Amid geoeconomic fragmentation, South Korea has what the world needs. A uniquely critical bundle of industries including semiconductors, ships, batteries, and arms makes Seoul an attractive addition to several proliferating resiliency-minded international initiatives. However, South Korea remains especially vulnerable to escalating coercion, disruption, and conflict. Further, these various groupings may be independently attractive but are in tension, as going down one “lane” can generate opportunity costs for another. A partnership portfolio straightforwardly maximizing rewards while minimizing risks is unlikely to emerge, and some tradeoffs are inevitable.     

While all countries must consider their capabilities and vulnerabilities as old economic assumptions unravel, South Korea’s especially intense circumstances make it a very talented player in a very dangerous game. 

On one hand are South Korea’s strengths in strategic industries. The country’s semiconductor industry dominates memory chip exports, rivals Taiwanese manufacturing, powers a booming KOSPI, and is expanding into design. These strengths, combined with developmental state practices and aggressive, widespread implementation, make Seoul a leading contender for the world’s third AI power. Meanwhile in batteries, the three legacy Korean firms are the last real competitors to nearly dominant Chinese producers. Similarly in shipbuilding – maritime and naval –  strengths like LNG carriers make Korean shipyards the main China alternative. In arms exports, K-defense’s rise continues via high-performance and affordable, rapid, and favorable production terms.       

Yet South Korea’s threat environment is stark. North Korea is disinterested in reconciliation, irreversibly nuclearized, and empowered by Russia. Ever-rising China continues its regional revisionism, while U.S. security guarantees arguably resemble an unreliable protection racket. Potential solutions, such as a new protector or nuclear weapon acquisition, remain perilous. 

Such geopolitical concerns are linked to South Korea’s economy, which is indeed dependent upon trade, particularly with the superpowers. Beijing’s economic coercion of Seoul is well-documented and several critical Korean industries, such as semiconductors and batteries, rely upon Chinese imports while facing severe Chinese competition. Meanwhile, the Trump administration extorts Korean investment pledges and other concessions while even its more benign predecessors pressed economic security alignment. Further, as freedom of navigation deteriorates, Korean trade and energy imports must use waterways like the Strait of Hormuz and South China Sea. 

Three Lanes for Geoeconomic Partnerships

As most nations face similar economic security concerns, resiliency-seeking groupings have multiplied. With its industrial strengths and largely positive (if not uniquely trusted and influential) reputation, South Korea is well-suited for any of what I will call three “lanes”: a U.S.-led new economic order, a liberal-democratic middle power coalition, and relatively China-inclusive, Global South-centered networks.

Lane 1: A U.S.-led Order

Whether of the transactional Trumpist or Campbell-Doshi allied scale variety, South Korea heavily features in whichever geoeconomic vision prevails in Washington. Similarly, given the traditional alliance’s prominence, Seoul’s emerging “geoeconomic toolkit” has unsurprisingly centered on the U.S. partnership. 

South Korea is well-equipped to act as “force multiplier” or “wingman” to American superpower heft, in which R&D, investment, and trade channels across emerging technologies, critical minerals, the defense industrial base, and energy forge China-resilient supply chains. When so inclined, the United States can also coalesce larger groupings featuring other high-capacity partners, like Japan. When alliance-skeptics hold the White House, such economic partnerships can reinforce the military relationship. 

Equally obvious are the risks to choosing Washington. Under any U.S. president, choosing this lane provokes Chinese retaliation, which can only be mitigated. Even if the weakened Trump administration proves to be an aberration, reliable U.S. policy coherence remains highly questionable. Noticeably, Washington’s economic coercion is no longer theoretical, as many extracted Korean investment pledges into the United States include commercially dubious terms.         

Lane 2: A Middle Power Coalition

Given the heightened uncertainty, Euro-Atlantic and Indo-Pacific liberal democracies are now building new economic coalitions to achieve autonomy against China’s and the United States’ bullying, and South Korean participation is essential. The attraction of the “middle power moment” is unmysterious. A “likeminded” democratic grouping including Europe, Japan, South Korea, Australia, Canada, and possibly India could feature formidable pooled market size and GDP, Korean-Japanese technological-industrial, European-British financial and institutional, and Canadian-Australian natural resource capabilities. 

South Korea’s role within the project is concretely taking shape. Diplomacy with France, Germany, and Japan has accelerated cooperation on energy security, arms manufacturing, critical minerals, AI and emerging technologies, and strategic industries. 

Yet disciplined advocates of this lane emphasize optionality and resilience, not a standalone solution. South Korea cannot fully resolve its U.S. and China dilemma through a middle power coalition. Even if the middle powers’ aggregate GDP is competitive, capacity in, for example, the AI stack is not. AI further demonstrates tensions between South Korea’s China-resemblant speed, implementation, and application priorities versus Europe’s emphasis on safety, governance, and privacy. Uncomfortably, Seoul can also credibly question what Europe offers in some domains beyond market access and regulation. 

Worse, middle powers still do not act together in a crunch. They tend instead to seek bilateral deals with Washington or Beijing. Such behavior is understandable for the Indo-Pacific members, who, given the lack of regional alternatives to U.S. dependency and Chinese hegemony, seek to supplement the U.S.-led order, not replace it. Euro-Atlantic leaders such as France’s Emmanuel Macron and Canada’s Mark Carney, however, have proven eager to more decisively break with Washington, suggesting a coalitional geographic divide. 

Lane 3: China and the Global South

Finally, although overlooked, rising giants such as India and growing regions such as ASEAN and Central Asia are increasingly geoeconomically proactive, including toward South Korea. Global South players have not cohered into a modern Bandung, yet they show capacity for joint action, value-chain upgrading, and sound developmentalist practices. 

South Korea’s joint opportunities include critical minerals with Central Asia, nickel and batteries with Indonesia, Indian scale, Singaporean finance, arms trade with the Philippines, and an especially deep and wide-ranging partnership with Vietnam. Revitalizing the New Southern Policy, Seoul has completed successful summits in these regions, whether bilaterally or under larger ASEAN or “C5 (Central Asia) + 1” settings. This lane is also conducive to South Korea’s cultivating a commercially competent, geopolitically constructive profile while not antagonizing China. 

However, the technological, financial, and developmental gap between the Global North and South persists even as it narrows, limiting what the latter can offer Seoul. Projected near-future shares of battery cell production, for instance, remain modest. Further, this partnership set still contains real limitations and tensions. Central Asia, despite its infrastructure push, still faces daunting physical and political geography barriers. It’s uncertain whether the Vietnam partnership can move into higher-value domains. South Korea also has surprisingly underdeveloped strategic trust with India or the Philippines.    

Opportunity Costs and Choices

As should be self-evident, these three lanes are not just independently limited but impose opportunity costs upon one another – if they’re not outright mutually exclusive. 

Most explicitly, with “lane 2” in mind, U.S. officials have warned against groupings that replace or push back against the United States. Given Trump’s precedent of scaling back joint exercises on the peninsula, South Korea must consider the prospect of provoking security backlash. Conversely, excessive “lane 1” adherence could make Seoul’s Euro-Atlantic partners question how much post-American autonomy the Korean connection can actually help provide. 

Similarly, as most Global South players eschew superpower alignment, fully joining the United States’ geoeconomic camp can undermine a country’s developmental appeal. Those suspicions are mutual; Washington has accused many “lane 3” players of facilitating Chinese economic influence and workarounds.

The tensions between “lane 2” and “lane 3” are less discussed but real. European leadership invariably emphasizes liberal norms, human rights, and robust governance standards, in turn drawing accusations of neocolonialism, arrogance, and hypocrisy. Should South Korea present itself as a Western democracy in good standing or a postcolonial development success story? When considering international regulation disputes, it may often have to choose.

What Should South Korea Do? 

The three lanes must be granularly developed where they do not conflict. If the U.S. partnership cannot be de-centered, many Indo-Pacific “lane 2” and “lane 3” partners including Japan, Australia, India, and the Philippines face similar, if less immediately intense, dilemmas and should be diversification’s starting point. For example, a joint India-Japan-South Korea semiconductor initiative can be credibly presented to Trump’s Washington – which could itself be potentially brought in – as supplementary, not competitive. 

With Tokyo in particular, Seoul should look past historical disputes and legacy rivalries in chips, ships, cars, and batteries. As both countries lose ground in these industries and larger geopolitical interests converge, emphasis should shift to joint scale and shared expertise. 

Europe and Canada have many strengths and should be cultivated. But Seoul’s specific and extreme geostrategic position needs to be made clear to those partners before serious disagreements surface on AI or battery regulation, the Russian energy relationship, etc. 

Meanwhile, Global South multilaterals like ASEAN and the C5, and “lane 3” generally, should receive greater attention. Their share of global GDP will only grow, their economies highly complement South Korea’s, they can help break chokepoints such as in critical minerals, and many hold pathbreaking alternative perspectives to superpower rivalry.

Finally, South Korea must determine how to approach the United States and China. Even with a robust “lane 2” and “lane 3,” the prospect of truly escaping superpower entanglement is exceptionally daunting for South Korea’s economy, even more so as links multiply between economic and traditional security. So long as China remains the dominant regional economy and the U.S. alliance irreplaceable for security, Seoul must precariously develop “lane 1” while minimizing provocations to China. All this has to be managed while hoping Trumpist predatory instincts do not overtake the South Korea-U.S. relationship. 

In closing, it must be said that many of these acute dilemmas were avoidable and originated in Washington, not Seoul. South Korea’s geoeconomics and China relationship never would have had easy solutions. But if the current U.S. administration had not acted as such a coercive bully toward Seoul and its other partners, “lane 1” and “lane 2” would likely not have split, tensions between “lane 1” and “lane 3” would have been dampened, and one of Washington’s most economically capable partners would not face such difficult tradeoffs.