India - South & North Korea Thread

[A_Gupta]

South Korea better with 25% tariff than 15% plus $350 billion
https://www.chosun.com/english/world-en ... GZYFFYJKU/

Dean Baker, senior economist at the Center for Economic and Policy Research (CEPR), a U.S. think tank that argued, “South Korea and Japan would be better off paying tariffs and using their investment funds to support domestic companies rather than handing over large sums to the Donald Trump administration,” stated in an interview with this newspaper on the 15th, “The 25% tariff Trump imposed on South Korea will certainly deal a significant blow to the South Korean economy, but it would be less damaging than accepting a 15% tariff and simultaneously paying $350 billion (approximately 485 trillion Korean won).” The $350 billion figure represents roughly 84% of South Korea’s current total foreign exchange reserves.

Regarding East Asian security guarantees South Korea might seek in exchange for tariff negotiations, Baker said, “If South Korean and Japanese leaders believe they can rely on Trump to protect them from military actions by China or North Korea, that’s delusional. Do they still not understand ‘America First’? Trump will act in his own interest when the time comes. He has made it clear he is not bound by past security commitments.” Below is the Q&A.

[A_Gupta]

Korean concerns about Trump's H1-B move - they see it as more a sign that visas for Korean workers to set up factories will be difficult; but not a lot of impact otherwise.
https://www.chosun.com/english/market-m ... 5NMH5Y5NU/
Trump's 100-Fold H-1B Fee Hike Complicates Talks
U.S.-South Korea Visa Negotiations Face New Hurdle Amid Rising Costs for STEM Workers

[A_Gupta]

While these opinion pieces have some undertones of anti-democracy and anti-regulation, the South Korean fear of the Chinese economy comes through clearly.

Editorial: Formidable 'China Speed,' Once Our Identity
South Korea's manufacturing future at risk as outdated regulations stifle innovation race against 'China Speed'
https://www.chosun.com/english/opinion- ... EVZ5HH774/

Ten years ago, Chinese Premier Li Keqiang lamented, "As the world’s largest steel producer, we still cannot make a single ballpoint pen tip."
...
A decade later, China has transformed from a "low-cost manufacturing factory" into a "top-tier manufacturing powerhouse." This is the result of the national strategy "Made in China 2025," which nurtures 10 key industries, including robots, shipbuilding, electric vehicles, batteries, and aerospace. Half of the world’s industrial robots are now produced in China, and in aerospace—a field where South Korea cannot even present its credentials—China has achieved independent operation of an unmanned space station and the world’s first landing on the far side of the moon. This astonishing transformation occurred in just "10 years."

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The speed of innovation in Chinese manufacturing is formidable. While domestic automakers like Hyundai Motor and Kia take 3–4 years to develop a new car, Chinese electric vehicle (EV) companies release new models in just 1.5 years. Aito, a joint venture between Huawei and EV maker Seres, launched its premium M9 model in December 2023, two years after its founding, and became the top premium car brand in China within a single year. This is incomparable to the 48 years Hyundai Motor took to launch its premium brand Genesis. Huawei, Xiaomi, traditional automakers, and battery companies have merged into one body, dominating the EV ecosystem in the blink of an eye.

When China joined the World Trade Organization (WTO) in 2001, its manufacturing competitiveness ranked 23rd globally. It took just over 20 years to rise to second place, behind only Germany. The U.S., with over 100 years of manufacturing history, ranks fourth, Japan fifth, and South Korea third. "China Speed" differs from the "Miracle on the Han River," which symbolized compressed high-speed growth. The Han River Miracle was about industrialization, but China is simultaneously accelerating industrialization, informatization, and the AI revolution. Harvard University evaluated national competitiveness in five key technologies—artificial intelligence, biotech, semiconductors, space, and quantum—and found that China ranked second in all categories, following the U.S. South Korea ranked fifth in semiconductors, ninth in AI, and tenth in biotech, but did not place in the top 10 for space or quantum technology. Chinese manufacturing is integrating Fourth Industrial Revolution technologies like AI and big data into production sites faster than any other country. Consequently, 41% of the world’s "lighthouse factories," which lead manufacturing innovation, are located in China.

Speed determines the outcome of economic and industrial competition. SK Group Chairman Chey Tae-won said, "Looking at China’s speed, there’s a high probability that we won’t be able to keep up and will die."

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South Korea has a small population, a small market, scarce resources, and mediocre technology. If it does not regain the "Han River Speed," its very livelihood could disappear. The ruling and opposition parties must reach a consensus to boldly remove outdated regulations that shackle new technologies and industries, establish the principle of "permit first, regulate later," and let companies race ahead. If South Korea cannot even match half of China’s innovation speed, its manufacturing future will vanish.

Can India climb up the ladder of manufacturing competitiveness? Can it attain South Korean speed, let alone Chinese speed?

[A_Gupta]

https://www.chosun.com/english/industry ... LEFANQI6M/

Over the past 10 years, the number of South Korean companies included in the Global 2000 list decreased from 66 in 2015 to 62 this year (-6%), while Chinese companies increased from 180 to 275, a rise of 95 companies (52.7%). The U.S. also saw an increase from 575 to 612 companies, up by 37. The total sales of South Korean companies on the list grew by only about 15%, from $1.47 trillion in 2015 to $1.69 trillion in 2025. In contrast, Chinese and U.S. companies saw their total sales increase by 95% and 63%, respectively. The growth rate of major Chinese companies' sales was 6.3 times that of South Korea. This is the result of an analysis by the Korea Chamber of Commerce and Industry (KCCI) of the past 10 years of Forbes' "Global 2000" statistics, which annually selects the top 2000 companies worldwide based on sales, profits, and assets.
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A comparison of U.S., Chinese, and South Korean companies included in Forbes' "Global 2000" clearly reveals the dynamism of the three countries' corporate ecosystems. The U.S. saw balanced growth in both traditional large corporations and new companies in advanced industries. China showed notable progress in new companies.
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The country with the most companies on the Global 2000 list was the U.S. (612 companies), followed by China (275), Japan (180), and others. South Korea fell from 4th place in 2015 to 6th, behind India (70) and the U.K. (68).
...

The KCCI pointed out, "South Korea's corporate ecosystem has a regressive structure where support decreases and regulations increase as companies grow." Lee Jong-myeong, head of the KCCI's Industry Innovation Headquarters, said, "The rate at which small and medium-sized enterprises (SMEs) become mid-sized companies in a year is 0.04%, and the rate at which mid-sized companies become large enterprises is about 1-2%." He added, "It is time to change the policy paradigm to quickly produce formidable new companies across various sectors, as seen in the U.S. and China." Lee also stated, "Even if it's limited to certain regions or industries, regulations should be relaxed, and support should focus on 'projects with high growth potential' rather than 'equal distribution.'"

What is India's rate of MSME becoming large?

[A_Gupta]

IMF Warns South Korea on Aging Population, Debt Surge
https://www.chosun.com/english/market-m ... VRGOKUFJU/

In its annual consultation report with South Korea released on the 24th, the IMF said, “To ensure fiscal sustainability and accommodate future spending pressures related to aging, long-term fiscal reform is required.”

The IMF emphasized in the report, “Introducing a credible medium-term fiscal anchor (target) would help secure the sustainability of long-term fiscal policy.” A fiscal anchor is a concept similar to a fiscal rule that manages national debt below a predetermined ratio. In other words, the IMF recommended that South Korea “set specific targets for national debt or fiscal deficits when establishing medium- to long-term fiscal plans for the next 3–5 years or more.”

The government submitted a “Korean-style fiscal rule” to the National Assembly in 2020, aiming to manage the national debt-to-GDP ratio within 60% and the fiscal deficit ratio within -3%. However, the proposal remains pending in a standing committee. According to estimates by the Ministry of Economy and Finance, if structural reforms are not implemented, the national debt-to-GDP ratio—49.1% at the end of this year—will jump to 71.5% in 10 years and rise to 156.3% by 2065, 40 years later.

Rahul Anand, head of the IMF’s Korea mission, said at a press conference on the same day, “The South Korean government’s fiscal policy stance is appropriate given that the growth rate is below the potential growth rate (the maximum growth rate achievable without stimulating inflation).” However, he added, “As Korea is an aging society, fiscal reforms must accompany the significant spending demands expected in the future.”

The IMF’s warning contrasts with the current government’s approach, which downplays the rapid increase in national debt amid an expansionary fiscal policy. President Lee Jae-myung recently stated at a press conference marking his 100th day in office, “The absolute size of government bonds is not very important. If we issue government bonds, the debt-to-GDP ratio will slightly exceed 50%, whereas other countries typically exceed 100%.”

[A_Gupta]

South Korean despair - 1
https://www.chosun.com/english/opinion- ... EXKF2I6FY/

At one point, it was common to think of South Korea’s approach as “security with the U.S., economy with China.” The perception was that aligning with the U.S., an ally, on security was natural, while the rapidly expanding Chinese market was too significant to ignore economically. Some argued this phrase would provoke the U.S., which is in a hegemonic competition with China. Observing the U.S. response, it seems there was some truth to that.

During the Yoon Suk-yeol government, the phrase “security with the U.S., economy with the U.S.” emerged. As the Biden administration moved to contain China, there was a sense of relief that we, being chased by Chinese industries, had some breathing room. When the U.S. offered massive subsidies to our companies and requested investments in the U.S., it seemed South Korea was entering a new era of full alignment with Washington. These were all dreams dreamed before Trump’s return.

Trump’s approach to Europe, Japan, and South Korea differs slightly. While Europe agreed to invest 600 billion dollars in the U.S., the burden is shared among 27 countries. Japan’s 550 billion dollars is manageable given its unlimited currency swap agreement with the U.S. and its vast overseas net assets. However, we have no currency swap agreement and our overseas net assets are not substantial. 350 billion dollars does not align with our GDP level. Compared to Japan, around 200 billion dollars would be more appropriate for us.

Trump engages in give-and-take deals with strong powers but is harsh on those with weaknesses. Initially, the tariff bombs seemed aimed at China, but over time, tariffs on Chinese goods have weakened like sand slipping through fingers. While it was expected that the Korean shipbuilding industry would benefit from additional costs imposed on Chinese vessels entering U.S. ports, this too has now become vague. On the other hand, Trump remains inflexible with U.S. allies. It seems that to Trump, the very fact of being an ally to the U.S. is a significant “weakness.”

From an economic scale perspective, a 350 billion dollar cash investment is beyond our capacity, but to Trump, this might be the “right price.” It is said that Trump asked President Lee Jae-myung, “Without U.S. troops, can South Korea defend against North Korea?” The implication is that a South Korea “occupied by North Korea without U.S. troops” should pay an additional 100 billion to 200 billion dollars in security costs.

No matter how we think about it, there is no way to invest 350 billion dollars in cash in the U.S. Although we have foreign exchange reserves of 410 billion dollars, they are not like bank deposits that can be withdrawn at any time. Even if they could be withdrawn, the country cannot pour out all its foreign currency. The initial promise to invest 350 billion dollars was misguided, but now we cannot back down. Ultimately, breaking the promise would be our fault, and we must brace for Trump’s retaliation.

First, “economy with the U.S.” will fade to some extent. In particular, Hyundai-Kia, facing 25% tariffs, may lose the U.S. market to Japanese cars. This is a market built with blood, sweat, and time. Other products, large or small, will also find it difficult to avoid damage. If this happens, even if we do not want it, the center of gravity may gradually shift from “economy with the U.S.” to “economy with China.” If the U.S. closes its market, chains workers sent to build factories, and increases professional visa costs by 100 times, psychologically, “economy with the U.S.” will also drift away.
….

Even if we can adjust our economic focus toward China, relying on China for security is impossible. China would treat South Korea as a subordinate state. Therefore, we have no choice but to maintain security through the U.S. alliance while also strengthening our own self-reliant defense. This means keeping the ROK-U.S. alliance as a foundation, but ensuring the nation does not falter every time American policy shifts. To achieve this, our conventional military must clearly surpass North Korea’s capabilities.

South Korea already possess conventional weapons and equipment that exceed North Korea’s. The problem lies with the politics and the military personnel. In a low-birthrate country, continuously reducing service periods will result in the army falling below 300,000 in 10 years. Even more alarmingly, a friend’s son, who served as a mortar operator, reportedly never fired a live round during his entire service. The unit commander likely prioritized “zero accidents” over combat readiness. These trends raise concerns that both security and economic strategies could fall into confusion.

[A_Gupta]

South Korean despair -2

Suicide Overtakes Cancer as Top Cause for South Koreans in 40s
Suicide Deaths Reach 13-Year High as Economic Pressures Impact Economically Active Age Group

https://www.chosun.com/english/national ... TAZ4EZXEQ/

[A_Gupta]

Dealing with North Korea

Minister Chung: North Korea's 2,000 kg HEU Stockpile
Minister advocates inter-Korean basic agreement, mirroring 1972 East-West German treaty

https://www.chosun.com/english/north-ko ... YZ3SDEQ74/

The Lee Jae-myung government’s National Planning Committee included in its five-year national management plan released last month a proposal to conclude a South-North Basic Agreement modeled after the 1972 East-West German Basic Treaty. The East-West German Basic Treaty was founded on the principle of recognizing each other as equal states and maintaining a peace coexistence system.