The 2-Minute Thought: Postcard from Korea and China

After spending a week in South Korea, I can tell you that the threat from North Korea just isn’t top-of-mind for South Koreans.

Not a single person I spoke to ever brought up North Korea or Kim Jong Un or military conflict in conversation.  As you might have heard elsewhere, the geopolitical headlines that have been alarming the rest of the world are, in South Korea, just business as usual.

What did get mentioned a lot, however, were the consequences of allowing the U.S. to install its Terminal High Altitude Area Defense or THAAD missile defense system in South Korea. 

That move, which so angered China, inspired official and unofficial Chinese retaliation against Korean firms and products.  China is Korea’s largest trading partner.  It accounts for a quarter of its exports.  Getting shut out of China hurts. 

In March, Beijing banned package tours to South Korea, which cut the number of Chinese tourists there by 2.3 million in just the five months between March and July.  Bloomberg estimates that South Korea has lost $4.7 billion of revenue from Chinese tourism alone.  Including Chinese boycotts of other Korean products, China’s retaliation may have cost Korea 0.3% of economic growth so far this year.  The Hyundai Research Institute figures that total lost Chinese business will come in at $7.5 billion for the year. 

In the Seoul neighborhood where I stayed, the difference was visible.  Not too long ago, the neighborhood had been a convenient way-station for Chinese tour groups.  It has no famous sites, but it’s an easy place for tour buses to park.  Two years ago, there were  storefronts selling “Korean souvenirs” with signs written in Chinese advertising prices cheaper than the traditional markets downtown.  There was a mysterious Chinese food canteen set up specifically to cater to Chinese tour groups that no Korean would ever enter.  There was a lot of Chinese being spoken on the streets.  On this trip, though, it was all gone. “What happened to all of it?” I asked my friend.  “THAAD,” he answered.

And whenever I asked about the state of the Korean economy, the answer usually involved China.  A chemicals exporter told me that business around the world was good – except for China.  The global economy was strong,  personal consumption was healthy, and that meant the need for the basic chemicals that go into soap and cleaning products and packaging was good  – unless you exported to China.  Fortunately, he said, he imported from China and exported to the rest of the world. 

I mentioned to a jeweler that the perception in the U.S. is that the Korean economy is healthy and that all the economic numbers look good.  Oh no, he said, the Korean economy has been depressed because we haven’t been able to sell to China.  But it will be getting better because China is opening up again.

That is what everyone said.  Things are looking up because a few days after I arrived in Korea, there was an announcement that China and South Korea had agreed to improve relations.  Things are warming up again.

And when I stopped in Shanghai for the weekend on the way home, there were no visible signs that Korean businesses were suffering.  At least, the Korean cosmetics stores were as popular and as packed with shoppers as they could be.  

Update on the Korean Peninsula...

A lot has been happening on the Korean Peninsula, both North and South.  In our March newsletter we covered the impeachment of South Korea’s former president Park Geun-hye and public fury over political corruption.  Since then, former President Park has been arrested; the first liberal South Korean president in a decade, Moon Jae-in, has been sworn in; and North Korea has conducted two more missile tests.

North Korea looms as perhaps the globe’s biggest geopolitical threat.  As the situation on the peninsula continues to change, here are some things we’ve learned from recent events:

1)  There’s a new South Korean president who may notsee eye-to-eye with the U.S.

While it hasn’t quite been a week since Moon Jae-in was sworn in as the new South Korean president, we know he will take a softer approach to North Korea.  Moon wants to bring back the “Sunshine Policy” – South Korea’s policy of engaging North Korea through commercial and cultural ties – and work toward closer relations. 

While Moon has said he looks forward to working with the U.S., he also has criticized the U.S. installation of the THAAD anti-missile system in South Korea, and he’s firmly opposed to any U.S. military action on the peninsula without South Korea’s assent.  How this will weigh against the Trump administration’s harder rhetoric is something we’ll have to see. 

2)  South Korean attitudes toward North Korea are complicated.  

 Moon Jae-in won the presidential election by the widest margin ever.  But there was a stark generational divide in the results. 

Moon, a former human rights lawyer, ran as the candidate of change focused on wiping out corruption and income inequality. That resonated with younger generations, but not older ones: More than 50% of those in their 30s and 40s voted for Moon, but only 24% of those in their 60s and 70s did. 

For many older Koreans, the candidate who appealed more was conservative Hong Joon-pyo, who ran a simple anti-Communist campaign, took a hard line against North Korea, and painted President Moon as a pro-North Leftist.  That says a lot about how complex attitudes toward the North are.

Older Koreans are more likely to feel an affinity with North Korea and favor reunification -- but also emphasize anti-Communist ideology.  In contrast, younger generations are more concerned with domestic economic issues and breaking the chummy ties between government and big business conglomerates.

In a recent survey, 61% of those in their 60s said reunification with the North would be extremely positive.  But those positive feelings dropped to 51% for those in their 50s, 50% for those in their 40s, 38% for those in their 30s, and 32% for those in their 20s.  Only 5% of 20-somethings said they felt shared “bloodlines” with North Koreans.  More were likely to see North Koreans as “different,’ untrustworthy,” or “frightening.”

3)  Security is not number one.

As much as the U.S. news focuses on North Korea, in South Korea it’s not all about North Korea all the time.  National security was an important election issue – but not the most important one.  According to a Gallup Korea Poll, the most important issue was economic revival, and behind that, job creation. Especially for young Koreans, trying to survive in an extremely competitive job market has crowded out national security concerns.

4)  And North Korea?

It’s becoming an increasingly formidable adversary.  For a long time, North Korea’s amateur-ish missile tests looked kind of silly.  But that’s no longer true.  While it was once widely thought that North Korea would trade its nuclear weapons program in a “grand bargain” with the U.S., the consensus now is that it will never give up its program.  North Korea seems dead set on building intercontinental missile capability – and the ability to survive all-out war.  Its willingness to take extreme risks and remain in a perpetual state of “almost-war” presents an extreme challenge for the rest of the world.


The 2-Minute Thought The Distance Between North and South Koreans

Every five years, the East Asia Institute surveys South Koreans on whether they view North Korea as “one of us,” “a brother,” “a neighbor,” “an enemy” or “other.” 

In 2005, 51% of South Koreans said they saw North Korea as “a brother” while only 15% selected “enemy.”  But by 2015, 41% of South Koreans said they saw North Korea as “an enemy.”   

The affinity that South Koreans once felt so strongly for their “brothers” to the North is fading.

A visitor to South Korea in the 1980s or 1990s would have been struck by how much South Koreans viewed North Koreans as part of the same family – largely because of an intense sense of shared ethnic identity and an optimistic expectancy around eventual reunification.  But that is no longer the case.

Last year a Ministry of Culture survey found that 32% of Koreans felt there was no particular reason to work toward reunification with the North.  While that’s only a third of respondents, it’s double the proportion who felt this way in 2006.

And there is a generational dynamic.  In a different survey, where respondents were asked if reunification with the North would be extremely positive, 61% of those in their 60s said yes.  But agreement levels fell to 51% for those in their 50s, 50% for those in their 40s, 38% for those in their 30s, and 32% for those in their 20s. 

Not surprisingly, it is 20-somethings who feel the greatest distance from North Koreans.  Only 5% of those in their 20s see themselves as sharing “bloodlines” with North Koreans.  Other surveys have shown that younger South Koreans are more likely to see North Koreans as “different,’ untrustworthy,” or “frightening.”

What has happened for younger Koreans?  For one thing, they came of age during South Korea’s “Sunshine Policy,” the decades-long strategy of attempted engagement with North Korea which inspired both debate and frustration.  And North Korea’s recent behavior -- including the 2010 torpedoing of the South Korean warship Cheonan in the Yellow Sea -- hasn’t helped. 

But more than anything, it is probably that young Koreans grew up in a globalized world – a vastly different experience from what older Koreans knew.  As Emma Campbell in East Asia Forum put it: “Young South Koreans are sophisticated, well-travelled, highly educated, multilingual, tech-savvy and global.  Their life stories have little in common with their North Korean or Korean-Chinese brethren.  As one young person told me, ‘to be honest, South and North are almost different countries.  Americans or Europeans are more similar to us in their way of thinking than North Koreans.”

Plus, it’s pretty hard to be a young person in South Korea today.  With fierce competition in schools and the job market creating social and economic insecurity, reunification with the North is hardly likely to be top of mind.