South Korea’s recent shift in its diplomatic stance towards China, especially since the inauguration of President Yoon Suk-yeol, has led to increased friction between the two nations. Not only has South Korea been vocal about China’s internal affairs, but it has also joined the United States in criticizing China. The recent developments involving graphite exports have further strained relations. China had just lifted its ban on graphite products for South Korean companies, signifying a potential for renewed cooperation. However, in an unexpected turn, South Korea announced an investigation into Chinese companies immediately after the export resumption, which could be perceived as an ungrateful response.
China, a major player in the new energy industry, especially in battery production, has been leading alongside Japan and South Korea, the latter heavily relying on Chinese raw materials for its battery industry. China’s recent gesture to ease restrictions on graphite exports to South Korea was a significant move, considering there has been no similar easing of restrictions towards the United States.
The investigation announced by South Korea targets three Chinese companies involved in the nickel cathode battery sector. This move has raised eyebrows, given the intense competition in the global battery market, where China, Japan, and South Korea collectively hold nearly 90% of the market share, with China alone accounting for almost 70%.
China has long advocated for peaceful resolutions to conflicts, but this latest development from South Korea might necessitate a strategic shift. South Korea’s recent behavior, especially Yoon Suk-yeol’s comments on China during his visit to the UK and the signing of agreements critical of China, shows a disregard for the cooperative relationship. In response, China may need to adjust its strategy, moving from a diplomatic approach to a more assertive stance.
In the battery sector, where South Korea seeks to compete, China could leverage its complete industrial chain advantage for a comprehensive response. China’s willingness to use both incentives and deterrence could send a clear message to South Korea and other countries about the importance of respecting and cooperating with China.