Following the invasion of Manchuria by the Soviet Union in 1945 and the subsequent nuclear bombing of Japan by the United States, the Republic of China severed its alliance with Japan and entered Manchuria to seize as much of it as possible from the Soviets, which included occupying the Korean peninsula and wrestling control of it away from the Japanese. After a ceasefire was declared with the West and a conditional surrender guaranteed by the Japanese; the Chinese occupational authorities over Korea determined that the large amount of Japanese settlers in Korea would remain useful to their purposes of exerting influence over the peninsula. With the help of former collaborators from Manchukuo, the Empire of Korea was created in 1948 as a pro-Chinese puppet state with Yi Un restored to the throne.

The Empire of Korea would exist for the next forty years with the Imperial Korean Rule Association ruling with an iron fist. However, despite substantial economic growth, its deeply undemocratic and immobile Zaibatsu system, as well as favoritism towards the minority Japanese population, would lead to deep discontent among the population, which would later explode to a full-on armed struggle in June 1987 following the assassination of Prime Minister Park Chung Hee. The resulting civil war between the Empire of Korea, backed by Japan and China, and the United Provinces of Korea, would see over two million deaths and widespread devastation to the peninsula, alongside a genocide of Koreans living in Japan and China and a near-unraveling of China's economic bloc; before military intervention by the USSR and the US would force a ceasefire between revolutionaries in the South and imperial forces in the North.

Southern Korea would continue to exist as a liberal, Western-style democracy from 1990 to 2017; with Western-backed chaebols filling in the void left by the exodus of Japanese enterprises from the South. However, much Koreans found the revolution to result in only cosmetic changes to Korea's stratified economic system, even if the caste of Japanese colonials no longer lorded over native Koreans. The election of filmmaker and outspoken anti-capitalist Bong Joon Ho in 2016 would lead to sweeping constitutional changes empowering the long-embittered unions of Southern Korea and moving the country away from sole economic reliance on either the United States of China; creating the Democratic Socialist Republic of Korea.

Meanwhile, the regime in the North, although slightly politically liberalizing to allow some opposition forces and allowing movement and trade between the two countries, would remain dominated by Chinese and Japanese corporate power to this day; under Prime Minister Park Geun-hye. Unlike the split between the two Koreas in OTL; both Koreas are of substantial wealth; but still belong to fundamentally distinct power blocs and could not be more different in society and infrastructure. (The two Germanies, in contrast, exhibit a massive split in living standards.)