Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Summit tips Korea's economic axis toward US
Conglomerate leaders attend a banquet hosted by the presidential office on the occasion of the summit between President Yoon Suk-yeol and U.S. President Biden, at the National Museum of Korea in Yongsan District in central Seoul, Saturday. From left in the back are Lotte Group Chairman Shin Dong-bin, CJ Group Chairman Sohn Kyung-shik and SK Group Chairman Chey Tae-won. Yonhap
By Yi Whan-woo
Seoul's moves expected to draw backlash from China
By Yi Whan-woo
The bilateral summit between leaders of Korea and the United States, Saturday, shows Seoul's tilt toward the U.S. concerning the economy, which accordingly is anticipated to benefit from the Washington-led alliance in global supply chain networks and trade.
But because such a move could mean an end to Seoul's double allegiance to Washington and Beijing, they have the risk of provoking China, which has increasingly been weaponizing trade against U.S. allies in its continued trade war with the U.S.
“The summit will support Korea Inc. gain a foothold in markets in the U.S. and allies at a time when economic security is increasingly being underlined,” Joo Won, the deputy director of the Hyundai Research Institute told The Korea Times, Sunday.
He was referring to the growing interconnection of economic and security interests worldwide, which the U.S. has been pushing harder to decouple from China and to rebuild American ties in supply chains for strategic items, such as semiconductors and secondary batteries.
The latest example can be seen in the Indo-Pacific Economic Framework (IPEF), proposed by the Joe Biden government to promote regional cooperation in four major areas: supply chains, the digital economy, clean energy transformation and investments in infrastructure.
Korea formally expressed its intent to join the IPEF on the occasion of the summit between President Yoon Suk-yeol and Biden, Saturday, in the lead-up to the framework's launch in Tokyo, during the U.S. president's second leg of his Asia trip after Seoul.
Japan is among the countries ― also including Australia, New Zealand and Singapore ― that are likely to be founding members of the IPEF.
“The framework is not bad at all for Korean businesses because it assures a secure, resilient network of supply chains backed by the U.S., which have been disrupted in recent years,” said Park Won-gon, a professor of international relations and North Korean studies at Ewha Womans University.
In semiconductors, a win-win situation between Korea and the U.S. is expected, with Samsung and SK Hynix from the Korean side boasting of manufacturing capabilities and the American businesses being global leaders in design.
On secondary batteries, enhanced cooperation is foreseeable between Korean battery manufacturers and American auto makers.
For instance, cooperation has been underway between LG Energy Solution and GM on the one hand and SK Innovation and Ford on the other.
A win-win situation is drawing attention as well in the automotive sectors, with Hyundai Motor announcing, Saturday, that it will invest $5.5 billion in building electric vehicles and batteries in the U.S. state of Georgia. Such investment is likely to result in the creation of massive jobs.
In relation to possible risks of the Korea-U.S. economic alliance, analysts have pointed out that China accounts for more than one-fourth of Korea's exports and that Beijing can exploit trade dependence to retaliate as in the case of deployment of U.S. THAAD missile shield in Korea in the late 2010s.
Additionally, Korea heavily relies on China for supplies of raw materials for manufacturing goods, and such reliance could led to supply shortages amid Seoul's transition to U.S.-led network supply chains.
The latest case of such a shortage was in 2021 when Korea's shipping industry experienced a shortage of diesel exhaust fluid, also known as “urea water,” used on diesel trucks.
“And China is already reacting sensitively toward Korea's decision to join the IPEF,” Park said, referring to a series of criticisms from state-controlled media outlets in Beijing.
Korea's presidential office said that the IPEF is not aimed at isolating China in the region.
But the online edition the state media outlet, The People's Daily, claimed that Biden's Asia trip is intended to pressure China and that Korea could be inflicted with serious damage if it sides with the U.S. in terms of its national interests.
The English-language version of The Global Times, which is under The People's Daily, said that the IPEF is intended to force countries in the region to decouple from China, not to facilitate economic prosperity in the region.