We can counter the forthcoming China challenges
There is no need to stress the importance of the manufacturing industry for Korea’s economy. Recently, however, concerns spread widely about its future, and the source of the worries is the rise of China. In October 2013, China declared that it will be transformed into a manufacturing superpower from merely the largest manufacturer by 2020 based on its strategy.
If China succeeds in that leap, what will be the impact on Korea? What China meant by “manufacturing superpower” probably means a country with advanced technologies such as Korea, Japan and Germany.
Many global economic institutes predicted that China’s GDP will be about $14 trillion by 2020 and the GDP per capita will be over $10,000. By then, Korea’s GDP per capita will be about $40,000, according to their reports. There is no objection to China’s growth based on economic development. But the seriousness of the problem is about the improving technologies of China, where labor is far cheaper than in Korea.
Korea will face a serious economic crisis because it is largely dependent upon exports. A financial crisis can be countered with expansionary policy, but this crisis cannot be tackled with such a measure. The situation surrounding Korea’s manufacturing industry is extremely challenging. State-run research and development showed poor outcomes while the cooperative projects between industries and schools are moving slowly. The education system for engineers is poor and the technology ecosystem is moved by conglomerates. The public also has little appreciation for manufacturing industry jobs.
The Park Geun-hye administration’s so-called creative economy agenda only put emphasis on the information and communication technology and the basic manufacturing industry was given less emphasis. We do not have much time left until 2020. There is no time to waste.
How can we properly counter the forthcoming challenges? There is only one answer. We must become a manufacturing technology superpower that China can never be able to catch up to. That is like the technologies of Germany and China. If the government provides proper support and the industries and schools work together resolutely, it is possible. Wisdom is needed to change this crisis into an opportunity.
By Yang Min-yang, Professor of mechanical engineering at KAIST