Better Japan-Korea Relations Bring Hopes for Economic Ties

By Hirotaka Fukaya / Yomiuri Shimbun Staff Writer

1:00 JST, June 16, 2023

Relations between Japan and South Korea have been improving, bringing hope that economic ties between the two nations can be rekindled.

An adviser to the Japan-Korea Economic Association in Tokyo welcomed the results of the joint poll conducted by The Yomiuri Shimbun and South Korean newspaper Hankook Ilbo.

“A mutual rapprochement between the leaders of Japan and South Korea has lifted public sentiment, which will be very positive for economic and cultural exchanges,” said Kazuo Korenaga.

Over the past three years, the association has only been able to hold Japan-Korea exchange events online due to the spread of COVID-19. Now, the association is excited about holding in-person events and strengthening corporate exchange programs.

Bilateral relations rapidly deteriorated in 2018, when the South Korean Supreme Court finalized a ruling that ordered Japanese companies to compensate former requisitioned workers from the Korean Peninsula.

The Japanese government then tightened export controls on semiconductor materials and other related products to South Korea in 2019, spurred by cases such as the December 2018 incident where a South Korean Navy destroyer locked on to a Maritime Self-Defense Force plane with a fire-control radar.

In a May 2020 poll, 91% of respondents in South Korean said that relations between the two countries were “bad,” the worst ever recorded.

Before the ties improved recently, the relations were said to have deteriorated to their worst level since the end of World War II.

According to the Japan National Tourism Organization, the number of South Korean visitors to Japan plunged 48% year-on-year to about 310,000 in August 2019, and remained stagnant until October 2022, partly due to the pandemic.

As bilateral relations began to improve, Japan eased the restrictions on exports of semiconductor materials among other products to South Korea in March this year.

Takahide Kiuchi, executive economist at Nomura Research Institute, believes that Japan-South Korea relations will continue to improve, given that the United States considers good bilateral relations to be paramount to security, despite the risk that Seoul may change its stance toward Tokyo due to factors such as a change of government.

On the positive side for the Japanese economy, Kiuchi said that if Japan-Korea relations improve steadily after the pandemic, and if trade and visitor numbers return to normal, these factors should boost Japan’s gross domestic product by about 0.9%.