Planning as world changesOn Monday, Ahn Cheol-soo, chair of President Yoon Suk-yeol’s transition committee, presented six national goals and 110 agenda items, including future growth engines for the economy. The incoming administration plans to concentrate on 6G telecommunications, secondary batteries, displays, bioscience, defense and space industries, next-generation reactors, hydrogen energy, smart farming, artificial intelligence and cultural content.
The chairman pointed out that we have no future if we follow in the footsteps of the Moon Jae-in administration, which focused on three categories — system semiconductors, future cars and bio-health — as “some sort of cash cow for immediate gains.”
Ahn made very appropriate remarks given the significance of the government’s crusade to invest in growth engines for the future. After being led by Samsung, SK, Hyundai and LG as “fast followers,” Korea’s major industries are fast chased by second movers like those in China. Worse, the ruling party will become a minority in the legislature after Yoon’s administration starts on May 10. The international situation also raises alarms, including Russia’s invasion of Ukraine, normalization of currency policies in major economies and lockdowns in China.
The Korean economy currently suffers from three highs — high prices, high interest rates and high exchange rates — which raises the possibility of stagflation. Though the pandemic and the invasion of Ukraine are external factors, our economy relies on trade for more than 60 percent of the GDP.
According to the Federation of Korean Industries (FKI), the market share of Taiwanese and Japanese chips in China increased by 4.4 percentage points and 1.8 percentage points, respectively, compared to 2018, when America’s regulations on semiconductor supply to China started. But in the same period, Korea’s share shrank 5.5 percentage points. That can largely be attributed to Huawei’s suspension of memory chip imports from Korea after the U.S. ban. But Taiwan is more competitive than before. The International Monetary Fund (IMF)’s outlook for the global economy affirms the crisis Korea faces. The IMF projects Taiwan’s per capita GDP will exceed Korea’s this year, at $36,051 versus $34,994.
The world economy is headed to a life-or-death war for technology between America and China with a colossal revamp in supply chains for each industry. The old order of the international economy does not work anymore. We urge our lawmakers and government to think over what they can do for the country.