While South Korea’s new government tries to stabilize its economy, the nation is also caught between two superpowers, China and the United States. Economists warn that falling exports and increasing global tariffs could foreshadow a new age of uncertainty for Asia’s fourth-largest economy.

The growth forecast for South Korea has deteriorated sharply. The OECD projects 1.0 percent growth in 2025, which is among the slowest rates for any advanced economy. Exports, long the engine of national growth, dropped more than 10 percent earlier this year due to weaker demand from both China and the United States.

President Lee Jae-myung, who took the helm in mid-2025, has promised so-called “balanced diplomacy,” preserving the U.S. alliance while reopening cultural and trade links to Beijing. But trade analysts warn that China, which was South Korea’s leading customer, is now a fierce competitor in areas like semiconductors, batteries, and renewable energy.

Debate over Sinicization inside South Korea reflects public concern that greater economic dependence on Beijing could grow with closer ties. But government figures show that Korea’s export share to China has already dropped below 20 percent — a sign of diversification rather than deepening dependence.

Domestically, South Korea is structurally weak for a number of reasons: high household debt, an aging population, and a slowdown in domestic consumption. These fault lines, economists say, magnify the impact of global shocks and leave the country more vulnerable to external turbulence.

South Korea’s economic life depends on efforts to diversify export markets, focus on high value-added industries, and maintain fiscal austerity. “There is no future for Korea in choosing between Washington or Beijing, whether it is under Joe Biden or Donald Trump,” Professor Kim Hyun-soo of Yonsei University said during a radio interview on Thursday.

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