China, Japan and South Korea Agree to Talk Things Through

8 MINS READMay 15, 2018 | 09:00 GMT
After three years of bumpy relations, China, Japan and South Korea have once again gathered for a trilateral summit as they look for a way to harness their economic heft.

China, Japan and South Korea have explored combining their economic might with a trade alliance. But territorial squabbles and other roadblocks have stood in the way of that goal.

  • Japan, China and South Korea have been striving, on and off, to establish a trilateral mechanism for cooperation.
  • They have had only intermittent success, however, largely because of conflicting agendas and strategic competition in the Asia-Pacific region.
  • Right now, U.S. trade strategy and the ongoing North Korean nuclear crisis give Asia-Pacific's three biggest powers powerful incentives to work together, but their conflicting geopolitical imperatives will continue to limit cooperation.

Japan, China and South Korea recently came together for their first trilateral summit in three years. The summit, established a decade ago, has the potential to forge an economic bloc among the three that would have a major economic impact on global trade. But that can only happen if the regional powers can resolve territorial disputes, leadership squabbles and debates over the contentious future of the two Koreas.

The Big Picture

China and Japan have engaged in a decadeslong battle for influence in the Asia-Pacific region. South Korea, meanwhile, has had little power to shape the region but has worked to balance the two competing countries to fit its own interests. These dynamics came out during the three nations' trilateral summit, where longstanding geopolitical conflicts came face-to-face with recent regional developments.

What Happened?

On May 9 in Tokyo, leaders from China, South Korea and Japan held their 2018 trilateral summit to address a number of concerning global developments. Since the summit was initiated in 2008, the countries have gathered seven times, most recently in 2015.

But after a three-year hiatus caused by territorial disputes over the East China Sea, spats between China and South Korea over the latter's deployment of the U.S-led Terminal High-Altitude Area Defense (THAAD) and the weak bilateral relationship between Seoul and Tokyo, the three nations decided earlier this month that it was time to reconvene.

The decision comes in the wake of the looming summit between U.S. President Donald Trump and North Korean leader Kim Jong Un, the uncertain commitment of U.S. strategic presence in the region, and Trump's ongoing pressure on the three states to reduce the trade deficit.

Some Background

South Korea first proposed the trilateral summit in 2004, wanting to capitalize on the massive shared economic power that the three countries could have as a single bloc. Together, the nations account for 23 percent of the global gross domestic product (GDP) and 75 percent of East Asia's total GDP and trade volume. Establishing a "northeast Asia free trade area" could allow them to leverage that power on a global scale while also responding to underlying geopolitical realities.

This chart depicts the combined gross domestic products of China, Japan and South Korea with those of the United State and the European Union.
Resources and land in Japan are scarce, so it is always seeking to extend its market and supply. Meanwhile, a strong China intends to continue rapidly expanding its economic clout in the region and beyond. And South Korea, far more dependent than its peers on regional trade, would benefit much more from an integrated economic bloc than from bilateral relationships, as well as from the possibility of fewer trade barriers.

However, competition among Beijing, Tokyo and Seoul has grown stronger over the past decade and a half. In particular, China's economic boom — and its rising military and political might — has pushed Japan to strengthen its own economy and military, striving for a stronger leadership role in the region. Then there is the United States, which — alone and with regional allies — has sought to constrain China on every front, whether in its periphery in the South China Sea or with increased trade and economic pressure. South Korea, for its part, has struggled to balance its close economic ties with China and its reliance on the U.S. security framework in the region, driven both by North Korea's nuclear program and an increasingly active Japanese military, all while juggling to preserve its autonomy.

So How Did They Get Along This Time?

On certain topics during the May 9 summit, Japan, China and South Korea were able to put aside their longstanding differences for the sake of enhanced cooperation. But the nations remained stubbornly divided on many of the key issues that will determine whether or not the group can achieve collaborative success in the future.


All three powers have strong incentives to work with one another as much as they can, and representatives showed rare solidarity by uniting in a call for denuclearization on the Korean Peninsula and agreeing to cooperate on promoting a long-discussed trilateral free trade pact.

Such unity has been built on a monthslong process to reset each of the contentious bilateral relationships among the three traditional rivals. Since ruling parties in Beijing and Tokyo both cemented their domestic power late last year, the two countries have made a concerted effort to improve relations. For the first time in several years, they engaged in official exchanges and economic dialogue prior to the summit. And during the gathering, they presented a list of cooperation initiatives including Japanese participation in third-country projects under China's Belt and Road Initiative, the establishment of a defense hotline managing the East China Sea and an agreement on currency swaps and a 200-billion-yuan investment quota to Japan.

Likewise, following the yearlong feud between China and South Korea over THAAD, Beijing quietly scaled back its informal economic boycotts against Seoul in a likely effort to keep up with the shifting dynamics in the Korean Peninsula. And South Korea has attempted to maintain a healthy relationship with Japan as well, despite a previous promise to walk back the former government's strategic rapprochement with Tokyo. Given recent high tensions with China, South Korea knows how important it is to stay on Japan's good side.


But the summit also made clear the three powers' deep divides on key strategic matters shaping the region — specifically the potential breaking of the North Korean nuclear quagmire, the possibility of a reunited North and South Korea and the ongoing leadership competition between China and Japan.

While the three agreed on the ambition of ending North Korea's nuclear program and hailed the outcome of the recent inter-Korean summit, they could not agree on a plan of action to facilitate that outcome. Beijing and Seoul's approaches focused on maintaining stability and peace on the peninsula. They suggested offering economic incentives to North Korea and agreed to revive the idea of infrastructure projects such as a railway linking the two Koreas. The two neighbors differ on their desires for the long-term shape of the Korean Peninsula and the U.S. security footprint, but both share enough immediate interests to maintain their mutual goal of preventing the United States from returning to a military option or spurring further North Korean economic struggles.

By contrast, Tokyo kept its hard-line tone against North Korea, vowing to uphold "maximum pressure until Pyongyang fully denuclearizes." Tokyo is maintaining this tough stance in large part because of how it has been alienated from the latest developments in the Korean Peninsula. Japan was one of the strongest advocates for the hard-line U.S. approach to North Korea, and now that Washington seems to be shifting to a more conciliatory strategy, Tokyo wants to make sure its demands are included in any potential deals.

Likewise, though all three countries have relatively strong economic ties, establishing a northeast Asia economic bloc remains a tall order due to competition between China and Japan. China, targeted by Washington's escalating trade pressure, has actively attempted to exploit the grievances of its suffering allies and strongly advocate for a trilateral free trade agreement. But its attempt received a tepid response from Tokyo and Seoul.

This chart shows the volume of trade that flows through South Korea, Japan and China as compared to trade through the United States and through the European Union.

Japan's response is unsurprising. It remains concerned about China's rapidly expanding economic power and has thus prioritized an alternative free trade pact: the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which has endorsed Japan's status as a leader in the region. South Korea's reaction is more surprising, given that Seoul was originally the force pushing for the three powers to unite economically. But between China and Japan's ongoing competition and South Korea's need to stay on Washington's good side, Seoul's options for shaping the trilateral dynamic and establishing economic unity are limited.

What Can We Expect Now?

As long as China continues expanding its influence, the North Korea situation remains unstable and the United States continues calibrating its regional strategy, the trilateral leaders' summit is likely here to stay. But the conference's main accomplishment this year was largely symbolic: It represented a shared commitment among East Asia's biggest powers to maintain strong communication. Any tangible impacts — such as the formal establishment of a free trade agreement among the three countries — are far from reach.

Ultimately, the difficulty of making the trilateral summit work comes down to the disputes over who leads the region. China is in the best position to be the dominant regional power, but that doesn't mean Japan is willing to merely accept that state of affairs. Their desires are simply too conflicting for meaningful economic cooperation. South Korea, meanwhile, knows that it realistically could never be the region's leader, but it benefits from a trilateral structure far more than individual bilateral relationships, since it can play Tokyo and Beijing off of one another. However, right now, it has far too much to balance with the North Korea situation and its relationship to the United States.

The best the three regional powers can hope for right now is a continued willingness to maintain open communication. Any substantial economic unity is many years away, if it happens at all.

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