As the world fractures into rival blocs, middle powers are rediscovering an old temptation: using great-power rivalry to extract short-term gains.
From Seoul to Riyadh to Ankara, mid-sized states are testing how much leverage proximity to US–China tensions can buy. But when national champions confuse tactical advantage for strategic influence, the result is often self-sabotage.
South Korea’s Hanwha Group offers a textbook case. One of Asia’s largest industrial conglomerates, Hanwha recently lobbied Washington to impose new tariffs on Chinese solar modules routed through Southeast Asia—framing the move as essential to “US energy security.”
The campaign backfired spectacularly, alienating American developers, destabilizing regional supply chains and tarnishing Seoul’s reputation as a reliable partner. What began as a bid for market share became a lesson in overreach.
From partner to problem
Hanwha’s US solar subsidiary, Qcells, was once a poster child for Biden’s clean energy agenda. It built factories in Georgia, hired local workers and qualified for generous Inflation Reduction Act (IRA) tax credits. For a time, it represented the ideal foreign investor: helping localize production while strengthening US supply-chain resilience.
But when Chinese firms began exporting low-cost panels through Malaysia, Vietnam, Thailand and Cambodia—countries Washington itself relies on to diversify away from China—Hanwha didn’t respond with innovation or efficiency gains. Instead, it turned to politics, demanding new tariffs under the guise of fighting “circumvention.”
This was not a defense of American jobs—it was rent-seeking wrapped in patriotism. Worse, it ignored a simple truth: Southeast Asia isn’t a loophole; it’s a lifeline. The US depends on these hubs to maintain distance from China without triggering full decoupling. Punishing them risks fracturing the very network that enables diversification—and keeps ASEAN aligned with the West.
The backlash was swift. US solar developers warned of project cancellations and rising costs. Utilities balked. Even within Washington, Hanwha’s gambit raised eyebrows: was Seoul now siding with protectionism over partnership?
Misreading the game
Hanwha’s misstep reflects a wider pattern among middle powers: mistaking US rhetoric for operational reality.
Washington isn’t pursuing full decoupling—it is engineering managed interdependence. It wants to secure choke points in semiconductors, AI and defense while retaining flexibility in lower-stakes sectors. When allies push for maximalist anti-China measures in industries like solar, they cross an invisible line—from useful partner to political irritant.
For South Korea, the stakes are particularly high. Its economy thrives on dual access: US technology and Chinese markets. Over-identifying with one side invites retaliation from the other. When corporate giants like Hanwha treat US politics as a bidding arena rather than a strategic alliance, they erode Korea’s most valuable asset: trust.
The middle-power trap
Hanwha’s overreach is not unique. Across the world, middle powers are walking the same tightrope.
– Turkey flirts with Russian arms deals while pledging loyalty to NATO—earning suspicion from both sides.
– Saudi Arabia plays Beijing and Washington off each other, leveraging oil and investment diplomacy to extract concessions.
– India walks the line most adroitly—joining the Quad while deepening trade with China and Russia.
Success in this game depends on restraint. Middle powers gain influence not by defying gravity, but by moving with it. Overreach begins when ambition outpaces awareness of scale.
Hanwha saw an opportunity in US–China friction but misunderstood the architecture of American strategy. It mistook access for influence—and influence for control.
A warning for Seoul—and beyond
South Korea now faces a reckoning. Its prosperity rests on globalization, yet its politics increasingly reward nationalist posturing. When private firms act as freelance geopolitical agents—without coordination or strategic coherence—they risk pulling national policy into contradiction.
Washington, too, bears responsibility. Its industrial policies invite allied participation but not allied protectionism. When partners demand special carve-outs under the banner of “friend-shoring,” they weaken the very coalitions meant to secure supply-chain resilience.
Ultimately, it comes down to incentives, not ideology. Hanwha’s episode shows how easily corporate profit motives can diverge from national interest—turning allies into accidental saboteurs.
The multipolar tightrope
As overlapping blocs proliferate—AUKUS, BRICS, IPEF and countless bilateral pacts—the temptation to exploit great-power rivalry will only grow. But lasting relevance in this new order won’t come from moral grandstanding or opportunistic lobbying. It will come from reliability.
Nations that overreach risk isolation. Those that play the long game—balancing agility with discipline—will earn trust, investment, and quiet influence.
Hanwha’s misstep carries a simple but urgent lesson: in an age of uncertainty, restraint is power. Middle powers that mistake America’s temporary political openings for permanent leverage may soon find themselves on the sidelines of a contest they never truly controlled.
The real test isn’t defiance or dependence—it’s disciplined realism: knowing when to press, when to yield, and when to simply keep building. Because in geopolitics, as in business, overreach is still the fastest path to irrelevance.
Yuxuan Waters Deng is a US-based entrepreneur and writer focusing on US–China economic competition, industrial policy, and adaptive governance in Asia.
