After "Busan Agreement": Strategic Outlook for Key Nations Post-APEC 2025

Xiuli Chen

— 36 min read

Busan’s Role in Asia

Busan – South Korea’s second-largest city – has long been a linchpin of Asian trade and security. Located at the southeastern tip of the Korean Peninsula, Busan has served as a regional trading hub since at least the 15th century, owing to its well-sheltered harbor and proximity to Japan. It became Korea’s first international port in 1876 (opened to Japanese and then foreign trade) and thereafter facilitated significant flows of commerce and cultural exchange. During the Korean War (1950–53), Busan’s strategic importance was underscored when it was one of only two South Korean cities never captured by the North; it functioned as a de facto capital, harboring ~500,000 war refugees behind the UN’s Pusan Perimeter defensive line. In the post-war era, Busan’s port expanded massively – by 2017 it was handling over 20 million TEUs (containers) annually and ranked among the top ten busiest ports globally. The city has also emerged as a center for international diplomacy, hosting events like the 2005 APEC summit (and again serving as a key venue in 2025), which cements Busan’s role as a gateway connecting Northeast Asia to the world.

The Trump–Xi Meeting in Busan at APEC 2025

The Asia-Pacific Economic Cooperation summit of 2025, hosted by South Korea, became the stage for a pivotal meeting between U.S. President Donald Trump and Chinese President Xi Jinping. Coming amid prolonged U.S.–China trade frictions, the Busan meeting was highly anticipated as an inflection point in the tariff war and strategic rivalry. South Korea leveraged the summit to advance its own partnerships: shortly before the leaders’ meeting, Seoul and Washington signed a “Technology Prosperity Deal” to cooperate on AI, next-generation mobile networks (6G), biotech, and space – a pact U.S. officials said reflected America’s respect for South Korea as a top technology partner. President Trump had also just finalized a trade accord with South Korean President Lee Jae-myung, under which Washington agreed to cut tariffs on Korean autos and parts from 25% to 15% in return for Seoul pledging $350 billion of new investments in the United States. This deal, reached after difficult negotiations, spared South Korea from the worst U.S. import tariffs and provided a framework to inject massive capital into the U.S. economy over the coming years. By the time Trump and Xi convened in Busan on October 30, 2025, hopes were high that a broader easing of tensions, an After "Busan Agreement”, could emerge, benefiting not just the U.S. and China, but the wider region.

"Busan Agreement": the outcome of the Trump–Xi summit

After a nearly two-hour discussion in Busan, President Trump hailed the meeting as “amazing” and announced a limited trade bargain with President Xi. The deal amounted to a tactical truce rather than a comprehensive resolution of disputes, but it did yield tangible concessions on both sides. Key elements of what we might call the “Busan Agreement” include: China’s commitment to crack down on illicit fentanyl trade, to resume purchases of U.S. agricultural products (especially soybeans), and to suspend its new export restrictions on rare earth minerals for at least one year. In exchange, the United States agreed to trim some tariffs on Chinese imports by half – cutting the tariff rate on certain goods from 20% to 10% – which effectively lowered the average U.S. tariff on Chinese products from ~57% to 47%. These steps broadly reversed the clock on the trade war escalation, bringing bilateral trade conditions closer to their pre-2018 status quo ante. Notably, Trump emphasized that the tariff relief was specifically tied to China’s actions on fentanyl precursors (a major cause of the U.S. opioid crisis) and to Beijing keeping critical rare-earth supplies flowing. Beijing, for its part, stopped short of structural economic reforms in this meeting – contentious issues like China’s industrial subsidies and state-led growth model went unaddressed – but Chinese officials framed the outcome optimistically. China’s foreign ministry lauded the talks for “injecting new momentum” into U.S.–China relations and creating conditions for “positive outcomes”. Indeed, both sides agreed to continue dialogue, planning follow-up visits in the next year to build on what was achieved. This cordial tone and commitment to keep talking offered a much-needed respite for global markets and businesses rattled by the trade war – news of the framework deal even sent stocks to record highs amid hopes of de-escalation. South Korea’s foreign minister also noted that APEC members were, against recent trends, close to consensus on a joint leaders’ statement addressing shared challenges like protectionism. In short, the Busan summit produced a fragile but meaningful thaw: a preliminary trade truce between the world’s two largest economies and a burst of cooperative agreements that set a hopeful tone for Asia-Pacific economic integration going forward.

With this context, we now analyze the implications of the "Busan Agreement" and outline detailed reactive strategies for four nations to capitalize on the opportunities and mitigate risks. Despite differing national interests, all parties share an interest in stability and prosperity, and the "Busan Agreement" offers an opportunity to pursue win-win solutions in that spirit.

The Busan meeting’s outcomes offer China near-term relief and strategic breathing room in an increasingly fraught U.S.–China relationship. By agreeing to curb fentanyl precursor exports and restore commodity trade, Beijing managed to secure a rollback of some U.S. tariffs that have been weighing on its manufacturers. President Xi obtained a suspension of Washington’s planned tariff hikes – effectively halving a portion of the Trump-era tariffs – which eases pressure on China’s export sector and could bolster business confidence in China’s slowing economy. Additionally, the U.S. pledge to hold off new restrictions on tech or rare earths (in exchange for China pausing its own rare-earth export curbs) prevents a further choking of critical supply chains in the short term. These outcomes align with what Chinese negotiators reportedly expected – “a stepping stone to stabilize the relationship,” not a grand bargain on all issues. In fact, Chinese analysts see the truce as validating Beijing’s tough retaliatory tactics: by swiftly countering U.S. moves with export controls of its own (e.g. on rare earth metals), China demonstrated leverage that brought the U.S. back to the table. “It’s very clear that rare earths is the ace in the hole that China is able to wield… the U.S. has no comparable leverage,” noted one geopolitical analyst of China’s position. Moreover, the cordial tone of the Busan talks – with Trump praising Xi as a “great leader of a great country” – and agreement on follow-up visits suggest a more constructive atmosphere, at least temporarily. This de-escalation provides China an opening to refocus on domestic priorities and regional diplomacy without the immediate cloud of an escalating trade war.

Short-Term Strategy – Invest in Asian Stability and Technological Innovation

In the wake of Busan, Beijing should move proactively to consolidate its gains and demonstrate leadership in Asia’s economic recovery and innovation. With the U.S. courting Asian allies through investment deals (e.g. South Korea’s $350 billion pledge to America) that could siphon capital out of Asia, China’s best response is to double down on investing across Asia in the near term. This strategy is both defensive – countering the outflow of Asian funds to the West – and affirmative, as it reinforces China’s image as a regional growth engine. Concretely, China can prioritize high-impact investments in neighboring economies over the next 1–2 years, focusing on areas that improve livelihoods and connectivity. This might include financing critical infrastructure (transport links, smart ports, power grids) and “life-quality” projects like healthcare, education, and digital services in Southeast and Central Asia. Notably, President Xi has articulated such an approach through initiatives like the Belt and Road’s shift to “small yet smart, people-centered programs” that directly benefit communities. By funding clean water systems, hospitals, renewable energy farms, or smart city upgrades in partner countries, China addresses development gaps that purely commercial projects might overlook. These short-term investments would yield goodwill and stability in Asia – which is in China’s strategic interest – and can be aligned with existing frameworks (e.g. providing support under the Global Development Initiative or augmenting COVID-19 recovery funds). At the same time, China should channel resources into technological cooperation within Asia, building on its strengths in 5G, AI, and green tech. This could mean offering scholarships and training for tech talent from ASEAN nations, opening joint research centers, or expanding initiatives like the Digital Silk Road. Such moves bolster innovation capacity region-wide and tie Asian tech ecosystems closer to China’s, countering any attempt to isolate China technologically. Indeed, openness and connectivity for win-win cooperation have been hallmarks of China’s regional stance: Beijing has implemented the RCEP trade pact, sought entry into CPTPP, and promoted the flow of technology and services across the Asia-Pacific. By injecting fresh momentum into Asia-Pacific development now – as highlighted during APEC – China can fill the leadership vacuum and ensure that Asian economic integration stays on track even as others invest elsewhere.

Long-Term Strategy – Deepen Asian Integration and Self-Reliance

Over a longer horizon (5–10 years), China’s strategy should be to entrench itself as the linchpin of Asian economic unity and to achieve greater technological self-reliance. The Busan truce is a tactical pause; it does not resolve core U.S.–China tensions over advanced technology, supply chains, and influence. Acknowledging this, Beijing’s long-term response should be twofold. First, strengthen multilateral economic institutions and trade networks in Asia with China at the center. For example, China can accelerate the Belt and Road Initiative’s evolution toward “high-quality” projects – something President Xi underscored by announcing eight major steps for a new decade of BRI cooperation (from infrastructure connectivity to green development and science & tech innovation). These steps include building a “multidimensional connectivity network” across Eurasia and launching a Belt and Road Science, Technology and Innovation cooperation action plan. By executing these plans – e.g. completing flagship railways, establishing regional innovation hubs, and encouraging Chinese firms to invest in startups and industrial parks across Asia – China will cement supply-chain ties that are resilient to external shocks. It should also continue championing trade liberalization in Asia: push for upgrades to the China–ASEAN FTA, finalize the long-pending China–GCC (Gulf Cooperation Council) Free Trade Agreement, and promote frameworks like the DEPA (Digital Economy Partnership Agreement) to set common standards. (Notably, China is already the largest trading partner for the Gulf states, with China–GCC trade topping $315 billion in 2022, and about 90% of a comprehensive FTA deal has been negotiated. Sealing such agreements will further integrate China with fast-growing markets and secure long-term energy and commodity supplies.)

Second, China must relentlessly pursue tech self-reliance and high-end industrial modernization to reduce vulnerability to any future U.S. decoupling. The “After Busan Agreement” respite should be used to invest heavily in next-generation semiconductors, AI chips, aerospace, biotech and other sectors where U.S. export controls still bite. Beijing’s policy direction – as seen in its 15th Five-Year Plan recommendations – is already geared towards indigenous innovation and sustainable, high-quality growth, emphasizing breakthroughs in core technologies and less dependence on foreign inputs. This will involve nurturing homegrown tech firms, supporting research alliances with friendly nations (e.g. joint labs with South Korea, Israel, EU if feasible), and improving the business climate to retain talent and capital. Over time, greater technological autonomy will give China more strategic freedom in dealing with U.S. pressure. Importantly, this drive need not be isolationist: China can invite foreign companies and funds into its innovation sectors under its own rules, ensuring knowledge transfer while maintaining control. By around 2030, China aims to lead in fields like EVs, renewable energy, quantum computing and advanced manufacturing – its emergence as a “leading innovator” is already evident in patents and R&D spending. Success here will make China’s economy more sanction-proof and bolster its narrative that “China’s development and rejuvenation are not incompatible” with other countries’ prosperity. In sum, China’s long game after Busan is to bind Asia closer together through trade and infrastructure, champion global development (as a public good provider), and build the internal capacities to weather any renewed rivalry with the West.

China's Strategic Engagement with South Korea – A Special Focus

A critical component of China’s post-Busan Agreement strategy is how it engages South Korea, which finds itself economically tied to China but strategically allied with the U.S. The Busan summit highlighted Seoul’s delicate balancing act – in one forum, South Korea inked major deals with Washington (on tariffs and tech), even as it hosted Xi for a state visit aimed at mending ties. For China, investing in South Korea’s success is a smart reactive move to counter increased U.S.–Korea economic cooperation. In the short term, Beijing can extend goodwill gestures and targeted investments toward Seoul. For instance, China could expand people-to-people and tourism links – building on its recent visa-waiver for Korean visitors that boosted travel and “spiritual connection” between the nations – and encourage Chinese firms to import more Korean products under the existing China–South Korea FTA. Facilitating additional market access for South Korean businesses (in sectors like content creation, cosmetics, finance or healthcare, where Korea excels) would signal that Seoul does not have to choose between the U.S. and Chinese markets; it can benefit from both. Short-term investments might include Chinese venture capital in South Korea’s startups, partnerships between Chinese tech companies and Korean firms in AI or battery technology, or even joint industrial projects in neutral third countries (e.g. co-developing smart cities in Southeast Asia). Such initiatives yield mutual benefits: South Korea gains external investment and a larger export market, while China strengthens economic interdependence that could moderate Seoul’s alignment with U.S. containment efforts.

In the longer term, China should aim to institutionalize its economic partnership with South Korea to anchor the relationship. One avenue is upgrading the China–ROK Free Trade Agreement (in force since 2015) to cover more services and digital trade, keeping it on par with Korea’s deals with other nations. The two countries are already major trade partners (bilateral trade hit $328 billion in 2024) and are deeply integrated in supply chains. Building on this, China can invite South Korea to cooperate in emerging fields like green tech, AI ethics, and regional security (e.g. pandemic and climate response) – areas where Seoul’s advanced capabilities complement China’s goals. Experts noted during Xi’s visit that there is huge potential to boost collaboration in “technology, green industries, artificial intelligence, and the digital economy,” aligning with both nations’ future growth strategies. For China, drawing South Korea into joint tech standards or R&D projects (for example, coordinating on 6G telecom standards or electric vehicle supply chains) would not only benefit both economies but also gently pull Seoul’s strategic center of gravity toward the Asian sphere. Of course, political trust is a prerequisite: Beijing will need to reassure Seoul on security issues, for instance, managing the North Korea threat and avoiding coercive diplomacy, so that economic cooperation can flourish. By demonstrating consistent respect for South Korea’s autonomy and shared interests (e.g. maintaining regional peace and supply chain stability), China increases the likelihood that Seoul will continue a balanced diplomacy, rather than joining any rigid anti-China bloc. In effect, investing in South Korea is an investment in Asian stability: it helps neutralize U.S. efforts to divert Asian capital and attention westward, and it showcases a model of mutually beneficial great-power coexistence.

Benefits and Risks

China’s active investment across Asia, and particularly in South Korea, carries several short- and long-term benefits. In the short run, it stabilizes China’s neighborhood, creating a buffer against external economic shocks. By infusing capital and know-how into Asian partners, China helps those economies grow, which in turn sustains demand for Chinese goods and bolsters friendly ties. It also mitigates the impact of South Korean and Japanese outbound investments to the U.S.; if China fills the regional investment gap, Asian development won’t stall due to capital flight. Immediately, this strategy enhances China’s diplomatic standing (being seen as a regional benefactor), countering narratives of China as solely a competitor or threat. In the long term, successful investments yield political capital and economic integration: countries that have benefited from Chinese projects (from railways in Thailand to tech incubators in Seoul) are more likely to support China in international forums and resist pressures to decouple. Moreover, if Chinese firms take equity stakes or forge joint ventures in Asia, they gain access to talent and technology – aiding China’s own modernization. A good example is in energy: Chinese state companies joined Qatar’s giant LNG expansion with equity stakes, securing long-term gas supplies for China. Similarly, Chinese stakes in or partnerships with South Korean high-tech manufacturing could secure supply lines for critical components and reduce China’s reliance on Western suppliers. This symbiosis would underpin China’s economic security in the face of any future U.S. decoupling moves.

The risks of this approach are not negligible, however. One risk is overextension or misallocation of investment – China must be selective to ensure projects in Asia are commercially viable and not just diplomatic gifts. It has learned from early BRI experiences that unsustainable lending can lead to bad debt and backlash. Thus, focusing on “commercially viable, profit-sharing projects” (as China did even in the new U.S.–Korea shipbuilding investment fund) and co-financing with host countries will be wise. Another risk is geopolitical suspicion: U.S. strategists may view a surge of Chinese investment in, say, South Korea or ASEAN as malign influence or “debt-trap” diplomacy. This could prompt counter-moves, like the U.S. offering its own infrastructure funds (BLUE Dot Network etc.) or pressuring allies to vet Chinese deals on security grounds. South Korea, for instance, might hesitate to let in significant Chinese investment in sensitive sectors (chips, 5G) due to U.S. export control regimes or espionage concerns. China will need to navigate these sensitivities by being transparent and focusing on win-win economic areas (e.g. green tech, where less security concern exists). Finally, there is the risk that domestic hurdles or external shocks could constrain China’s ability to invest abroad. If China’s economy were to significantly slow, its generosity in Asia might dwindle, undermining this strategy. Therefore, Beijing should also shore up its own economic fundamentals – something it is addressing via reforms and stimulus to boost domestic consumption and innovation. Overall, with prudent management, the rewards of investing in Asian stability far outweigh the risks for China. It aligns with “emerging policy trends” in Beijing that emphasize shared development and a “community of common destiny” in Asia, reflecting China’s vision of rising together rather than decoupling.

From Washington’s perspective, the "Busan Agreement" yielded notable wins but also underscores ongoing strategic challenges. In terms of immediate outcomes, President Trump emerged with a deal he can tout as a trade victory, which has both economic and political significance. The agreement with Xi saw China renewing purchases of American farm goods (especially soybeans) and cooperating on the fentanyl issue – a domestic priority given the opioid crisis – in return for modest U.S. tariff reductions. This not only helps U.S. farmers regain a key export market (China had largely halted U.S. soybean imports during the trade war), but also addresses a major public health concern by enlisting China’s help in stemming fentanyl precursor flows. Trump’s claim that he got Beijing to keep rare earths exports unrestricted is a relief for U.S. manufacturers in defense, tech, and automotive sectors that rely on those critical minerals. Financial markets reacted calmly, even optimistically, to the truce, suggesting the U.S. business community welcomes any thaw that reduces uncertainty. Additionally, the separate U.S.–South Korea agreement finalized at APEC 2025 delivers tangible economic benefits to America. South Korea’s pledge of $350 billion in new investment to the U.S. – structured as a fund with annual disbursements up to $20 billion – promises to create jobs and industrial activity in the United States. It also came coupled with South Korea’s agreement to keep its tariffs on U.S. goods reciprocal at 15% and special provisions on semiconductors, autos, and other sectors that boost U.S. exporters’ competitiveness. In effect, Trump used the leverage of tariffs to secure both inbound investment and improved market access – a combination that could have positive effects on the U.S. economy. Indeed, analysts noted the deal “removes a major overhang” for Korea’s economy and markets, which by extension helps U.S. companies that trade with or operate in Korea. And by working with allies like Seoul and Tokyo (Trump also announced trade “breakthroughs” with Japan and others during his Asia trip), the U.S. is buttressing a united front of advanced economies that can collectively innovate and set standards.

However, the "Busan Agreement" also highlight that the U.S.–China rivalry is far from resolved. The arrangements reached are mostly interim measures or partial compromises. Washington did not extract concessions on China’s industrial subsidies, intellectual property practices, or state-owned enterprises – the core issues that the U.S. originally cited when launching the tariff war. As one observer put it, the Busan deal “broadly rewinds” the situation to a prior state without tackling root causes. This suggests that the structural competition – especially in high-tech industries and strategic dominance – will resume, possibly in new forms. Also, by halting escalation rather than ending the trade war, the U.S. maintains significant tariffs (still ~47% on average on Chinese imports) which American importers and consumers continue to bear. On the geopolitical front, the warm Trump–Xi optics and talk of “G2” cooperation belie an underlying reality: U.S.–China relations have deteriorated dramatically since Trump’s first term. Trust is low, and repeated cycles of confrontation could erode even the personal rapport between leaders.

Short-Term Strategy – Consolidate Trade Gains and Alliance Coordination

In the immediate aftermath of the "Busan Agreement", Washington’s strategy should focus on locking in the gains of the recent deals and reinforcing alliances to maintain leverage. First, the U.S. government should ensure that China follows through swiftly on its promises. This could involve setting up bilateral working groups or verification mechanisms on the fentanyl crackdown (sharing data on precursor chemical shipments), and closely monitoring China’s purchases of U.S. soybeans, corn, and other exports. The U.S. should also reciprocate in good faith on the tariff side: promptly implement the agreed tariff cut (likely on fentanyl-related categories) and be transparent about the new tariff schedule. This will bolster U.S. credibility and encourage further cooperation. Meanwhile, Washington must capitalize on the $350 billion South Korean investment deal. That means working with Seoul to identify and expedite projects that the fund will finance. Notably, $150 billion of the package is earmarked for joint shipbuilding and industrial ventures, which can revitalize U.S. commercial shipyards and manufacturing bases. The U.S. Commerce Department (with Commerce Secretary Howard Lutnick heading the investment committee) should swiftly approve viable projects – e.g. upgrading ports, building LNG tankers (where U.S. has needs and Korea has expertise), or expanding EV battery plants in the U.S. – so that the benefits become visible before long. The remaining $200 billion in cash investments (spread over many years) should be carefully channeled into sectors that boost U.S. competitiveness (such as advanced manufacturing, clean energy, or regional infrastructure). Essentially, Washington has secured a huge capital inflow; the strategic use of this capital (e.g. to rebuild supply chains or create jobs in swing states) will determine the real impact.

In tandem, the U.S. should strengthen coordination with its allies and partners in Asia to maintain a united front in dealing with China post-truce. Busan illustrated that when allies coordinate (South Korea and Japan aligning their trade deals with U.S. goals), the U.S. can negotiate from a position of greater strength. The U.S. should continue building out the framework of the Indo-Pacific Economic Prosperity Network (or similar initiatives like the Blue Dot Network, Build Back Better World, etc.), offering collaborative investment projects as alternatives to Chinese capital. For instance, Washington might work with Tokyo and Seoul to co-finance infrastructure in Southeast Asia, so that those countries are not solely reliant on BRI projects. The theme of the APEC 2025 host was inclusive, sustainable growth, and the U.S. can echo that by pushing for high-standard investment in the region. Also, given that APEC 2025 achieved a nearly unanimous consensus on fighting protectionism and supporting free trade, the U.S. should leverage that momentum to re-engage in multilateral trade diplomacy – perhaps by reconsidering entry into CPTPP (the Pacific trade pact) or updating its own FTAs in the region to include digital trade and labor standards. While domestic politics may limit big new trade deals, demonstrating an openness to economic engagement will win hearts and minds in Asia, especially as China increases its regional integration.

Long-Term Strategy – Compete through Innovation and Values

Over the longer term, the United States faces the task of strategically competing with China in a more sustainable, positive-sum way, while guarding its interests and upholding a liberal international order. The Busan partial truce gives the U.S. some breathing space – an opportunity to invest in its own capabilities and partnerships before the next potential flare-up. A cornerstone of long-term U.S. strategy should be massive reinvestment in innovation, education, and infrastructure at home. The tech rivalry with China will be won by whoever leads in R&D and talent. Washington has taken steps (like the CHIPS Act for semiconductor manufacturing and funding for AI and quantum research), but it needs to follow through with implementation. By the time the U.S.–China trade truce might expire or need renewal, the U.S. should aim to be less dependent on Chinese supply chains for critical goods (through “friend-shoring” production to allies or domestic reshoring) and to have a firmer technological edge. Encouragingly, the U.S.–Korea tech cooperation deal on AI, 6G, and space is a template – the U.S. can forge similar pacts with Japan, the EU, and others to create a network of innovation. This approach turns the alliance system into a force multiplier: for example, co-development of next-gen telecommunications with South Korea (a leader in 5G/6G) ensures the democratic world isn’t reliant on Chinese telecom gear. Likewise, sharing best practices on AI governance and partnering in space exploration (as per the Busan AI/space MOU) can keep the U.S. and its allies ahead of the curve. In essence, the U.S. should use this period of reduced trade tensions to invest in competitiveness – not to relax. History shows that focusing inward on innovation, while maintaining open markets, is the recipe for American strength.

Another long-term element is that the U.S. should continue to promote its values and rules-based order . The U.S. can differentiate itself by championing high standards – for instance, ensuring that the investments it attracts (like South Korea’s $350 billion) are used in transparent, environmentally responsible ways, and that any projects it sponsors abroad don’t lead to corruption or debt traps. The narrative should be that America and its allies offer “quality” growth – high-tech, sustainable, and respectful of local needs, whereas Chinese investment, while welcome, sometimes comes with pitfalls (e.g. hidden debt, strategic strings). If the U.S. wants to counter Chinese influence in places like Southeast Asia or the Pacific, it must continue foreign aid and capacity-building in those regions, focusing on areas where the U.S. has a comparative advantage (such as education, healthcare, and cutting-edge tech). Over time, as countries benefit from multiple sources of investment, they will have more agency – which aligns with U.S. interests in a free and open Indo-Pacific. The U.S. should also remain engaged in forums like APEC, ASEAN Regional Forum, etc., and even consider inviting outside players like Qatar or other Middle Eastern partners into Asia-Pacific initiatives as observers or contributors, reflecting the interconnectedness of regions (for example, Qatar is a major LNG supplier to East Asia and a potential investor in ASEAN infrastructure). By weaving a broad coalition of nations that prefer a stable, rules-governed environment, the U.S. can exert subtle pressure on China to play by international norms.

Finally, Washington must prepare for the scenario that the trade truce could falter if a new crisis emerges. Keeping some tariffs in place actually gives the U.S. continued leverage – Trump demonstrated a willingness to use them as bargaining chips. But tariffs alone are a blunt tool; more effective will be targeted measures and diplomacy. The U.S. should refine its export control regime to protect only its most sensitive tech (e.g. cutting-edge AI chips) while not needlessly restricting less strategic trade, thus maintaining some interdependence that discourages conflict. And critically, the U.S. should invest in diplomatic channels with China (hotlines, more frequent summits beyond Busan) to manage competition. The Busan meeting was the first since 2019 – allowing such a long gap was dangerous given how tensions built up. Going forward, regular leader-level engagement, even if tense, will reduce miscalculations. In summary, America’s long-run strategy after Busan is to compete by strengthening itself and its alliances, cooperate with China where possible (climate change, global health, etc.), and continue to offer the world a vision of prosperity coupled with freedom. By doing so, the U.S. positions itself to benefit from positive outcomes (like those from Busan) while being resilient against any reversals.

The APEC 2025 "Busan Agreement" was in many ways a showcase of South Korea’s growing diplomatic and economic clout – and it brought Seoul concrete gains along with new balancing challenges. Economically, South Korea scored a major victory in securing reduced U.S. tariffs and avoiding trade war collateral damage. Under the deal finalized with President Trump, U.S. duties on Korean automobiles and auto parts will fall from 25% to 15%, substantially improving the price competitiveness of Korean automakers in the U.S. market. Analysts noted this “(15% tariff) improves Korea’s price competitiveness versus Japanese and European automakers”, potentially boosting Hyundai, Kia and other car exports. In exchange, Seoul’s commitment to invest $350 billion in the U.S. essentially buys goodwill and preferential access – South Korean firms will be building factories, ships, and infrastructure in America, likely securing contracts and partnerships that could benefit them for decades. The immediate market reaction in Korea was very positive: the benchmark KOSPI stock index surged to record highs after the announcement, led by jumps in shipbuilding, automotive, and semiconductor shares. This reflects optimism that Korean companies will gain from eased trade frictions and new investment opportunities. South Korea also gained assurances on critical U.S. export policies – the deal mentioned that tariffs on Korean semiconductors will be kept “not disadvantageous” relative to those on competitors like Taiwan, protecting Korea’s chip sector from any future tariff hikes. Furthermore, Trump gave his nod (at least informally) to South Korea’s defense ambitions, including support for Seoul building a nuclear-powered submarine, which enhances South Korea’s security stature. On the technology front, the signing of the U.S.–ROK cooperation pact on AI, 6G, and space exploration is a boon to South Korea’s innovation agenda. It opens the door for Korean researchers and companies to collaborate closely with American counterparts on cutting-edge projects – potentially giving Korea a leg up in setting standards and accessing global markets in these fields. In short, "Busan Agreement" fortify South Korea’s position as a key node in both the U.S.-led economic network and, potentially, as a bridge to China.

Yet, South Korea also faces the delicate task of balancing its two major partners, the U.S. and China, in the post-Busan Agreement landscape. President Xi’s state visit to South Korea (on the heels of APEC) underscored that Beijing places great importance on Seoul’s friendship. China is South Korea’s largest trading partner – bilateral trade was $328 billion in 2024 – and Korean industries (from smartphones to tourism) are deeply intertwined with the Chinese market. The "Busan Agreement" made it clear that while Seoul tightened its alliance with Washington, it simultaneously needs to reassure and engage Beijing. South Korea would not want to be seen as taking sides in a new Cold War. Xi Jinping himself remarked during the visit that China’s rejuvenation is not incompatible with Making America Great Again, signaling a hope that South Korea can maintain dual cooperation. The implications are that Seoul must navigate its new tariff/investment privileges with the U.S. in a way that doesn’t alienate China. For example, the massive investment in the U.S. could divert some Korean financial resources that might otherwise go into Asian projects, potentially irking Beijing if it perceives Korea as neglecting regional commitments. Additionally, closer U.S.–Korea high-tech ties (AI, 6G) might raise Chinese concerns about technology containment or military applications. And while South Korea gained U.S. support for some defense autonomy, it must be cautious: developing nuclear submarines or other advanced military systems might trigger reactions not only from North Korea but also China, which is wary of an arms buildup in its vicinity. In essence, South Korea has more leverage and security guarantees post-Busan Agreement, but also a more complex tightrope to walk to keep both great powers supportive of its interests.

Strategy to Maximize Benefits of the U.S. Deal

South Korea should take full advantage of the new tariff and investment deal with Washington, as it presents a historic opportunity to boost the Korean economy’s global footprint. A first step is to effectively manage the $350 billion investment commitment so that it yields returns for Korea, not just the U.S. Government advisors in Seoul have already indicated the funding will come from operating income of Korea’s foreign assets and will be split into $20 billion per year tranches to avoid undue strain on Korea’s financial markets. This safeguard is wise – it prevents a sudden drain on Korea’s foreign reserves or excessive won depreciation. The Bank of Korea and Finance Ministry should closely monitor capital outflows to ensure currency stability; even with the cap, analysts warn a steady outflow will put “downward pressure” on the won over time. Thus, Korea might deploy tools like currency swap lines (possibly expanding its swap arrangement with the U.S. Federal Reserve if available) or intervene to smooth volatility if needed. On the flip side, Seoul can capitalize on the expected boon to exports from the deal: with U.S. tariffs on Korean cars, electronics, and other goods now lower, Korean firms can aggressively ramp up marketing in the U.S. knowing they have a price edge of several percentage points over some competitors. The Korean government, in partnership with industry associations, could launch a “Made in Korea” campaign in the U.S. highlighting the quality and now more affordable cost of Korean products . There is also talk that tariffs on South Korea’s wood products, pharma, aircraft parts were cut to lowest or zero as part of the fine print – Korean companies in those sectors should seize this chance to expand U.S. market share.

Crucially, South Korea should direct the investment projects in the U.S. toward areas that strengthen Korean competitiveness. For example, if a chunk of the $350 billion goes into jointly building shipyards or manufacturing plants in the U.S., Korean companies (like Hyundai Heavy Industries or Samsung Electronics) could lead those projects, effectively using U.S. soil to increase their production capacity and access U.S. government incentives. The memorandum indicates a 50/50 profit split in some ventures – Korean firms must ensure they bring their best technology to make these ventures profitable, while also learning from any American expertise. By co-investing smartly, South Korean industry can reap profits from the U.S. market and repatriate them (or reinvest) which ultimately benefits Korea’s economy. Additionally, Korea should leverage the U.S. partnership in emerging tech: for instance, in the AI and 6G cooperation pact, prioritize joint R&D that can feed back into Korea’s domestic tech ecosystem. If the U.S. and Korea develop a “trusted AI technology stack” together, Korean startups and researchers could be at the forefront of that, gaining know-how that they can also apply in other markets (including potentially China, if politics allow). The same goes for space – collaborating on space launches or satellite tech with NASA could spur Korea’s nascent space industry and maybe enable Korea to put its own satellites in orbit with U.S. help . To organize these efforts, Seoul might form a “U.S.–Korea Economic Cooperation Task Force” that brings together trade officials, central bank representatives, and major corporations. This body would ensure Korea meets its investment pledges on time and maximizes reciprocal benefits (contracts, jobs for Koreans abroad, tech transfer, etc.). By showing successful implementation, Korea also strengthens its case in future negotiations – proving it is a reliable and valuable U.S. partner, perhaps deserving of even further tariff cuts or exclusions down the line.

Deepening Cooperation with China

Simultaneously, South Korea must reassure China and deepen bilateral cooperation to avoid any perception that Seoul is tilting exclusively toward Washington. The positive spin from "Busan Agreement" is that improved U.S.–China ties actually create a more favorable environment for South Korea – it reduces the pressure of “either-or” choices. President Xi’s visit to Korea (the first in 11 years) was a golden opportunity which Seoul appears to have embraced: experts expected the trip to “inject new momentum” into the China–ROK strategic partnership and expand cooperation in tech, green industries, and the digital economy. South Korea should follow through on these expectations. One concrete step is to upgrade the China–South Korea FTA. The existing FTA can be expanded to include new areas like e-commerce, finance, and services where Korea has strengths. It could also address some non-tariff barriers. If Seoul and Beijing could announce negotiations for “FTA 2.0” that goes beyond goods trade, it would signal a commitment to economic integration. Moreover, South Korea can position itself as a key partner in China’s regional initiatives without undermining its alliance with the U.S. For instance, Korea can participate in the Belt and Road Initiative in selective ways: Korean construction firms and banks could join Chinese-led infrastructure consortia in third countries (like high-speed rail projects in Southeast Asia). This allows Korea to benefit from the BRI’s opportunities while also ensuring projects meet higher standards (Korean firms bring transparency and quality). In fact, such collaboration can be sold as a win to all sides: Asia’s needs are huge, so Korean and Chinese investment together can achieve more than either alone, helping stabilize developing Asian economies – something the U.S. also implicitly welcomes, since a stable Asia is good for everyone.

Another vital area is technology and climate cooperation with China. South Korea has pledged ambitious green goals (carbon neutrality by 2050) and it makes sense to work with China, the region’s largest carbon emitter, on initiatives like emissions trading systems, electric vehicle supply chains, and renewable energy. Korea could invite China to co-develop certain green technologies – for example, jointly investing in hydrogen energy or battery recycling facilities – potentially with Japan as well, forming a North East Asian climate partnership. Not only would this deepen ties with China, it could also ease any Chinese concerns that Korea’s tech cooperation with the U.S. is aimed against China. If Korean and Chinese companies are co-inventing green tech, it’s a positive-sum game. Additionally, South Korea can encourage people-to-people exchanges with China to rebuild goodwill that was dented in recent years . The fact that China reinstated visa-free travel for Koreans in 2024 and Korean pop culture is popular in China are advantages. Seoul might push for expanded student exchange programs, cultural festivals, and tourism marketing between the two countries. When ordinary citizens and local businesses profit from friendship, it creates a constituency on both sides in favor of stable relations.

Attracting Chinese Investment

A key dimension of deepening cooperation is attracting more Chinese investment into South Korea – turning the tables so it’s not just Korea investing abroad. Despite being a technologically advanced economy, South Korea can benefit from inbound foreign direct investment (FDI) to spur growth in new sectors. China, with its massive capital pools, is an attractive source. There are compelling reasons why Korea needs to attract Chinese investment and why China should invest in South Korea. For Korea, Chinese investment can bring in capital for projects that might otherwise struggle to find financing, and it can open doors to the Chinese market via partnership. For example, if a Chinese tech giant invests in a Korean AI startup, that startup not only gains funds but potentially access to Chinese user data or distribution channels – boosting its chance to become a global player. Likewise, Chinese investment in Korea’s content industry (films, games) could help those products penetrate China’s vast consumer base (subject to content regulations). More broadly, having Chinese stakeholders in the Korean economy may help shield Korean companies from trade retaliation. Suppose Chinese firms are co-investors or co-owners in some of those Korean businesses (for instance, Chinese travel agencies owning stakes in Korean hotels, or Chinese tech firms co-producing dramas). In that case, mutual investments create a kind of economic interdependence that can dampen political disputes – much like how extensive U.S.–China business ties have historically acted as a stabilizer.

From China’s perspective, investing in South Korea is strategically and economically sound. South Korea is a highly developed, innovation-driven market – Chinese companies can learn from Korean counterparts in semiconductors, consumer electronics, biotechnology, and content creation. It fits into China’s push for upgrading its own industries; for example, acquiring stakes or joint ventures with Korean chipmakers could aid China’s semiconductor ambitions (though of course such deals would be sensitive and subject to export controls). Even beyond tech, South Korea offers a gateway to advanced economy standards and consumers. Investing there allows Chinese firms to diversify their global portfolio, earn stable returns in a low-risk environment (Korea has rule of law and strong IP protection), and perhaps use Korea as a base for further expansion (Korea’s FTA network is vast, including with the U.S., EU, and others – a Chinese-owned entity in Korea might indirectly enjoy those FTA benefits). Politically, Chinese investment in South Korea also serves as a counter-move to U.S.–Korea closeness. It shows that China is equally willing to economically reward South Korea. In the long term, if Chinese state banks and funds become significant financiers of Korean projects (factories, real estate, etc.), Beijing gains a bit more influence or at least voice in Seoul – something it would prefer, given its unease at U.S. influence in the region.

So how can Korea attract more Chinese investment? One approach is to identify sectors where Chinese investment is mutually beneficial and relatively uncontroversial. Green technology is one such area: Korea could invite Chinese green tech firms or funds to invest in solar farms, wind energy, or EV charging networks. These are not defense-sensitive and align with both countries’ climate goals. Another area is biotechnology and healthcare – China has large healthcare firms looking to expand, and Korea’s medical R&D is top-notch; joint research centers or pharma manufacturing with Chinese capital could flourish in Korea’s free economic zones. Korea might also enhance its investment promotion efforts in China – by hosting roadshows in Beijing/Shenzhen to showcase projects such as Smart City developments or fintech sandboxes in Korea that need funding. Easing certain regulations can help too: Korea could streamline approval for foreign investors (including Chinese) in its stock market and bond market, as long as it manages any systemic risks. The objective is to signal that Korea welcomes China’s constructive investment, not just its tourists and traders. President Lee could even propose a bilateral investment treaty or fund with China, mirroring the fund Korea is setting up for U.S. investment. Imagine a “Korea–China Innovation & Growth Fund” where each side contributes capital to finance collaborative ventures in both countries – this would institutionalize two-way investment flows.

Although Qatar is not a member of APEC and geographically lies outside East Asia, the ripple effects of the Busan summit reach the Gulf, and Qatar has distinct interests in the outcome. Qatar’s economy is deeply intertwined with global trade dynamics – especially through energy exports – and it has been actively investing in Asia and aligning with major powers. A stable U.S.–China relationship fostered by the Busan Agreement is unequivocally positive for Qatar. It reduces the risk of great-power frictions that could destabilize global markets or force difficult diplomatic choices. Notably, China is a critical long-term customer for Qatari LNG (liquefied natural gas). In fact, Qatar recently signed a record 27-year LNG supply deal with China’s Sinopec, committing to send 4 million tons of LNG annually through 2050 – the longest such contract ever. China’s commitment to this deal (and others, as Chinese firms have also taken equity stakes in Qatar’s gas expansion projects) reflects an expectation of steady relations and trade. Additionally, Qatar maintains strong strategic ties with the United States (host to a major U.S. air base and a key security partner), and has been broadening ties with South Korea and other Asian economies. The outcomes at Busan involving South Korea’s growth and Asia-Pacific stability indirectly benefit Qatar by creating a more prosperous environment for Qatar’s overseas investments and its export markets.

Short-Term Strategy – Leverage the Positive Climate for Economic Opportunities

In the near term, Qatar should capitalize on the improved great-power relations to advance its economic diversification and investment goals. With U.S. and Chinese leaders toning down hostilities, Qatar can comfortably deepen partnerships with both without fear of offending either. For instance, Qatar can push to expedite ongoing energy projects and contracts with China. The rare-earths and commodities understandings at Busan mean China will keep its export industries humming, requiring reliable energy – a door for Qatar to perhaps increase LNG supply volumes or negotiate additional gas deals. (So far in 2025, China has imported about 8.4 million tons of LNG from Qatar – nearly a quarter of Qatar’s exports – and this could grow.) QatarEnergy could also look to collaborate with South Korean and Chinese shipyards to ensure timely delivery of the massive fleet of LNG tankers it has on order . Given Busan’s emphasis on supply chain stability, Qatar can market itself as a stable supplier of not just LNG but also other resources. It might highlight that despite global turbulence, Qatar kept gas flowing to all partners and will continue to do so in the new environment of reduced trade tensions.

Financially, Qatar’s sovereign wealth fund (QIA) should seize investment openings across Asia that arise from the "Busan Agreement". As South Korea and Japan pour funds into the U.S., certain projects in Asia might seek alternative investors – Qatar can fill that gap. For example, if South Korea’s investment focus shifts West, opportunities may open in Southeast Asian infrastructure or Korean domestic projects where Qatari capital could step in. Qatar has a history of high-profile investments (from real estate in Western cities to stakes in Volkswagen, Barclays, etc.), and it has been eyeing more Asian assets. Now would be a good time for QIA to increase its presence in South Korea and China. In South Korea, Qatar could look at joint ventures in petrochemicals or tech. In China, Qatar might target sectors aligned with China’s new five-year plan – maybe healthcare or logistics – to ride China’s growth in a cooperative spirit. Such investments would be helped by the positive vibe post-Busan Agreement, as Chinese regulators will be welcoming to foreign investors while Beijing touts openness. Additionally, Qatar can use its financial clout to partner in multilateral Asian initiatives: for instance, contributing to the Asian Infrastructure Investment Bank (AIIB) projects or APEC’s development programs. This raises Qatar’s profile as a global investor committed to Asia’s development, aligning it with the Busan spirit of shared growth.

Long-Term Strategy – Bridge Asia and the Middle East, and Balance Relationships

Over the longer term, Qatar should aspire to be a bridge between Asia and the Middle East, harnessing the Busan Agreement context to champion inter-regional cooperation. One strategic vision could be the creation of an “Asia-Middle East Partnership Forum” that brings Gulf states (including Qatar) together with key Asian economies like South Korea, China, Japan, and ASEAN countries to discuss trade, energy, and technology exchange. Given that China is already the GCC’s top trading partner and China–Gulf trade reached $315 billion in 2022, there is appetite to formalize these ties. Qatar can take a lead in this: it hosted the Doha Forum and often mediates international issues, so why not convene an economic dialogue? The Busan Agreement’s cooperative tone gives momentum to such ideas, exemplified by the near-finalization of the China–GCC Free Trade Agreement (90% of terms agreed as of late 2025). Qatar should push within the GCC to quickly finalize and sign this FTA with China. The FTA will cement Qatar (and neighbors) as key suppliers to and investors with China, locking in tariff-free access for Qatari petrochemicals, aluminum, and other exports, while making Chinese machinery and tech imports cheaper. This symbiotic trade growth aligns perfectly with Busan’s message against protectionism.

Moreover, Qatar can further its diversification by partnering with Asian countries on innovation and quality-of-life improvements, echoing the Busan theme of tech and life-quality cooperation. For instance, Qatar has launched initiatives like Qatar National Vision 2030, focusing on knowledge economy and healthcare. It could invite top Asian institutions (Korean hospitals, Japanese R&D centers, Singaporean smart city planners, etc.) to set up branches or joint projects in Doha. A concrete idea: Given the focus on AI and 5G in the Busan agreements, Qatar could create a “Gulf-Asia Tech Hub” in its planned Lusail City or Education City, where Asian and Qatari tech startups get incubated together. This would be a forward-looking realization of cross-continental cooperation, benefiting from South Korea’s and China’s advances in those fields and Qatar’s capital and infrastructure. Qatar already collaborates in education (many American and European universities have branches in Doha); extending that to Asian universities or tech parks can diversify its knowledge partners.

Diplomatically, Qatar should continue to play its role as a neutral mediator and friend to all – a stance Busan’s more harmonious outcome allows it to maintain more easily. Qatar has the distinction of hosting both American military assets and doing significant business with China and Iran; it has mediated in conflicts from Afghanistan to Gaza. This balancing act is part of its strategic autonomy. Being seen as a facilitator between East and West would elevate Qatar’s global standing further, much like its hosting of the FIFA World Cup did in sports. The positive relations with South Korea specifically could be leveraged – South Korea and Qatar have a history of cooperation (Korean firms built much of Qatar’s LNG infrastructure and Doha’s metro). In fact, South Korea imports significant LNG from Qatar, and Qatar charters Korean-made LNG tankers. Strengthening this energy partnership in light of Busan is wise.

Maintaining Positive Momentum

To ensure the optimistic “win-win” narrative among nations holds, Qatar – like others – should emphasize dialogue, mutual respect, and multilateralism. It should continue to engage in forums like the UN and G20 to advocate for global cooperation, aligning with South Korea’s and China’s calls at APEC for openness and integration. Qatar’s leadership often speaks about cooperation and has positioned the country as a peacemaker. In the post-Busan Agreement era, Qatar can align its messaging with the hopeful tone set in Busan: that major powers can solve problems together (as the U.S. and China addressed fentanyl and rare earths) and that smaller states can have agency by working creatively with all sides. For instance, Qatar can highlight how its own diversification efforts benefit from U.S.–China stability – a subtle reminder to both superpowers that their cooperation (or at least constructive competition) is valued by the international community.

In terms of risk, Qatar should be mindful that global politics are fluid. If U.S.–China relations were to sour again, Qatar might face pressure (like choosing between U.S. weapons or Chinese 5G tech – a dilemma some countries have had). Thus, Qatar’s best strategy is to continue strengthening its self-reliance and multivector diplomacy. The wealth Qatar accumulates now from high LNG demand (partly a result of Europe’s needs and Asia’s growth) should be wisely invested to secure its future. Busan’s hopeful outcome is an opportunity for Qatar to lock in long-term arrangements: long-term LNG contracts (like the 27-year China deal), long-term joint ventures, and perhaps longer-term strategic dialogues with both the U.S. and China. If Qatar can achieve a major milestone, say a free trade agreement with the U.S. (Qatar is already a major investor in the U.S., but an FTA would be symbolic) or a strategic partnership agreement with China, it would buffer it against any future headwinds.

In summary, Qatar’s reactive strategy after the Busan Agreement should be to embrace the stability to expand economically, invest in Asia’s growth alongside China (ensuring Asia remains stable and prosperous, which benefits Qatar as an investor and supplier), and position itself as a conduit of cooperation between Asia and the Middle East. By aligning with the positive trajectory among the U.S., China, and South Korea, Qatar stands to gain in both prosperity and international stature.

Conclusion

The “After Busan Agreement” era, marked by the 2025 APEC Summit outcomes, presents a hopeful blueprint for international relations in a time of rivalry. Each stakeholder for example, China, the United States, South Korea, and Qatar, has distinct takeaways and to-do lists, but common threads run through their strategies. All seek to harness the benefits of reduced tensions: for China, it’s renewing its commitment to shared growth in Asia while bolstering its innovation; for the U.S., it’s securing economic wins and strengthening alliances as it competes responsibly; for South Korea, it’s leveraging new opportunities from both great powers to solidify its role as a thriving, pivotal economy; and for Qatar, it’s utilizing the stable backdrop to bridge regions and invest in a diversified future. There is a palpable “positive-sum” mindset emerging – a belief that through cooperation and smart policy, each nation can advance its interests without derailing others. Busan’s historical legacy as a gateway and safe haven resonates in this context. Just as Busan was a bastion of resilience and exchange in the past, the Busan APEC summit may be remembered as a moment when the tides turned from confrontation to collaboration.

To be sure, challenges remain and this detente is delicate. But the strategies outlined – heavy on innovation, investment, and inclusive diplomacy – provide a roadmap for turning the Busan goodwill into lasting progress. South Korea’s foreign minister noted that most APEC members agreed on confronting protectionism together, and indeed the Busan Agreement reflects a rejection of zero-sum thinking. It shows that major powers can find compromises (like the tariff-fentanyl swap) that benefit global stability, and that middle and smaller powers can actively shape outcomes to their benefit. Each country’s proactive steps – whether China building a new port in Asia, the U.S. upskilling its workforce, South Korea courting both Silicon Valley and Shenzhen, or Qatar linking Gulf gas with Asian growth – will contribute to a more stable, prosperous world.

Encouragingly, leaders on all sides have struck an optimistic tone. “We’re going to have a very good outcome for our country and for the world,” President Trump said before meeting Xi. President Xi, in turn, spoke of creating a “favourable environment for the development of both nations” with the U.S. Such rhetoric, matched with concrete actions, builds confidence that Busan was not an endpoint but a beginning – the beginning of an era where competition can coexist with cooperation. South Korea, rejuvenated by new trade wins, can serve as a living example of the dividends of engaging with all sides. And nations like Qatar, forging partnerships across continents, remind us that globalization can adapt and thrive if we manage it wisely.

In the spirit of hope that pervaded the Busan summit, the strategies above are geared towards mutual benefit and positive peace. If implemented, they will help ensure that the "After Busan Agreement" period is characterized by economic vitality, technological progress, and diplomatic civility in Asia and beyond. Each country stands to gain – and in gaining together, they reinforce the foundation for a more stable and prosperous international community. The Busan meeting showed a glimpse of that future; now it is incumbent on all parties to build it. In the final analysis, Busan’s legacy will depend on the collective will to pursue win-win outcomes – a goal that is decidedly within reach, as the unity of purpose at APEC 2025 demonstrated.

Read more