September 17, 2018

Competing Economic Futures for the Korean Peninsula

By Kristine Lee

As Seoul presses ahead with rapprochement with Pyongyang amidst the third summit between President Moon Jae-in and Chairman Kim Jong-un this week, it is becoming apparent that the stakes of diplomacy with North Korea far transcend the scope of nuclear disarmament. Beyond the formidable challenge of implementing a verifiable denuclearization protocol, the United States must navigate a delicate balance between supporting inter-Korean peace processes where appropriate, while ensuring that Beijing does not co-opt Pyongyang’s economic future.

Every regional stakeholder is currently pursuing its variant of triangular diplomacy, playing one major power off of the other to advance its interests. South Korea is no exception. Both Seoul and Beijing see tremendous opportunity in the economic transformation of North Korea, and the Moon administration’s bold economic initiatives have facilitated a rare alignment of strategic interests between South Korea and China.

Moon’s so-called New Economic Map Initiative offers but one obvious point of synchronicity with Beijing’s priorities. This week’s inter-Korean summit will feature a renewed focus on operationalizing Moon’s vision of building a continuous economic community on the Korean Peninsula, including his stated goal of establishing railway links with North Korea by the year’s end, as key South Korean business leaders join the delegation. Some estimates indicate that Moon’s plan to build out railway links between the two Koreas could add more than 1 percentage point to South Korea’s annual gross domestic product and could also generate seven hundred thousand jobs within the next five years. Meanwhile, linking the inter-Korean railway system to the Chinese mainland would not only offer Beijing an eastward extension of its overland infrastructure initiative but would also ensure that Chinese companies are well-positioned to dominate the North Korean market.


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