As the world stumbles into 2026, the diplomatic and economic chessboard of Northeast Asia is anything but static. South Korean President Lee Jae Myung has embarked on a whirlwind tour of the region, aiming to balance the demands of powerful neighbors while shoring up his country’s economic and strategic interests. At the same time, U.S. business leaders are doubling down on their commitment to South Korea, betting big on the nation’s potential as a regional hub amid a dizzying boom in artificial intelligence and mounting geopolitical tension.
Lee’s diplomatic marathon began with a landmark four-day visit to Beijing at the very start of January—the first official visit by a South Korean president to China since 2019, according to reporting from Hankyoreh. Not content with simply exchanging pleasantries, Lee arrived with an entourage of about 200 South Korean corporate leaders in tow, signaling that economic cooperation was at the top of the agenda. The trip was a clear continuation of China’s recent charm offensive, which kicked off in earnest with President Xi Jinping’s attendance at the Asia-Pacific Economic Cooperation (APEC) Summit late last year.
But the warmth of the welcome belied a deeper, more strategic calculation. Chinese officials, including Xi himself, made no secret of their desire to frame the relationship in the context of shared struggles against Japanese militarism—an unmistakable shot at Japan’s current government. As the official Chinese readout put it: “Both countries, with broad common interests, should stand firmly on the right side of history and make correct strategic choices. Over 80 years ago, China and the ROK made great sacrifices in resisting Japanese militarism and achieved the victory. Today, it is all the more important for the two sides to join hands to defend the victorious outcomes of World War II, and safeguard peace and stability of Northeast Asia.”
President Lee, for his part, was careful not to be drawn too deeply into Beijing’s historical narrative. He reaffirmed South Korea’s standing policy on Taiwan, telling Xi that he “respects” China’s ‘one China’ position, and paid homage to the shared history of opposition to Japanese imperialism with a visit to Shanghai to mark the anniversary of Kim Ku’s birth—the leader of the Korean government in exile during Japanese occupation. But as international affairs writer Jung E-gil observed in Hankyoreh, Lee was “much more prudent on Beijing’s push for collective action against [Japanese Prime Minister] Takaichi’s remarks on history” and sought to balance South Korea’s strategic relationship with China while “retaining its alliance with the US.”
That balancing act is growing ever more complex. The backdrop to Lee’s trip was a world, as Jung put it, “splintering into spheres of influence,” with the U.S., China, and Russia each carving out their own domains. U.S. President Donald Trump’s aggressive intervention in Venezuela, the ongoing conflict in Ukraine, and tensions across the Taiwan Strait all contribute to a sense that the global order is in flux.
In the midst of this uncertainty, U.S. business leaders are making their own moves. On January 9, James Kim, chairman of the American Chamber of Commerce in Korea (AMCHAM), met with South Korea’s Industry Minister Kim Jung-kwan in Seoul. As reported by Yonhap, Kim stated, “At a time when rapid advances in AI and shifting geopolitical dynamics are reshaping the global landscape, the U.S.-Korea partnership remains vital in supporting economic security and sustainable growth.” He emphasized that “cooperation with South Korea is vital for U.S. businesses to achieve sustainable growth amid the AI boom and geopolitical uncertainties.”
The numbers back up his confidence. According to the South Korean Ministry of Trade, Industry and Resources, new investment plans announced by U.S. companies in South Korea surged 86.6 percent year-on-year to $9.77 billion in 2025, driven largely by the metals, distribution, and IT sectors. Minister Kim Jung-kwan, for his part, pledged to foster a “more predictable and stable environment” for foreign businesses operating in South Korea, expressing gratitude for the record-high U.S. investment pledges. Both sides agreed that expanding investment in future-oriented industries would be crucial for the continued success of the bilateral relationship.
Yet the regional diplomatic puzzle is far from solved. As Lee wraps up his visit to China, his next stop is Japan, where he is scheduled to meet Prime Minister Sanae Takaichi in her hometown of Nara on January 13. This meeting is widely anticipated as a potential breakthrough, but it is fraught with risk. Takaichi, a conservative nationalist, is known for provocative remarks about Japan’s wartime history and territorial claims—she has even visited the controversial Yasukuni Shrine and called the disputed Dokdo/Takeshima islands “illegally occupied.”
Despite these challenges, there is cautious optimism that Lee and Takaichi might find common ground. The two leaders had a friendly encounter at the APEC conference, with Lee embracing a “forward-looking” relationship and building on progress made by previous administrations. Japanese scholar Ayumi Teraoka wrote in Foreign Affairs, “The deteriorating security environment in the Indo-Pacific makes it even more necessary for these leaders to collaborate. In particular, Washington’s renewed unpredictability and waning engagement in multilateral forums require Japan and South Korea to work together to sustain regional public goods and protect their interests.”
Still, the obstacles are formidable. The unresolved issues of wartime history, compensation for forced labor victims, and territorial disputes like Dokdo/Takeshima loom large. As the progressive daily Kyunghyang Shinmun editorialized, “They cannot simply avoid historical and territorial issues. Japan has remained completely indifferent to historical issues. This may be partly due to South Korea’s lack of strong opposition. I hope this summit will mark a turning point in resolving historical issues.”
For Korean progressives, focusing solely on shared security concerns is not enough. Real progress, they argue, depends on addressing the painful legacy of the past. Yet, as Yonsei University scholar Moon Chung-in observed, “His shuttle diplomacy with Takaichi in Nara on Jan. 13 will go well as long as she does not provoke him on Dokdo or other history issues.” The hope is that both leaders can keep the dialogue constructive, but the risk of old wounds reopening remains.
Meanwhile, Lee’s efforts to secure Chinese support in pressing North Korea to return to dialogue yielded little more than vague words about engagement—there was no mention of denuclearization or concrete steps forward. The situation on the Korean Peninsula remains as delicate as ever.
Former U.S. Ambassador to Korea Kathleen Stephens summed up the moment: “Seoul’s choreography of summitry with Washington, Tokyo, and Beijing has been masterful. But the real challenges will come when real choices have to be made.”
As 2026 unfolds, South Korea stands at the crossroads of economic opportunity and diplomatic peril, striving to harness the promise of new investment while navigating the perils of history and geopolitics. The world will be watching to see whether Lee’s delicate dance can deliver the stability and prosperity the region so desperately needs.