South Korea looks to China

In the first half of this year Korea's China-bound exports increased by 56.6% despite Beijing's moves to cool down China's roaring economy.

Last year, China replaced the US as the leading destination for exports. In 2003 South Korea's Mainland-bound investments hit $2.5 billion, more than three times its US investments.

With China's meteoric rise, many have begun to talk about a strategic realignment, a transfer of allegiance from the US to China. Korean President Roh Moo-hyun recently set up a presidential commission on Northeast Asian regionalism and there has been a lot of discussion recently about establishing an East Asian Community, which would include the Association of South East Asian Nations (ASEAN), Japan, China and South Korea, but exclude the United States.

Chinese social ties are now much closer with the South than with the North, even though North Korea still relies on China for the bulk of its aid. Of the 78,000 foreign students registered at Chinese universities for the current academic year, 39,000 are from South Korea.

Korea now sees its fortunes tied with those of China. That perception shift has huge implications for US influence in the region. Recent polls show a majority of South Koreans, particularly those too young to remember the horrors of the war, see America as their biggest national security threat.

Much of the growing anti-American feeling in Korea stems from the belief that the US intentionally perpetuates the conflict with the North for its own strategic reasons. Young Korean entrepreneurs in particular feel that America's economic restrictions on goods produced in North Korea keep the two Koreas from what could be an advantageous marriage of Southern technology and cheap Northern labor.

Of course this anti-Americanism doesn't automatically translate into pro-China sentiment. For one thing, Koreans perceive that China is no more interested in a strong, reunified Korea than the Americans or Japanese are.

China is also now a target for economic discontent. Korea's projected 5% GDP growth figure for 2004 masks an economy that is weak and faltering. Korea relies almost entirely on export growth to keep its economy humming and with Beijing cooling things down and reining in credit, the chances of further 50%+ increases in exports are unlikely. Domestic consumption is also way down following a consumer credit blowout last year and there are big concerns that GDP growth is benefiting only giant exporters like Samsung and Hyundai. Massive strikes over the summer have also lowered investor confidence and further reduced an already small trickle of foreign investment.

Exports, normally a pointer to capital spending in Korea, aren't any more. While they were 27% higher than a year earlier in the first quarter, investment rose only 1.8%. Korean companies are still investing, but in China where costs are lower, a trend that has fed rising anti-China discontent.

But the most prominent dispute between the two countries in the last year or two has been the bizarre ongoing debacle over the ancient kingdom of Koguryo.

In July, Seoul with the unexpected support of Pyongyang protested what it called history distortion, by Chinese academic and government departments, which this year began disseminating new research showing that the Korean kingdom of Koguryo (37BC-668) was ruled by China.

While it may seem like just a case of academic sophistry, the dispute highlights the concerns of China's neighbors over its expanding power in the region. Pyongyang and Seoul see this imperialism on history as an indication of Beijing's fear of a powerful reunified Korea while Beijing regards the claims of North and South Korea as having the potential to incite separatist sentiment among the estimated two million ethnic Koreans in Northeast China.

As the geopolitical tectonic plates start to shift in Northeast Asia one thing is clear: for the Republic of Korea the sun is now rising in the West.