Challenges ahead for new South Korean leader

Sworn in Wednesday, Moon Jae-in has stepped into the leadership vacuum left by former President Park Geun-hye, who was impeached over a massive political corruption scandal.

As well as the smoldering tensions with North Korea, Moon has inherited a heavy load of economic problems.

Here are some of the main issues:

Tensions with China

South Korea has upset China, its biggest trading partner, by agreeing to the deployment of a U.S. missile defense system on its territory.

China has responded with an array of economic reprisals, including cutting tourist visits and pressuring the Chinese operations of major companies. (Beijing has denied that it is coordinating the response).

Tensions with China

South Korea has upset China, its biggest trading partner, by agreeing to the deployment of a U.S. missile defense system on its territory.

China has responded with an array of economic reprisals, including cutting tourist visits and pressuring the Chinese operations of major companies. (Beijing has denied that it is coordinating the response).

Economists say a major overhaul or scrapping of the trade deal would be a big blow for South Korean exporters. However, the Trump administration may end up taking a cautious approach to any formal talks because South Korea is an important regional ally.

Seoul said after Trump's recent comments that it has not yet received an official request to renegotiate the agreement.

Corruption

Moon has come into office after an extraordinary corruption scandal brought hundreds of thousands of protesters into the streets and resulted in Park's downfall.

The scandal has also engulfed some of the country's biggest companies. In the highest profile case, de facto Samsung chief Lee Jae-yong is on trial for bribery and other corruption charges.

Lee denies the charges, but the scandal has fueled public anger against his company and South Korea's other huge family-run conglomerates, known as chaebols. The opaquely run companies have also been accused of hurting innovation and entrepreneurship in the country by squeezing out smaller companies.

"Reform of the chaebols should help to boost productivity growth across the economy," Capital Economics said in a research note ahead of the election.

But the research firm cautioned that "the scale and importance of the chaebols to the economy means any significant change will certainly take time."