In Korea, hopes rise for greater economic cooperation with Japan as U.S.-China rivalry intensifies

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In Korea, hopes rise for greater economic cooperation with Japan as U.S.-China rivalry intensifies

Published: 21 Aug. 2025, 07:00

Audio report: written by reporters, read by AI

Korean President Lee Jae Myung, right, and Japanese Prime Minister Shigeru Ishiba shake hands ahead of bilateral talks on the margins of the Group of Seven, or G7, summit in Canada on June 17. [JOINT PRESS CORPS]

As President Lee Jae Myung and Japanese Prime Minister Ishiba Shigeru prepare for a summit on Aug. 23, hopes are rising for renewed economic cooperation between the two countries.

Just a few years ago, “No Japan” slogans were seen on streets across Korea — but in the face of intensifying U.S.-China rivalry and global supply chain realignments, the two nations are increasingly viewed as indispensable partners, and Korea’s business community is now voicing strong support for deeper collaboration.

Hopes are growing for a stronger Korea-Japan economic partnership across the industry. Amid discussions of “decoupling” and “de-risking” global supply chains, countries that share common values and institutional frameworks are moving to rebuild supply routes among allies, hence the new strategic importance of cooperation between Korea and Japan that goes beyond traditional bilateral ties to touch on economic security.

Korea and Japan share more than just similar goals, but also similar vulnerabilities. According to the 2023 Economic Complexity Index, Japan ranked third and Korea fifth out of 145 countries, meaning both export some of the world’s most complex products. But that complexity also comes with high dependence on global materials, components and equipment — making both economies more sensitive to external shocks.

Reducing dependence on China is another shared priority. A report last year by Seoul National University’s Institute for Future Strategy noted that geopolitical shifts and China’s growing tech and industrial competitiveness are likely to weaken supply links between both Korea and China, and Japan and China. It also pointed out that Korean and Japanese companies may increasingly look to each other to replace Chinese suppliers.

A ″No Japan″ banner is hung up on the streets of Jung District in front of Namdaemun, central Seoul, on Aug. 6, 2019. [YONHAP]

Japan is Korea’s third-most important economic partner after China and the United States. Likewise, Korea ranks third for Japan’s production networks, according to the report.

Calls for cooperation in artificial intelligence are also growing in the digital era. SK Group Chairman Chey Tae-won, a proponent of building an “economic community” with Japan, said in July that "Korea must share data with Japan to scale up datasets and build the AI capabilities needed to compete with China."

Korea and Japan’s industrial strengths are also complementary, meaning that aligning these strengths could unlock powerful synergies in addressing shared challenges. Korea has an edge in memory and foundry semiconductors, battery cell manufacturing, mass production, marketing and business execution. Japan excels in core technologies, materials, components and equipment, precision engineering and financial services.

Corporate exchanges are already active — particularly in semiconductors. Samsung Electronics recently purchased a large building in Yokohama to house a new advanced semiconductor packaging R&D center, part of a December 2023 investment plan in Japan. Samsung Electronics Executive Chairman Lee Jae-yong visited Tokyo and Osaka in the spring to meet with Japanese corporate leaders. SK hynix has invested a total of 3.92 trillion won ($2.8 billion) in Kioxia, formerly Toshiba Memory, the world’s third-largest NAND flash producer.

President Lee Jae Myung and Japanese Prime Minister Shigeru Ishiba hold a summit on the sidelines of the Group of 7 summit in Kananaskis, Canada, on June 18. [JOINT PRESS CORPS]

Korea’s battery sector, which initially grew with Japanese technology, has since matured into a platform for joint ventures. One example is GMBI, a recycling joint venture between LG Energy Solution and Japan’s Toyota Tsusho to process used batteries. Hyundai Motor and Toyota are also strengthening their partnership on hydrogen vehicles. Last October, Hyundai Motor Executive Chair Euisun Chung and Toyota Motor Chairman Akio Toyota met at a racing festival in Yongin, Gyeonggi, to discuss hydrogen vehicle collaboration. In March, Hyundai Motor executives visited Tokyo alongside the Japan-South Korea Parliamentarians' Union to further explore cooperation in the hydrogen industry.

Still, experts warn that bilateral cooperation should not be confined to short-term gestures.

"The two countries need to maintain low-level, institutionalized dialogue channels to prevent disruptions caused by political shifts or trade disputes," said Choi Jeong-hwan, associate research fellow at the Korea Institute for Industrial Economics & Trade. “Korea and Japan have as many points of friction as they do opportunities for cooperation. We can’t afford for economic cooperation to break down every time the political winds change.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM SU-MIN [[email protected]]