The world is currently undergoing significant changes. However, such transformations do not occur overnight. They arise from long-standing imbalances of power, the erosion of values and institutions that uphold existing orders, and the emergence of new technologies and civilizations. Today, the power struggle between the United States and China exemplifies this phenomenon. The two superpowers are clashing across nearly all domains, including military and economic might, semiconductors, artificial intelligence (AI), energy, space, finance, currency, culture, and values.
At the center of this struggle is South Korea. The U.S. is our key security ally, while China is an indispensable economic neighbor. North Korea's nuclear weapons continue to threaten peace on the Korean Peninsula, and tensions in the Taiwan Strait create uncertainty for Northeast Asia's future. The global economy, once interconnected under the banner of free trade and globalization, is now shifting towards a new order focused on economic security and supply chain restructuring. In the face of this monumental change, what choices should South Korea make?
This question is directly addressed in the book 'Transformations: South Korea's Survival Strategy in the Era of U.S.-China Strategic Competition,' edited by Kim Heung-kyu, the head of the National Diplomatic Academy. This book, featuring contributions from experts in diplomacy, security, economics, and industry, goes beyond merely comparing the strengths of the U.S. and China. It analyzes the structural changes in the global order and asks what South Korea must prepare to survive and thrive.
Kim Heung-kyu is a scholar who has long studied China, U.S.-China relations, and international politics in Northeast Asia. He has developed the Plaza Project, a private think tank that seeks to explore the nation's long-term foreign strategy beyond the boundaries of conservatism and progressivism. 'Transformations' is grounded in this perspective, emphasizing that a nation's survival strategy should not be confined to the interests of a regime or ideological slogans but should be based on a clear understanding of reality and long-term national interests.
The significance of this book's publication lies in its assertion that South Korea's strategic choices should not be limited to diplomacy and military matters. It views semiconductors, advanced technology, economic security, supply chains, North Korea's nuclear issue, and the Taiwan question as interconnected components of a national strategy.
The author reflects on the wisdom needed to design South Korea's future, drawing from the military strategist Sun Tzu and the philosopher Laozi, as well as the history of the rise and fall of great powers. Today's wisdom for South Korea's future is not solely found in advanced technology but also in the experiences humanity has accumulated over thousands of years regarding war and peace, power and restraint, competition and coexistence.
Sun Tzu states, 'The highest form of warfare is to outsmart the enemy; the next is to engage in diplomacy; the next is to attack the enemy's forces; and the lowest is to besiege cities.' The best strategy, according to Sun Tzu, is not to kill many enemies in war but to achieve national objectives without engaging in conflict. This embodies the spirit of winning without fighting.
South Korea's approach to the U.S.-China competition should start from this principle. A nation that only contemplates which side to attack ultimately becomes subordinate to the strategies of others. The key is to accurately understand the competition between the two superpowers while developing an independent strategy that safeguards South Korea's security and prosperity.
This does not mean advocating for a mechanical neutrality between the U.S. and China. South Korea stands on a solid security foundation with the U.S.-South Korea alliance. The constitutional values of liberal democracy, the rule of law, and human dignity must remain unshaken. However, maintaining an alliance is different from relying solely on diplomatic thinking tied to that alliance. Practicing autonomous judgment and multi-layered diplomacy on a firm alliance is the hallmark of a mature nation.
Laozi's 'Dao De Jing' imparts another piece of wisdom: 'Having is beneficial, but not having creates utility.' This means that the emptiness at the center of a wheel allows it to move, and the empty space in a vessel enables it to hold something. Visible power is not the only measure of a nation's strength.
The same applies to international politics. Military power, economic strength, and technological capability constitute a nation's tangible power. However, trust, diplomatic flexibility, cultural inclusiveness, and international reputation are the spaces that enable that power to function effectively. While one can dominate the world with weapons and money, maintaining a respected order over the long term is challenging.
The U.S. was able to position itself at the center of the global order after World War II not solely due to its overwhelming military and economic power. It played a leading role in establishing international institutions such as the Bretton Woods system, the International Monetary Fund (IMF), the World Bank, and the United Nations, while expanding its international influence through alliances, markets, universities, research institutions, culture, and technological innovation. Of course, the U.S.-centric order has its contradictions, including war, intervention, inequality, and double standards. However, it clearly demonstrates how the combination of military power, institutions, economy, and culture can significantly enhance a nation's influence.
China's rise cannot be explained solely by its military expansion. Since its reform and opening up, China has grown into the world's manufacturing hub, building a vast domestic market and manufacturing ecosystem. Today, it is expanding its competitiveness in electric vehicles, batteries, telecommunications equipment, AI, robotics, and space technology. At the same time, China faces challenges such as demographic changes, real estate issues, local government debt, technological controls, and international distrust.
Neither the U.S. nor China can achieve complete dominance in all areas. Therefore, the future world is likely to be a complex order characterized by competition and cooperation, confrontation and interdependence, rather than a simple hegemonic order where one country dictates all the rules.
What path should South Korea choose in this context?
History teaches us that the fate of nations caught between great powers does not necessarily end in tragedy. The Peloponnesian War between ancient Greece's Athens and Sparta illustrates how great power competition can destroy entire communities. Thucydides' account of the Melian Dialogue reminds us of the brutal choices small communities face when power overwhelms justice.
However, we must not accept the lessons of history as a fatalistic view for weaker nations. Today, South Korea is not the ancient Melos. It is a nation with a global manufacturing base, advanced technology, significant economic scale, military strength, high education levels, and cultural influence. The issue is not a lack of power but how systematically we can connect and strategically utilize the power we possess.
In the late 19th century, Korea failed to read the rapidly changing international order. Amid the competition of Qing China, Japan, Russia, and Western powers, internal reforms and national capacity building were insufficient, ultimately leading to the loss of sovereignty. While the responsibility for colonial rule lies with the Japanese Empire, we must learn from that tragedy the importance of the ability to read international circumstances and innovate within the nation.
Conversely, South Korea's modern history is also one of turning crises into opportunities for growth. It pursued education and industrialization amid the ruins of war, expanded political freedom through democratization, and developed sectors such as semiconductors, automobiles, shipbuilding, steel, information technology, and cultural industries into globally competitive fields. These achievements are not the result of any single regime, corporation, or generation but the cumulative efforts of countless workers, entrepreneurs, scientists, educators, and citizens.
Now, South Korea stands at another historical crossroads, with AI, semiconductors, and physical AI at its center.
In the past, coal, steel, oil, and warships determined the power of great nations. Today, semiconductors, data, algorithms, energy, robotics, and advanced manufacturing are at the core of national competitiveness. AI is not merely an industrial technology; it is a general-purpose technology that transforms productivity in the economy, military decision-making, intelligence activities, diplomacy, administration, education, healthcare, culture, and media.
To understand competitiveness in the AI era, one must consider five layers of technology. The first is energy and power. The second is semiconductors, including GPUs and high-bandwidth memory (HBM). The third is data and cloud infrastructure. The fourth is AI models and application software. The fifth is the robots and autonomous systems that bring that intelligence into the physical world, such as smart factories and physical AI. This classification serves as an analytical framework for explaining national AI industrial strategies.
If any one of these five layers is weak, a nation's AI competitiveness will be constrained. No matter how advanced the semiconductors produced, a lack of power will hinder the operation of data centers. Even with GPUs, a shortage of data and software will make it difficult to achieve industrial results. If excellent AI models cannot be applied in real factories, hospitals, logistics, and defense settings, the economic value added will be limited.
South Korea has a significant opportunity. Samsung Electronics and SK Hynix play crucial roles in the global semiconductor supply chain, while manufacturing companies like Hyundai Motor have accumulated capabilities in automobiles, robotics, and production automation. By integrating shipbuilding, defense, biotechnology, healthcare, information technology, and content industries, South Korea can leap forward as a powerhouse in implementing AI in real industrial settings.
In 2026, the government also identified AI data centers, K-semiconductors, and physical AI as core strategic industries. The Ministry of Science and ICT's second-half work plan, announced in July, emphasized support for large-scale private AI data center investments and the cultivation of the physical AI industry. In October, a collaborative event on physical AI technology and industry was also planned involving the government, industry, and research sectors. However, investment plans and policy goals do not immediately translate into tangible results. They must be evaluated based on actual power supply, talent acquisition, and commercialization outcomes.
Importantly, AI industrial policy becomes intertwined with foreign and security policy.
The semiconductor supply chain is built on a complex international division of labor involving the U.S., China, Taiwan, Japan, the Netherlands, and South Korea. Advanced semiconductor equipment, design software, manufacturing processes, memory, packaging, and materials cannot be monopolized by any single country. Therefore, as technological competition intensifies, the diplomatic ability to secure supply chain stability becomes increasingly vital.
South Korea must deepen its advanced technology cooperation based on the U.S.-South Korea alliance while realistically managing its economic relationship with China. It should expand cooperation with Japan in semiconductor materials and equipment, as well as in science and technology, and collaborate with Europe on technology standards, industrial norms, climate, and energy. Southeast Asia, India, the Middle East, and Central Asia represent markets and production bases, as well as future technology cooperation partners.
This diplomacy reduces unconditional dependence on any one country while allowing South Korea to grow as a connector in the international community. Diversifying supply chains does not weaken alliances; rather, it enhances national resilience.
The importance of physical AI grows in this context. While generative AI deals with human language, knowledge, images, and information, physical AI enables artificial intelligence to act in the physical world through robots, machines, vehicles, and production equipment. For South Korea, with its strong manufacturing base, this presents a particularly advantageous opportunity.
However, opportunity does not guarantee success. China is enhancing its competitiveness in humanoid and industrial robots by leveraging its vast manufacturing ecosystem and market, while the U.S. aims to lead a new industrial order based on its strengths in AI models, semiconductor design, software, and capital markets. If South Korea rests on its past manufacturing successes, it risks falling behind in the new technological order.
Thus, South Korea's industrial strategy must evolve beyond merely increasing semiconductor exports. It should connect AI semiconductors, data centers, power grids, robotics, software, and manufacturing into a cohesive ecosystem. The structure where universities, research institutes, large corporations, and small and medium-sized enterprises operate separately must change.
Particularly, the role of regions is crucial. The AI industry cannot be completed solely with data centers and research personnel in the capital region. When the manufacturing bases in Jeonbuk and Gyeongnam, AI capabilities in Gwangju, robotics and electronics industries in Daegu and Gyeongbuk, semiconductor research and development in Chungcheong, and marine and automotive industries in Busan and Ulsan are interconnected, a nationwide AI industrial ecosystem can finally take shape.
In this process, regions like Saemangeum can explore new possibilities by combining energy, industrial land, and advanced manufacturing. However, businesses will not gather merely based on slogans. Stable power supply, transmission networks, water resources, transportation, research personnel, living environments, and investment profitability must be concretely secured. Regional balanced development should also be approached from the perspective of national security and economic security.
Distributing and connecting the nation's industrial capabilities across the country reduces the risks associated with concentration in the capital region. If power, data, research personnel, and industrial facilities are overly concentrated in one area, it may become vulnerable to disasters, cyberattacks, and geopolitical shocks. Regional innovation is synonymous with national resilience.
However, South Korea's survival strategy cannot be completed solely through industry and technology. The most pressing issues in foreign and security policy, particularly regarding North Korea and peace on the Korean Peninsula, remain.
North Korea's nuclear weapons and missile capabilities threaten South Korea's security. Strong deterrence and the U.S.-South Korea combined defense posture are essential. At the same time, diplomatic efforts are needed to manage military tensions, prevent accidental conflicts, and maintain possible channels for dialogue. Deterrence and dialogue are not necessarily mutually exclusive. A reliable deterrent can create a foundation for dialogue, and meaningful dialogue can reduce military risks.
The Korean Peninsula issue should not be treated merely as a subsidiary matter in the U.S.-China power struggle. South Korea is a direct party to peace on the Korean Peninsula and bears the greatest responsibility and interest in its future. Even amid conflicting interests among the U.S., China, Japan, and Russia, South Korea must develop its long-term peace strategy and vision for unification.
Sun Tzu's principle of knowing the enemy and oneself is not merely a technique for understanding adversaries. It involves accurately grasping the capabilities and intentions of opponents while calmly assessing one's own limitations and possibilities. North Korea should not be underestimated, but South Korea must not diminish its own economic power, technological strength, alliances, and diplomatic capabilities out of fear.
At this point, we must revisit the purpose of national strategy. Why should South Korea strive to become stronger? Increasing semiconductor production, enhancing military strength, and becoming an AI powerhouse cannot be the ultimate goals. The ultimate purpose of national power should be to protect the lives and freedoms of citizens, realize a dignified life and cultural prosperity, and enable future generations to dream in a peaceful environment.
Laozi stated in the 'Dao De Jing,' 'Knowing contentment prevents disgrace; knowing when to stop avoids danger.' In national strategy, restraint is not weakness. Knowing the values one must protect and the capabilities one can manage, while avoiding excessive expansion and unnecessary conflict, is a mark of high strategic wisdom.
The history of great powers repeatedly proves this. Excessive military expansion, financial burdens, internal divisions, and institutional rigidity have accelerated the decline of many empires. The histories of Rome, the Spanish Empire, the British Empire, and the Soviet Union differ, but they all leave a common lesson: the need for balance between external influence and internal sustainability.
South Korea does not need to become an empire. It is more important to be a nation that the world needs rather than a great power that dominates others. South Korea should be a country that excels in semiconductors, AI, automobiles, and ships, respects freedom and the rule of law, communicates with the world through culture and the arts, and contributes to solving issues like climate crises, diseases, poverty, and war.
This is where the power of Korean culture lies. K-pop, K-dramas, films, literature, food, and lifestyle have already made South Korea a familiar country to the world. The power of culture does not coerce like military force but moves people's hearts. If South Korea's semiconductors and AI connect the world's industries, its culture can connect the emotions and daily lives of people worldwide.
Therefore, South Korea's new national strategy should be designed around three pillars.
The first is self-reliance in security and trust in alliances. While firmly maintaining the U.S.-South Korea alliance, South Korea must develop independent intelligence, surveillance, reconnaissance capabilities, cyber security, space security, and advanced defense technologies. A strong alliance and strong self-defense capabilities are not mutually exclusive.
The second is strategic autonomy in technology and industry. South Korea must secure irreplaceable competitiveness in key areas such as semiconductors, AI, physical AI, energy, and biotechnology. This does not mean advocating for complete domestic production of all technologies. Rather, it aims to maximize the benefits of international division of labor and cooperation while maintaining essential core competencies.
The third is the global expansion of culture and diplomacy. South Korea should broaden its diplomatic horizons beyond the two great powers, the U.S. and China, to include ASEAN, India, Europe, the Middle East, Central Asia, and Africa. Multi-layered diplomacy involving not only government diplomacy but also businesses, universities, media, cultural and artistic sectors, local governments, and civil society is necessary.
These three strategies cannot be separated. If security is unstable, the economy will falter; if industry is weak, the sustainability of defense will decline; and if there is a lack of trust in culture and diplomacy, economic achievements will struggle to translate into international influence. National strategy is about uniting all these elements in a single direction.
The most important question posed by Kim Heung-kyu's 'Transformations' is whether South Korea will remain a nation that simply waits for the choices of great powers or become a country that designs its own strength, values, and future.
The answer cannot be left to any single political leader, diplomat, or businessperson. The future of the nation is shaped by the dignity of politics, the innovation of businesses, the challenges of scientists, the responsibility of the media, and the mature judgment of citizens. In particular, the media should not merely convey the logic of great powers but interpret the world from South Korea's perspective. It must verify facts based on the principles of truth, justice, and freedom while considering the long-term interests of the nation and universal values for humanity.
Here, I reflect again on the three values of humanity, culture, and nature. Technology that does not respect humanity is dangerous, growth devoid of culture is hollow, and prosperity that destroys nature cannot be sustained. The national strategy in the AI era must center on these three values. Technology should serve humanity, industry should harmonize with culture, and economic growth should coexist with nature.
In the era of U.S.-China power competition, the path South Korea must choose is not simply a matter of siding with the U.S. or China. It is a question of what kind of nation South Korea will become. It must be a country that embodies trust in alliances, competence in competition, wisdom in diplomacy, innovation in industry, and dignity in culture.
Transformations represent both a crisis and an opportunity. When the old order shakes, new nations can find space to leap forward. South Korea has already grown into a nation that attracts global attention by overcoming war, poverty, authoritarianism, and economic crises. What is now needed is to transform that experience into a future national strategy.
Sun Tzu taught the wisdom of winning without fighting, and Laozi urged us to contain strength with restraint. History warns against the arrogance of great powers, while AI, semiconductors, and physical AI show where the new era's strength is generated.
All these teachings point to one conclusion: do not entrust South Korea's destiny to the hands of other nations.
We do not need to become a nation that dominates the world. However, we can become a nation that cannot be easily shaken by the world, a nation that the world wants to work with, and a nation that contributes to global peace and prosperity.
This is the survival and growth strategy for South Korea in the era of transformations, a path for a nation that loves humanity, culture, and nature.
* This article has been translated by AI.
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