This paper discusses the national security challenges and policy dilemmas that South Korea is predicted to face in the year 2012. North Korea is currently engrossed in efforts for stabilization of its new regime led by Kim Jong Un. It is expected that for the time being the two Koreas will seek signals to help facilitate a shift in the bilateral situation amid the continuing tense situation. Meanwhile,there remains a high possibility of recurrence of a crisis situation on the Korean peninsula due to accumulated internal conflicts and the unproven leadership of the North’s new leader. Concerning the North’s nuclear program, it is difficult to expect it will be settled in the way intended at the time of launching the Six-Party Talks. Under such circumstances, the international community’s interest is focused on what impact the new defense strategy adopted by the United States,including the planned cuts in the U.S. defense budget over the next decade, will have on the security situation in Northeast Asia. China’s military buildup based on its rapid economic development has become one of the main security concerns for the countries in the region. The strategic dilemma associated with China’s military buildup looms large, particularly for South Korea, because the bilateral relationship between the two Koreas overlaps with the ROK-U.S. alliance and the relationship between South Korea and China. The best scenario would be if the G-2, i.e. the United States and China, are willing to assume their share of responsibilities and capabilities in pending issues facing the international community, but this could be wishful thinking. The importance of the ROK-U.S. alliance cannot be overemphasized as long as U.S.-China relations remain one of “checking up on one another” and confrontation, and there are continued threats from North Korea. The South is certainly not alone in wishing to see China’s development in diverse sectors, i.e. raised GDP, the establishment of a competitive economic system, key currency, global standards and military power, and increased responsibility and capability for coping with security threats.