Historian Arnold Toynbee explained the rise and fall of civilizations in his work "A Study of History" through the lens of 'challenge and response.' Civilizations thrive when they creatively respond to harsh challenges, but they collapse when they fail to do so. In 2026, South Korea faces a formidable 'complex crisis' characterized by five simultaneous waves: declining trust in the United States, a more assertive China, a resurgent North Korea, Japan's militarization, and shocks to energy and supply chains. The key lies not in the intensity of these challenges but in our ability to respond. An outdated map cannot navigate a new world.
The fissures began within the United States, which, despite being the world's largest economy, is experiencing a decline in trust regarding its commitments. A recent Pew Research survey indicated a significant drop in South Koreans' favorable views of the U.S. and confidence in its international leadership. In an Ipsos poll, respondents identified China as having a more positive impact on the international community than the U.S. This shift is a consequence of trade wars, defense cost disputes, and transactional diplomacy that undermines alliances. Additionally, the International Energy Agency has described the oil supply disruptions stemming from the war in Iran as the worst in decades. Both South Korea and Japan, which rely on foreign sources for over 90% of their energy—mostly from the Middle East—find themselves in a precarious position.
Conversely, China has rapidly restructured its industrial and technological competitiveness, establishing new strategic influence. It accounts for nearly 30% of global manufacturing output, surpassing the combined totals of the U.S., Japan, and Germany. The Pentagon forecasts that China will possess around 1,000 nuclear warheads by 2030, supported by a navy of over 370 ships. With its dominance in electric vehicles, batteries, and solar production, along with controlling 90% of rare earth refining, China is tightening its grip on Western high-tech industries through export controls on gallium, germanium, and rare earths. This scenario illustrates that 21st-century hegemony hinges not on the number of aircraft carriers but on controlling supply chain chokepoints.
The actions of neighboring countries are also noteworthy. The war in Ukraine has presented North Korea with unprecedented opportunities. Following an expansion of military cooperation with Russia, North Korea's economy is estimated to be experiencing its highest growth in recent years. It is absorbing energy, foreign currency, satellite and missile technology, and combat experience. The New York Times remarked that Kim Jong Un has moved from 'hell to heaven.' With inter-Korean dialogue severed and both sides entrenched as 'hostile nations,' time is not on our side.
Japan has been the first country in Asia to initiate supply chain restructuring and security transitions. Since the 2010 Senkaku incident, it has reduced its dependence on Chinese rare earth permanent magnets to 31%. In 2026, Japan's defense budget surpassed 9 trillion yen for the first time. Amendments to Article 9 of its pacifist constitution are underway, and Self-Defense Force officers have been dispatched to NATO. However, as the Financial Times pointed out, Japan is a country that cannot say 'no' to Trump. Bound to a one-sided relationship with the U.S., Japan is paying more while becoming increasingly constrained, with only 20% of Japanese expressing trust in the U.S. Prime Minister Takaichi's comments about a 'crisis of existence similar to Taiwan' have provoked economic retaliation from China. This one-sided foreign policy has led Japan to a dead end.
South Korea faces similar geopolitical pressures as Japan but is even more vulnerable in terms of supply chains. Of the 31 critical rare metals, China is the largest supplier of 16. While Japan has reduced its reliance, South Korea's dependence on Chinese rare earth permanent magnets has surged to 88%, with 98% of gallium, 97% of graphite, and 84% of magnesium sourced from China. The 2021 urea water crisis serves as a reminder; when China halted urea exports, trucks across the nation nearly came to a standstill. This was a preview of how supply chain wars can suffocate industries without missiles being fired.
Nevertheless, South Korea possesses strengths that Japan lacks. First, it has the semiconductor and shipbuilding industries that the U.S. desperately needs. As demonstrated by Hanwha Ocean's acquisition of a shipyard in Philadelphia and contracts for U.S. Navy vessel maintenance, leveraging this industrial leverage can yield tangible results, such as approval for nuclear-powered submarines or negotiations on nuclear cycles. Second, the APEC summit in Gyeongju facilitated Chinese President Xi Jinping's first visit to South Korea in 11 years, restoring high-level diplomatic relations with China. Third, as a key party in the Korean Peninsula issue, South Korea is well-positioned to lead a coalition of middle powers in Asia without the burden of historical grievances.
Victor Cha, a Korea chair at the Center for Strategic and International Studies, advises abandoning 'strategic ambiguity' and standing with the U.S. and Japan against China. His warning to recognize the reality that South Korean companies were expelled from China during the THAAD retaliation is worth heeding. However, this prescription is only partially correct. Recognizing threats clearly is different from aligning with a specific camp. Dependence ultimately leads to entrapment. The binary choice of 'alliance or autonomy' is an outdated framework that has led Japan to a dead end.
The model of pragmatic diplomacy can be traced back to former President Kim Dae-jung. He anchored the South Korea-U.S. alliance in national interests but did not bind himself to it. With strong diplomacy toward the U.S., he opened the door to dialogue with Pyongyang, balanced historical issues with future cooperation through the Kim Dae-jung-Obuchi Declaration, and expanded diplomatic horizons through engagement with the four major powers. The principles of 'intellectual problem awareness and pragmatic realism' serve as a textbook for creative responses. This approach aligns with the current government's pragmatic diplomacy, which encompasses both security and economic interests.
During the Cold War, the key question was which side to choose. However, in this era of complex crises, the priority is to secure strategic space to maximize national interests rather than merely choosing sides. Alliances should be strengthened, but options must be broadened, and while pursuing values, the realities of economic security cannot be ignored. Just as the Kim Dae-jung administration navigated dual crises of the financial crisis and the Cold War structure on the Korean Peninsula to cultivate both national interests and peace, today's South Korea is called to develop a new national strategy that combines principles and pragmatism. Prioritizing national interests does not mean balancing between major powers but rather engaging in proactive diplomacy that compels major powers to recognize South Korea's importance. The future of South Korea lies not in choosing between the U.S. and China but in becoming an indispensable nation that both sides wish to cooperate with, leveraging its strengths in semiconductors, shipbuilding, batteries, AI, and cultural industries. This is the broader path South Korea must take in an era of complex crises.
Author's Key Background
△ Chairman of the Korea Inter-Parliamentary Exchange Center (Washington D.C.) △ Former National Assembly Member (two terms, Gyeonggi Namyangju-eul, Democratic Party) △ Visiting Researcher at Cornell University's East Asia Program (New York, U.S.A., 2006 – 2007) △ Former Chief of Staff to President Kim Dae-jung
* This article has been translated by AI.
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