with Chinese sanctions suggests that Beijing might show some flexibility on the THAAD issue so long as South Korea’s new government makes the required strategic shift.

Beijing would almost certainly remove its sanctions on South Korea immediately were the new administration in Seoul to remove THAAD. Yet, such a move might not be necessary to get the sanctions lifted.

What China seems to want most from South Korea right now is for it to step back from its evolving security relationship with Washington and Tokyo and show greater deference to Beijing on the handling of the North Korea issue. To date, Seoul and Washington have rejected Beijing’s calls to enter into talks with North Korea without any preconditions. The two allies have also declined China’s recently re-tabled proposal that they strike a bargain with North Korea to suspend their largest annual joint military exercises in return for North Korea agreeing to suspend its nuclear and missile programs.

There are definitely limits to how far Seoul can/will go to accommodate its neighbor on security matters. But if the new South Korean administration can find a way to allay Beijing’s fear that its influence with Seoul is irreversibly waning, it is possible that Beijing would lift at least some of its sanctions even with THAAD still in place.

The opportunity for Beijing and Seoul to repair their relations and put an end to China’s sanctions exists because the two sides interests are not in contradiction – dissimilar from the Chinese leadership’s goal of unifying the two sides of the Taiwan Strait and the Tsai administration’s goal of keeping the door open for Taiwan’s possible de jure independence.

Despite China’s willingness to sanction Taiwan and South Korea, it has not yet lost faith in its economic integration strategy. Beijing has kept its economic sanctions against Taiwan relatively limited – its only major victims being the country’s tourism and travel industries. And China’s economic sanctions against South Korea, although more substantial than those imposed on Taiwan, are not nearly as severe as they could be. In fact, China has for decades possessed significant economic leverage over its neighbors, but it has shown no desire to totally upend its economic relations with Taiwan and South Korea. The two countries can take solace in Beijing’s track record of restraint and its undying faith in its economic integration strategy. However, they can also be assured that Beijing is prepared to keep its sanctions in place for years if it doesn’t get what it wants.

Kristian McGuire is an independent, Washington-based research analyst. He is the founder and executive editor of Pac100.com and associate editor of Taiwan Security Research. Kristian earned his M.A. in international affairs from George Washington University’s Elliott School of International Affairs and his B.A. in international relations from University of the Pacific’s School of International Studies. You can reach Kristian at [email protected] and follow him on Twitter @KrisAMcGuire.