Reviving China-Japan-ROK trilateral: An attempt to hold common ground

The leaders of China, South Korea, and Japan met in Seoul to attend the ninth trilateral summit meeting after a hiatus of four and half years. The summit meeting was scheduled at an important juncture when the shadow of a heightened China and the United States (US) contest is looming over the East Asian region. Simultaneously, the Indo-Pacific region is experiencing significant upheaval, characterised by escalating security challenges and increasing geopolitical fragmentation. Amidst the institutionalisation of the US, Japan, and South Korea summit in 2023, the resumption of the trilateral summit between China, Japan, and South Korea raises important questions. What is the relevance of the restart of the trilateral summit? And, how does the trilateral 2.0 help serve each member's interest?

Creating consensus on economic cooperation

As the last trade negotiations happened in 2019, this trilateral summit is important for the three parties to push for the Free Trade Agreement (FTA) which has not progressed for a long time. Even though the conversation on trilateral FTA has regularly featured at ministerial meetings of foreign ministers and trade ministers at trilateral and bilateral levels, much has not moved beyond statements due to the COVID-19 pandemic and fluctuating diplomatic ties. Therefore, the trilateral summit will give impetus to push for a faster implementation of the FTA negotiation process as agreed at the summit. In the joint statement, the leaders committed to ‘keep discussions for speeding up negotiations for a Trilateral FTA, aiming at realising a free, fair, comprehensive, high-quality, and mutually beneficial FTA with its value’. The culmination of FTA will ensure greater economic cooperation between the three parties, viewed as a pillar of stability in bilateral ties compared to divergent security issues that routinely create fissures. As all members aim to strengthen economic cooperation, the rationale behind the trilateral revival is different for each, as elaborated below.  

• China

The joint statement released at the end of parleys at the Seoul trilateral reflects some of China’s core concerns related to the economy and global situation. The Chinese Premier, Li Qiang; South Korean President, Yoon Suk-yeol; and Japanese Prime Minister Fumio Kishida pledged to strive for a level playing field to bring in non-discriminatory open, and transparent climate for trade and investment. They also agreed to bolster supply-chain cooperation, mitigate disruptions, and keep their markets accessible. The Summit comes close on the heels of efforts by the US to bring in new regulations that curb the export of sensitive technology related to semiconductors, restrictions on outbound investment into advanced sectors in China, and slapping tariffs on Chinese goods. 

The joint statement released at the end of parleys at the Seoul trilateral reflects some of China’s core concerns related to the economy and global situation.

Japan and Korea (both US allies) are crucial in the US’s scheme to limit China’s access to sophisticated semiconductor manufacturing equipment and know-how. Foreign Direct Investment into China is at a 30-year low due to the strained geopolitical relations.  

The economy is an important aspect of the Communist Party of China’s (CPC) legitimacy to rule. On account of the economic headwinds, there is considerable apprehension among the Chinese elite as evidenced from China’s Central National Security Commission’s assessment last year that the Party-state must gear up to face “worst-case scenarios”. Li Wei, a scholar from the China Institute of Contemporary International Relations, cited “unilateral trade protection” and “regional and global conflicts” as reasons for the grim evaluation. China has tried to use the kinship card in its diplomatic engagement with South Korea and Japan. During the International Forum for Trilateral Cooperation convened in Qingdao last year, Chinese Foreign Minister Wang Yi told envoys from Japan and Korea that they should develop autonomy from the West and cooperate with China to “reinvigorate Asia”. Thus, China is pushing to revive talks on the free-trade agreement (FTA) that had stalled in 2019 on the back of the US-China trade war. 

• South Korea

As the chair of the Summit, South Korea has invested much political capital to revive the trilateral. These efforts are based on a rational assessment of the US polity that has led to the implementation of mercantilist trade policies, continuing from Trump to the Biden administration. For instance, many policies and interventions undertaken by the Biden administration like the Inflation Reduction Act (IRA) and the recent tariffs have hurt South Korean companies. In addition, Seoul understands that depending too much on either of the US and China is not viable as an economic strategy, therefore it's better to have good trade ties with both parties. Thus, it sees diplomacy as an essential tool to maintain better economic ties.

As the chair of the Summit, South Korea has invested much political capital to revive the trilateral. These efforts are based on a rational assessment of the US polity that has led to the implementation of mercantilist trade policies, continuing from Trump to the Biden administration.  

South Korea aims to improve its relations with the resumption of the trilateral summit, allowing it to inject stability in its bilateral economic relations with China with whom its ties have witnessed turbulence since President Yoon came into office and started promoting values-based diplomacy and closer security cooperation with Washington D.C. South Korean closer security relations with the US has had implications on overall relations with Beijing by its trade or security ties.  

Irrespective of the fact that the US became South Korea’s top export market displacing China, Seoul understands that it cannot undermine Chinese market importance, being an export-dependent economy, particularly when the next US president’s stance on industrial trade policy and 10 percent tariffs will be detrimental to Seoul’s exports. By re-kindling the trilateral, Seoul wants to protect the existing supply chains and trading relations with China, to Trump-proof itself. In addition, security issues still linger in the back of Seoul's strategic calculations about DPRK, with worsening ties with Moscow, Beijing is the last point of contact between Seoul and Pyongyang.   

• Japan

A revival of the trilateral is significant for Japan for several reasons, although its current potential is clouded by regional complexities. As one of China’s top foreign investors and a crucial player in East Asian supply chains, Japan benefits from the seamless trade of intermediate goods, which are integral to its manufacturing and export-oriented economy. Reviving trilateral cooperation could lead to enhanced economic synergies, shared technological advancements, climate action, digital transformation, and other areas as demonstrated in the six key areas of cooperation identified in the Joint Statement.

A revival of the trilateral is significant for Japan for several reasons, although its current potential is clouded by regional complexities. As one of China’s top foreign investors and a crucial player in East Asian supply chains, Japan benefits from the seamless trade of intermediate goods, which are integral to its manufacturing and export-oriented economy.

Most importantly, the trilateral offers Japan a platform to balance its strategic interests. Despite geopolitical concerns over China’s increasing assertions and advances which are in contravention of the rules-based order, Tokyo has sought to include China within regional frameworks understanding the geographical and economic significance of Beijing while strategically not adopting too confrontational an approach. Fostering a trilateral dialogue with China and South Korea, thus, offers a mechanism to manage regional tensions while balancing China’s role in East Asian geopolitics. This is crucial given the ongoing challenges, such as North Korea’s nuclear program and territorial disputes in the East China Sea even though these issues were not mentioned at the ninth trilateral.

That being said, Beijing's attempts to sway Tokyo and Seoul away from Washington have been largely ineffective, reflecting the entrenched nature of Japan’s alliances and also Japan's commitment to its alliance with the US which remains a cornerstone of its foreign policy. The strong military and strategic ties with the US provide both countries with a security umbrella against potential threats from China and North Korea making it challenging for China to disrupt these established relationships.

Way forward

The resumption of the China, South Korea, and Japan trilateral is a welcome development for the East Asian region and Indo-Pacific’s economic stability and security, as it attempts to reinvest in economic development and cooperation rather than creating fragmentation in the existing international trade system. The summit’s success points to an optimistic direction in the trilateral trajectory and can be gauged by the fact that it was able to build consensus on important issues, primarily restarting the FTA negotiations and other vital regional and global challenges, irrespective of the differences that remain among the three members. However, in a realm where security and economics are more linked than ever, it would be naive to expect business as usual. Other intervening variables like alliance commitments, shifting public sentiment, and members’ security interests will invariably challenge the functioning of the trilateral at every step. In spite of the obstacles, the progress made by the trilateral so far generates optimism, but it remains to be seen how well the three members keep aside their differences to cooperate on economic issues. 

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Pratnashree Basu is an Associate Fellow at the Observer Research Foundation.

Abhishek Sharma is a Research Assistant at the Observer Research Foundation.

Kalpit A Mankikar is a Fellow at the Observer Research Foundation.

• Economics and Finance
• Economic Diplomacy
• International Trade and Investment
• China
• East and Southeast Asia
• Economic cooperation
• Free Trade Agreement (FTA)
• Trade Negotiations
• US-China Relations

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