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1. COVID-19, Supply Chains, and Dependence on China: The Indian Perspective

Author:
Amitendu Palit
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
China is India’s largest source of imports, nearly 15 percent of which are sourced from China. Many of India’s major imports—electrical machinery, electronic and semiconductor devices, fertilizers, antibiotics, iron and steel products, and vehicular parts—are extensively sourced from China. The outbreak of the COVID-19 pandemic highlighted the critical dependence of India’s pharmaceutical industry on China for active pharmaceutical ingredients (APIs). The dependence on China for both intermediate and finished products, has encouraged India to incentivize greater production at home through production-linked-incentives (PLIs) and to work with Japan and Australia on reorganizing regional supply chains. The paper examines the repositioning of supply chains in the strategic industry of pharmaceuticals. Efforts to reduce dependence on China assume great importance in this regard as India strives to become the leading supplier of affordable vaccines for tackling COVID-19.) The decade of the 2020’s has begun with India embarking on the dedicated mission of reducing import dependence and increasing self-reliance. The COVID-19 pandemic has starkly exposed the frailties of supply chains relying heavily on China. For India, which relies extensively on China for several critical imports, no sector is more vulnerable to disruptions from over-dependence than its pharmaceuticals. India’s reputation as the “pharmacy of the world” drawn from its great proficiency in making affordable pharmaceutical formulations and vaccines, relies fundamentally on sourcing essential drug intermediates from China. As one of the leading actors in the world’s fight against COVID-19, India is wary of sourcing disruptions from China affecting its ability to contribute to expanding global health security. After focusing on the import dependence of India’s pharmaceutical industry on China, this paper analyzes the recent initiatives announced by India for increasing economic self-reliance and reducing such dependence. It concludes by reflecting on the prospects of India decoupling from China in sourcing pharmaceutical ingredients.
Topic:
Economics, COVID-19, Imports, and Supply Chains
Political Geography:
China, South Asia, India, and Asia

2. Taiwan’s Shifting Role in the Global Supply Chain in the U.S.- China Trade War

Author:
Jinji Chen, Hong-yu Lin, and Yi-ting Lien
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The U.S.-China trade war and the pandemic have had a profound impact on cross-border supply chains. In the past few years of U.S.-China tensions, China has been accused of engaging in unfair competition by abusing its national power, from trade and technology to COVID-19 responses. Amid such accusations, some countries have been stepping back from cooperating with China due to national security concerns. As the lockdowns have further disrupted value chains and highlighted the vulnerability of global supply chains, enhancing supply chain resilience has now become a national imperative for the U.S., Japan, and other countries, with an emphasis on strengthening their production capabilities in the semiconductor and medical care industries.
Topic:
Economics, National Security, Trade Wars, and Supply Chains
Political Geography:
China, Taiwan, Asia, North America, and United States of America

3. The Pandemic’s Impact on Supply Chains from China and their Evolution: The View from South Korea

Author:
Jin Kyo Suh
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Today’s global economy is highly interconnected and interdependent. Supply chains across the world are finely tuned to deliver parts just when they are needed, so that companies and industries do not need to waste money on maintaining big warehouses. The economic system runs with remarkable efficiency, and companies are able to keep inventory to a minimum. However, firms have started rethinking their supply chains in response to changing labor costs, advances in automation, rising protectionism, and external shocks, such as natural disasters. In particular, the COVID-19 pandemic has revealed the structural fragility of current global supply chains and has forced many global enterprises to fundamentally reconsider their approach to global manufacturing and sourcing. The crisis has also highlighted geopolitical tensions, trade restrictions, and nationalist politics aimed at promoting a country’s domestic industries, which are likely to continue reshaping the global business landscape. As a consequence, most global enterprises are going to be under greater political and competitive pressure to increase their domestic production, grow employment in their home countries, and rethink their use of lean manufacturing strategies that involve minimizing the amount of inventory held in their global supply chains. Previously, supply chains were designed to keep costs low and inventories lean. However, supply chains are now being reworked to reduce the risks of future disruption even if doing so means incurring additional costs. Because China is decidedly the world’s largest goods exporter and is also currently mired in a trade conflict with the United States, supply chains going through China may be among the most vulnerable to future disruptions. Hyundai, South Korea’s largest automaker, temporarily stopped production lines at its factories in South Korea because of shortages of Chinese parts. The Hyundai shutdown—encompassing the first factory lines to be idled outside China—could foreshadow considerably more serious disruptions in the complex networks that supply automakers with essential components and materials (Automakers are especially susceptible to interruptions in the flow of goods because the industry is global, and cars are complex products with a myriad of precision parts). Recognizing the risk that dependency on China poses to national industries, some governments have offered manufacturers incentives to exit China and ease the pain of diversification. For example, Japan put $2.2 billion of its COVID-19 economic stimulus package into supporting its manufacturers moving toward shifting production outside of China. There was also mounting public pressure in some countries, such as the United States, to move essential production of pharmaceuticals and medical equipment out of China and closer to home. It is, however, not that simple to reduce global supply chain reliance on China: the nation still retains not only considerable comparative advantages in many areas (e.g. electronics, machinery, and equipment manufacturing), but also enormous purchasing power as the world’s second largest market. Even those companies that have diversified production are finding it hard to break free of China’s pervasive influence. Anticipating a rise in tariffs due to the U.S.-China trade conflict, videogame producer Nintendo shifted the manufacturing of its blockbuster gaming console called Switch to Vietnam in 2019. There was, however, a shortage of Switch consoles in stores in early 2020 due to a lack of essential components flowing to the company’s Vietnamese factories, as COVID-19 paused production of component parts by Chinese suppliers. In addition, most businesses have developed complex interdependencies, resulting in a deep tiering of supply chains. Many manufacturers depend on first-tier suppliers which, in turn, rely on a second-tier, and so on. Therefore, relocating factories or replacing all Chinese suppliers would be infeasible in the short-term. This chapter reviews the impact of supply chain disruption caused by COVID-19 on the South Korean economy and examines the future of regional supply chains centered on China. The rest of the paper is structured as follows. How supply chain disruption caused by COVID-19 will affect the South Korean economy, including trade, is discussed in Section 2. According to the latest national GDP report by the Bank of Korea (BOK), South Korea is going to see a mere 1 percent GDP contraction for 2020, the second-best performance among major economies behind only China. Reasons for why the South Korean economy was not seriously affected by the pandemic are also discussed in Section 2. Section 3 highlights the difficulty of reducing global supply chain reliance on China. China is likely to remain a key player, and the world must look at the reality that global supply chains are highly interconnected with China and that disconnecting from China’s supply chain is not an easy economic task for many multinational companies. The final section offers a few concluding remarks on deepening regionalism specifically in Asia, including policy implications for South Korea.
Topic:
Economics, COVID-19, and Supply Chains
Political Geography:
China, Asia, and South Korea

4. The Future of U.S. Supply Chains: National Security and the Pandemic

Author:
Troy Stangarone
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The COVID-19 pandemic has been the most significant economic disruption to the international economy since the Great Depression. The IMF estimates that the global economy contracted by 3.5 percent last year, while the WTO has projected a 5.3 percent decline in global trade. The economic impact on the United States has been significant as well. Early in the pandemic the United States experienced shortages of critical medical supplies and products, while the need to social distance has continued to place restrictions on the overall economy. For 2020, the pandemic saw GDP decline by 2.3 percent, while exports fell by 12.9 percent and imports by 6.4 percent. All of this has resulted an increased focus on supply chains and their vulnerabilities.
Topic:
Economics, National Security, COVID-19, and Supply Chains
Political Geography:
China, Asia, North America, and United States of America

5. Shared History, Divided Consciousness: The Origins of the Sino-ROK Cultural Clash amid the Pandemic

Author:
Dong Xiangrong
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Since 1992, bilateral relations between China and South Korea have sustained a state of positive development, although there have naturally been some moments of friction and contradictions. Amid the COVID-19 pandemic in 2020, a number of disputes arose between netizens in China and South Korea over such things as the origin of pickled vegetables (paocai in Chinese, kimchi in Korean) and the Van Fleet award acceptance speech of South Korea’s BTS singing group. Different interpretations of a few thousand years of bilateral interactions—cultural, political, military, historical, and other topics mutually entangling the two—have led to some sharply vitriolic disputes between netizens in the two neighboring countries. Today’s tensions over national identity issues are rooted in how history is understood in the two countries and the enduring salience of cultural symbols of identity tied to history. Nobody could have anticipated that pickled vegetables would, ultimately, become a focus of the 2020 dispute between netizens of China and South Korea. Since over a decade ago when the Gangneung Danoje (端午祭) was granted UNESCO recognition and other developments occurred, all the way up to today’s pickles, it seems that almost all ongoing Sino-South Korean identity disputes are connected to the entangled histories of the two sides. Seen from the history of cultural exchanges from long ago, is traditional medicine, after all, your Chinese medicine or my Korean medicine? Is traditional dress our Han Chinese clothing or your Korean clothing? Is the May 5 festival our Duanwujie (端午節，Dragon Boat Festival) or your Danoje? Are vegetables marinated by pickling, our “paocai” or your “kimchi”? A thousand-year cultural legacy should be a factor to strengthen shared identity and tighten cultural connections in Sino-South Korea relations. However, against the current geopolitical and geo-economical background, shared cultural connections unexpectedly became the focus of contention between the two neighbors. Geopolitically, China and South Korea have been involved in different political camps since World War II. During the decades of Cold War, these two countries unfortunately fell into hot war although they were not each other’s main enemy. Each country describes the war and justifies its actions through its own lens. Was the war, after all, our “War to Resist U.S. Aggression and Aid Korea” or your “Korean War”? Different memories of the war led to widespread, fervent protest from Chinese fans against South Korea’s popular singing group BTS’s acceptance speech in receiving the Van Fleet Award by the Korea Society. Sensitivity toward remarks about the war some 70 years ago has unexpectedly heightened recently. Geo-economically, China and South Korea have been interdependent over the past three decades. China has been the biggest trade partner of South Korea for many years. The Chinese market is bigger than the U.S. and Japanese ones combined for Korean products. The market matters. The Samsung Group and Hyundai Group have had to react to the voices of customers and stop showing an advertisement performed by BTS. Also, when Seoul and Washington decided to deploy THAAD in South Korea, Seoul had to face the negative economic consequences of its deteriorating bilateral relationship with China. Both geopolitical differences and historical memories are now capable of arousing economic retaliation. This chapter analyzes from the angle of how history and the present are linked the current identity conflicts between China and South Korea. It recognizes that using today’s concepts to evaluate history leads clearly to tearing asunder Sino-South Korean mutual historical recognition. At the same time, the influence of values, geopolitics, differences in level of development, and other factors, along with cultural clashes between China and South Korea intersecting with political and security topics mutually arouse and even worsen relations between the two peoples. Security confrontations and ideological divergence have severely worsened public relations between the Chinese and South Koreans. These disputes, such as the Korean War and THAAD, have become important backdrops for the emergence and exacerbation of cultural rifts.
Topic:
Politics, Culture, History, and COVID-19
Political Geography:
China, Asia, and South Korea

6. The Coronavirus: Fueling Concerns and Contrasts between India and China

Author:
Tanvi Madan
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
On February 26, 2020, an Indian plane landed in Wuhan carrying medical supplies for China, which was then the epicenter of the COVID-19 outbreak. On its return, it evacuated a number of Indian and Bangladeshi nationals, as well as citizens of other countries. On the face of it, this is the kind of cooperative effort that is expected during a global public health crisis, with countries—even competitors—coming together at a time of need. However, the saga of that flight reflected another (prescient) dynamic—that COVID-19 would reinforce and increase rather than alleviate competition between China and India and complicate cooperation, with pandemic response and recovery efforts being seen through a competitive prism. That flight to Wuhan was not smooth; indeed, it was much delayed. Delhi had announced it a week earlier. It was a way to help China, demonstrate India’s capacity, and assist India’s neighbors by evacuating their citizens. But then Indian officials publicly, albeit anonymously, revealed that Beijing was not clearing the flight. The reason was unclear—China, after all, had been requesting international support. There also did not seem to be a bureaucratic snafu. So, was it the visual of Beijing accepting support from India, which Chinese officials and analysts sometimes dismiss as a less capable, even chaotic, neighbor? Was it the desire not to give India a soft power win, including with its neighbors? Was it because the flight involved a military transport aircraft procured from the U.S.? Was it retaliation for the temporary Indian detention of a Chinese ship bound for Pakistan due to a tip-off of dual-use items on board? Or was the reason Chinese unhappiness about Indian travel restrictions to and from China, or Indian export limits on certain medical products? Whatever the reason, China eventually gave the flight clearance, but only a week later and after much Indian negotiation. It was an early sign that the public health arena would not be immune from the competitive atmosphere prevailing between the two countries, and in the region as a whole. Subsequent events only bore that out. There has been considerable discussion about how countries’ perceptions of China would change due to the pandemic—at the beginning because of its mishandling, and then because of its recovery. This chapter argues that, rather than change perceptions, Beijing’s handling of COVID-19 increased the largely skeptical views of China that prevail in India, which had at least 29 million cases and over 385,000 deaths in India by mid-June 2021 (the 2nd and 3rd highest in the world respectively). This trend was further bolstered by the worst boundary crisis between the two countries since they fought a war in 1962. Together, the pandemic and the boundary crisis have ensured that the competitive and conflictual elements of the India-China relationship have been front and center over the last year. They have reinforced and accelerated concerns in India about China’s lack of transparency, its uncertain commitment to the rules-based order, as well as its growing influence in the Indo-Pacific and in international institutions. And they have demonstrated that despite Delhi and Beijing’s efforts to cooperate and to stabilize their relationship over the last two decades, it remains a fundamentally competitive one that can spill over into conflict. This chapter examines the impact of first the pandemic and then the boundary crisis on perceptions of China among the Indian government, establishment, and public. It proceeds to outline the consequences of these perceptions on Indian domestic policy, its partnerships with like-minded major and middle powers, and its counter-COVID activism. Finally, it considers China’s response, particularly to Indian policy changes.
Topic:
Bilateral Relations, Culture, Domestic Politics, and COVID-19
Political Geography:
China, South Asia, India, and Asia

7. The Sino–U.S. National Identity Gap and Bilateral Relations

Author:
Danielle Cohen
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The national identity gap between China and the United States has become increasingly apparent. Under Xi Jinping, China has sought to reclaim its historical greatness and proclaimed itself to be a responsible great power that offers a credible alternative to Western values, while also promoting increasingly authoritarian policies at home, complete with extensive repression in Xinjiang and renewed state control of the economy. Assertions of U.S. national identity were somewhat muted under Donald Trump, confused by the battle between those who supported the administration’s “America First” policy, its transactional approach to foreign affairs, and its deemphasis on human rights and democracy promotion in U.S. foreign policy, and those who worried about the global repercussions of an isolationist, nativist policy. For a time, the United States seemed more preoccupied with its trade war with China than with claims that the United States should act as the global protector of human rights and democracy. The COVID-19 pandemic further complicated already tense Sino–U.S. relations and called both countries’ national identities into question. While China had, as of spring 2021, succeeded in keeping its COVID-19 outbreak remarkably small, the damage caused by its initial suppression of medical reports, along with successful virus mitigation in a number of non-authoritarian states, called into question its claim to be a responsible world power on the basis of its pandemic performance. Meanwhile, the Trump administration failed to protect U.S. citizens from catastrophic death tolls and prevented the United States from taking a leading role in resolving this global crisis. In January 2021, the Biden administration took office with a focus on swiftly ending the pandemic, while also reasserting the traditional U.S. global leadership role. When combined with its assessment of U.S. power after the 2008 Global Financial Crisis and of U.S. domestic social and political instability evident throughout 2020-2021, the pandemic has strengthened China’s perceptions of the United States as a country in decline, and of China as a “risen” great power that should now play a major role in shaping the global order. At the same time, although U.S. policy towards China remains firm despite the presidential transition, the underlying rationale has shifted from the “America First” approach of the Trump administration to the democratic values-infused approach of the Biden administration. As the world struggles to move beyond the pandemic, the national identities of China and the United States are increasingly defined in opposition to each other and seem likely to drive an ever more challenging bilateral relationship in the coming years.
Topic:
International Relations, Foreign Policy, Bilateral Relations, Culture, and Domestic Politics
Political Geography:
China, Asia, North America, and United States of America

8. China, ASEAN, and the Covid-19 Pandemic

Author:
Joseph Chinyong Liow
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
For Southeast Asia, the COVID-19 pandemic was not only a public health crisis. It also provided an occasion for China to deepen its engagement in the region by dint of its own successful containment of the virus within its borders, and the resources it possessed to extend help to regional countries battling COVID-19 and its consequences, including economic, on their own shores. While Chinese help was welcomed, Southeast Asia also sought to avoid being beholden to any single external power. To that end, Southeast Asian states have actively pursued such diversification not only through efforts at reinforcing cooperation within ASEAN but also by using ASEAN as a vehicle to engage external powers. At the end of 2019, Chinese health authorities reported a cluster of pneumonia cases that had emerged in Wuhan, in the province of Hubei, which eventually led to the confirmation of a novel coronavirus. Several weeks later in January, the pandemic struck Southeast Asian shores when the first case outside of China was detected in Thailand. Within a few months, the world found itself in the grip of a global pandemic. By the end of January 2021, there were more than 100 million recorded cases of the COVID-19 infection, with over two million deaths. While the fatality rates are lower than those of previous pandemics of the SARS (Severe Acute Respiratory Syndrome) strain, it has by far been the most infectious, prompting Singapore foreign minister Vivian Balakrishnan to opine that with the pandemic “we are facing a global life and death crisis which requires extraordinary measures.” Threats posed by pandemics are not new to Southeast Asia. In the last two decades alone, the region had been beset by several transnational health crises, of which SARS and the H5N1 Avian Flu were arguably the most lethal. What is striking about the current climate, however, is the backdrop against which the pandemic is playing out: the COVID-19 pandemic has hastened the further bifurcation of an international order that was already threatening to come undone because of the intensification of Sino-U.S. rivalry and American withdrawal from multilateralism under Donald J. Trump. Southeast Asian states found themselves increasingly compelled to reassess their relationships with external powers. Taking the present pandemic as a point of entry, this paper considers its impact on Southeast Asia’s relations with China and the U.S. The paper makes three main arguments. First, it contends that Sino-U.S. rivalry has sharpened over the COVID-19 pandemic by dint of the politicization of this public health crisis by both parties. Second, it argues that China has identified and seized upon opportunities presented by the pandemic to enhance its regional and global standing through continued support for multilateralism and economic engagement through initiatives such as the BRI, in turn creating favorable conditions for the advancement of its foreign policy interests. Conversely, because of the severe deficiencies in how the Trump administration handled the pandemic domestically, the Biden administration will have to prioritize its domestic challenges at the expense of greater bandwidth and resources for foreign policy, especially in Southeast Asia, a region that since the end of the Vietnam War has never featured prominently in Washington’s pursuit of its overseas interests. Third, it posits that while Southeast Asia has doubtless benefited from Chinese support during this crisis, the region remains skeptical of Chinese strategic intent and concerned about overreliance. States have tried to diversify relations with regional powers while strengthening cooperation within ASEAN. The paper first looks, by way of background, at how the pandemic emerged as the latest arena of Sino-U.S. rivalry. It then explores how China has handled the pandemic domestically, where its success has allowed it to expand its influence as a putative provider of “global public goods.” In the interest of brevity, the paper then focuses on ASEAN by documenting collective regional efforts and strategies to navigate great power rivalry in the realm of global public health.
Topic:
International Relations, Security, ASEAN, and COVID-19
Political Geography:
China and Asia

9. The Pandemic as a Geopolitical Gamechanger in the Indo-Pacific: The View from China

Author:
Yun Sun
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
How has the COVID-19 pandemic reshaped or influenced China’s geopolitical outlook and its grand strategy for the years to come? This is a question that will determine China’s relationship with the United States, the Indo-Pacific region, and the rest of the world. In the Chinese strategic community, the pandemic has been regarded as a “watershed” event that has reshaped the structure of the international system and the power equilibrium. Its importance is elevated to the same status as the end of World War II, which determined the bipolar international system between the U.S. and the Soviet Union, and the end of the Cold War which began thirty years of U.S. hegemony in a unipolar world. Although China began as a sheer loser in the pandemic given its culpability in the origin of COVID and its early poor management of the domestic spread of the disease, Beijing believes that it has eventually emerged as a pure winner in the pandemic: the relative gain China has made vis-à-vis the U.S.’s bigger losses in disease control, national power, economic growth, global leadership, and credibility has strengthened Chinese confidence that the tide is turning in China’s favor. The “effectiveness” of the Chinese political system, as manifested in its domestic disease control, has reinforced China’s ideological conviction of its superiority. As China uses COVID diplomacy to demonstrate the superiority and desirability of its political system, the pandemic is perceived as an opportunity for it to shape the new international order and promote China’s desired “Community of Common Destiny.” Challenges remain, as the U.S. revamps its alliance system under the Biden administration and as regional powers and Western countries grow increasingly concerned and anxious about China’s growing confidence and capabilities. However, for China, the pandemic has been a great opportunity, and China has emerged from it as a pure winner. It is an interesting question as to how the pandemic has changed the nature and the dynamics of the great power competition between the U.S. and China. Most would agree that the pandemic exacerbated, accelerated, and aggravated the deterioration of relations that the U.S. and China had already been experiencing before 2020. However, the differences lie in the degree, intensity, velocity, and extensiveness of the damage. Without the pandemic, the downward slope U.S. and China had already been on would not have come to a state of “freefall” in 2020. And that “freefall” period has long-lasting and significant implications for their bilateral relations in the post-COVID world. The damaged trust, confidence, and credibility, and the deeply entrenched sense of hostility, or even antagonism, have made any effort to repair the relations extremely difficult, if not completely impossible. And this reality will affect the regional dynamics in the Indo-Pacific region for the many years and decades to come.
Topic:
International Relations, Security, Foreign Policy, Geopolitics, and COVID-19
Political Geography:
China, Asia, North America, United States of America, and Indo-Pacific

10. The Big Squeeze: Japanese Supply Chains and Great Power Competition

Author:
Mireya Solis
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Japan led, and was transformed, by the global supply chain revolution. Facing growing protectionism in industrialized markets and reeling from sharp yen appreciation in the aftermath of the 1985 Plaza Accord, Japanese firms responded with a drastic increase in their overseas investment activities. In so doing, many of these companies spearheaded the movement towards the fragmentation of production across national boundaries that sought efficiency gains by pooling the competitive advantages of different locations. Japan’s experience with the first supply chain revolution was transformative. It altered its export-led model with important implications for its foreign policy. Japanese investments in the United States helped abate trade frictions; integrated production was at the heart of the project to rebuild relations with China, and Japan’s lead as foreign investor in Southeast Asia has been a pillar of its blueprint for regional integration. The strains in the rules-based international trade order, however, have raised questions about the ability of global supply chains to continue to operate effectively. The U.S.-China geopolitical rivalry has manifested in a damaging trade war, and moves to restrict tech flows are creating decoupling pressures. The COVID-19 pandemic has exacerbated these trends with lockdowns that disrupt supply chains while export protectionism and calls to renationalize production are on the rise. The intensified risk environment could lead to a second supply chain revolution with a greater emphasis on redundancy and diversification and bifurcation of productive chains. How will Japan respond to the challenges to international production, a central engine of its economic prosperity, and with what consequences for its relations with major powers? To provide greater clarity on this overarching question, this paper is organized as follows. Section 1 describes the central role of Japanese firms in the emergence and deepening of regional production networks. Although Japan’s overall share of intra-regional trade has decreased in the 21st century—in tandem with China’s rise as regional hub- Japanese firms have retained their central role in GVCs (Global Value Chains) through their advanced manufacturing capabilities. Section 2 offers a glimpse of past and recent supply chain shocks—China’s embargo of rare earth metals, the Great East Japan Earthquake in Tohoku, and the Japan-Korea export control dispute—to illustrate both sources of vulnerability and resilience of Japanese GVCs. Section 3 assesses the systemic shift brought about by revived great power competition, and identifies some early adjustment responses from Japanese firms to a new normal of heightened geopolitical tension.
Topic:
Economics, Strategic Competition, and Supply Chains
Political Geography:
Japan, China, and Asia

11. Joint U.S.-Korea Academic Studies 2020

Author:
Gilbert Rozman, Mark Tokola, Gilbert Rozman, Dmitri V. Trenin, Yuki Tatsumi, Kathryn Botto, Rush Doshi, Scott W. Harold, See-Won Byun, Cheol Hee Park, Brad Glosserman, Charles W. Boustany Jr., Matthew Goodman, Wonho Yeon, and Kitti Prasirtsuk
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The experts in this volume have thoughtfully addressed themes that are pervasive throughout Asia and are timely for the U.S.-Korea alliance. With the future of Northeast Asia in flux, political leaders are hoping to transform their respective visions into the path forward for the region. Authors in the first section analyze the frameworks of U.S. President Donald Trump, Chinese President Xi Jinping, Russian President Vladimir Putin, Japanese Prime Minister Abe Shinzo, and South Korean President Moon Jae-in to discern the currents underlying geopolitical developments in the region. The second section examines the role of national identity in key bilateral Indo-Pacific relationships where geopolitical fault lines have become clearer. Chapters in this section cover the India-China, U.S.-China, South Korea-China, and South Korea-Japan dyads. The final section provides insights into how several of China’s neighbors and the United States are responding to its economic rise, which, of course, are also guided by strategic concerns. Considering how COVID-19 has exacerbated the rivalry between Washington and Beijing as well as the influence this relationship carries in shaping the future of the region, the contributions here are particularly relevant and timely.
Topic:
International Relations, Security, Economics, and Domestic Policy
Political Geography:
Japan, China, Asia, South Korea, North America, and United States of America

12. ASEAN’s Looming Anxiety

Author:
Kitti Prasirtsuk
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The rise of China generally presents both opportunities and challenges, particularly in economic terms. In the past several years, new kinds of challenges have been emerging and are looming larger in ASEAN countries. While ties with Beijing are, by and large, cordial, there are several signs that relations below the state level are increasingly worrisome. First, Chinese foreign direct investment (FDI) is largely not oriented towards manufacturing. A considerable amount tends to be in non-real sectors, such as real estate and casinos, which may not generate much employment and can be unhealthy to local economies. Second, the way Chinese businesses expand tends to be predatory, as demonstrated in tourism-related businesses and the acquisitions of fruit businesses in Thailand. As a consequence, new Chinatowns are emerging as more Chinese are moving into the region. Third, even business expansion through the Chinese government, e.g., the train projects, is far from smooth. ASEAN countries find themselves in uneasy deals – including onerous loan terms, undue requests for land usage along the train lines, stringent technology transfers, and imported Chinese labor. Moreover, the recent COVID-19 outbreak reveals not only the fragility of economic overdependence on China, but also public resentment towards the Chinese. Overall, the relations at the level of business and the people are far from promising, which can become a risk factor in state-to-state relations. The situation apparently demands good management from both Beijing and the counterpart governments.
Topic:
International Relations, Foreign Policy, Economics, ASEAN, COVID-19, and Real Estate
Political Geography:
China, Malaysia, Asia, Vietnam, and Southeast Asia

13. Is China’s Innovation a Threat to the South Korea-China Economic Relationship?

Author:
Wonho Yeon
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper reviews China’s technological rise and assesses whether it poses a threat to the South Korean economy. In terms of comparative advantage between the two countries, many experts have long believed that China’s strength is low-cost labor and Korea’s is technology and capital. However, this has changed as China’s economy grows. Now China has enough capital to invest in its economy. Some scholars even argue that China has the potential to meet its “innovation imperative” and emerge as a driving force in innovation on a global level.1 This paper examines the Korea-China economic relationship from the innovation productivity perspective, organized into sections: briefly introducing the Korea- China economic relationship; describing the technological rise of China, based on recent data; developing the model to analyze the innovation productivity of China and report the estimation results; evaluating the concern of the South Korean semiconductor industry; and presenting conclusions.
Topic:
International Relations, Economics, Science and Technology, and Bilateral Relations
Political Geography:
China, Asia, and South Korea

14. China’s Economic Rise amid Renewed Great Power Competition, America’s Strategic Choices

Author:
Charles W. Boustany Jr.
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
American ideals coupled with the commercial self-interest of American business and industry drove the policy of engagement, and even after the 1989 massacre of student protesters at Tiananmen Square, sustained momentum for China’s accession into the WTO. Despite China’s known unfair trade practices, it was thought that problems would eventually disappear as China adopted rules and norms as conditions of its accession to the WTO while deepening its integration into the global trading system. Yet, despite this strategy of engagement, China has not implemented expected substantive structural reforms consistent with the spirit, if not the letter, of its WTO obligations.
Topic:
International Relations, Security, Foreign Policy, and Economics
Political Geography:
China, Asia, North America, and United States of America

15. Chinese Views of South Korea: Aligning Elite and Popular Debates

Author:
See-Won Byun
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
China and the Republic of Korea (ROK) have experienced periods of conflict and cooperation since officially forging “partnership” relations in 1998. From a historical perspective, Korea was among the most willing participants of the Sinocentric tribute system and its underlying cultural hierarchy. Yet the 2003-2004 dispute over the ancient Koguryo kingdom’s identity marked the first major downturn in the China-ROK relationship since normalization. The rapid expansion of trade, at an average annual rate of 18 percent since 1992, has not prevented the two sides from fighting over political grievances. Most notably under the current Xi Jinping leadership, Beijing’s assertions of unprecedented friendship quickly turned into accusations of betrayal requiring economic punishment. Why and how did China’s policy toward South Korea shift so drastically after two decades of diplomatic normalization? To answer, we must focus on the expectations raised by China’s national identity for ties with South Korea. This study examines the evolution of Chinese views of South Korea with a focus on elite and popular narratives since 2013. Despite increased interdependence, these narratives point to China’s increasingly fragile political ties with Asian partners. Most importantly, China’s growing weight facilitates its strategic combination of economic and discursive tools of diplomacy framed by national identity. Recent tensions over the U.S.-ROK military alliance displayed Beijing’s denial of direct economic retaliation under the cover of public hostility, conveniently blurring the lines between state-led and voluntary actions. By hardening the identity dimensions of conflict, such strategies may only have long-term counterproductive effects of constraining Beijing’s political influence at home and abroad. The four sections below proceed as follows. First, I review two decades of China-ROK relations since the establishment of partnership ties in 1998. I identify two related trends: the intensification of political disputes despite trade, and China’s growing economic leverage in managing those disputes, keeping an eye on the role of national identity. Second, I assess the pessimistic turn in China’s domestic discourse on South Korea in the Xi Jinping period, using official, academic, and media sources. Third, I trace the interaction of elite and popular narratives, focusing on the 2016-2017 dispute over a U.S. missile defense system, Terminal High Altitude Area Defense (THAAD). I briefly extend the discussion to public clashes over Hong Kong in 2019 to underscore the enduring impact of China’s major power and domestic political identities on China-ROK relations. To conclude, I consider the trajectory of bilateral relations under the leadership of Xi Jinping and Moon Jae-in, including the domestic and foreign policy implications of nationalist discourse.
Topic:
Diplomacy, Economics, Public Opinion, and Elites
Political Geography:
China, Asia, and South Korea

16. The Case of United States Views of Its Ties with China

Author:
Scott W. Harold
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
U.S. views of the People’s Republic of China (PRC) have been hardening for at least two decades, from George W. Bush characterizing China in the 2000 presidential campaign and the first months of his presidency as a “strategic competitor,” to the Obama administration’s pursuit of a “pivot” to the Asia–Pacific in response to China’s growing assertiveness, to the Trump administration describing China’s rise as signaling the “return of an era of great power competition.” Does this trend reflect changes in U.S. self-conception and national identity? Evolving assessments of threat in light of Chinese behavior and what these imply about the regime’s intentions? A reaction to shifts in the overall balance of power between the two countries, perhaps a reflection of a declining superpower facing a rising challenge, “tragically” destined to participate in a “contest for supremacy in Asia” that will ineluctably result in a “Thucydides trap” or war of hegemonic transition? Or is it instead an inevitable clash between a liberal, democratic, rule of law capitalist hegemon and a resilient authoritarian challenger that is a communist dictatorship increasingly reliant on aggressive nationalism since the 1989 Tiananmen Square massacre and evolving rapidly towards national socialism or fascism? While each of these perspectives provides some purchase on the recent developments in U.S. – China relations as seen from Washington, this chapter focuses on the role of national identity, arguing that identity is by no means the sole or best explanation, but that it is an important factor that should not be overlooked or underestimated.
Topic:
International Relations, Foreign Policy, Diplomacy, and Strategic Competition
Political Geography:
China, Asia, North America, and United States of America

17. China’s Role in India’s Hindu Nationalist Discourse

Author:
Rush Doshi
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
"Hindu nationalism risks pushing India into war with China,” blared the headline from China’s nationalist tabloid, Global Times. Meanwhile, in Washington, a wide-ranging network of analysts optimistic on U.S.-India ties similarly argue that India’s nationalist political forces will push the country further away from Beijing and likely closer to Washington. These are bold claims about the ways in which national identity will intersect with great power politics. But are they correct? That question is now more urgent than ever. The Bhartiya Janata Party’s (BJP) sweeping victory in the May 2019 elections shows that Hindu nationalism is the potent political force reshaping the country. But what role does China play in Hindu nationalist narratives, and how might those narratives affect China policy? This paper explores the various threads of Hindu nationalism and chronicles the relatively limited role that China plays within them. First, it explores the history of Hindu nationalism as a political force in India, demonstrating its tendency to view Islam – rather than the West or China – as the salient other. The key nationalist policy priorities for Hindu nationalists–including the introduction of a Uniform Civil Code that reduces sharia’s role in civil law, the repeal of Article 370 of India’s Constitution that protects Kashmir’s special status, and the construction of a Ram temple at Ayodhya on the grounds of what was once a mosque – are all issues that implicate Hindu relations with Islam. Second, after making the argument that Hindu nationalism is primarily focused on Islam, the paper then turns to analyzing China’s role in nationalist ideology. It argues that China plays a relatively limited and often contradictory role in nationalist discourse despite the increasingly contentious Sino-Indian relationship. Hindu nationalists view China through a variety of lenses – sovereignty, trade, and values – each of which produces a different perspective and precludes a singular, unified Hindu nationalist view of China. And in some areas, Hindu nationalists even admire Chinese approaches.
Topic:
Security, Foreign Policy, Nationalism, Religion, Political Parties, Domestic Policy, and Hinduism
Political Geography:
China, South Asia, India, and Asia

18. Putin’s Strategic Framework for Northeast Asia

Author:
Dmitri V. Trenin
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper discusses the strategic framework for Russia’s policies toward Northeast Asia, placing it in the context of Moscow’s geopolitical repositioning after the Ukraine crisis and the ensuing confrontation with the United States, and the alienation from Europe. After 2014, the Ukraine crisis put an end to Russia’s quarter-century-long attempt to integrate with the West and become part of a Greater Europe and the Euro-Atlantic community. At the same time and in the same place (Ukraine), Russia’s attempt to build a power center in the former Soviet space came to an end. Ukraine was not the cause of either failure, but it was the trigger of both. The conclusion was clear. Russia was not fit for integration into something that was bigger than Russia, and Russia was no longer capable of integrating former borderlands. Two-plus decades after the break-up of the former Soviet Union, Russia stood alone—but also free. Such was the end of a grand illusion linked to the West, and also the end of three centuries of empire-building.
Topic:
International Relations, Foreign Policy, Regional Cooperation, Geopolitics, and Vladimir Putin
Political Geography:
Russia, China, Asia, and United States of America

19. Xi Jinping’s Geopolitical Framework for Northeast Asia

Author:
Gilbert Rozman
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
When Xi Jinping’s strategizing in East Asia is discussed, attention centers on the southern tier, stressing the Belt and Road Initiative (BRI). Policies toward Northeast Asia have been treated mostly as ad hoc responses to specific countries in shifting circumstances. The prospect that Xi has in recent years adjusted his overall approach toward this region has scarcely been explored. Unlike Southeast Asia, however, Northeast Asia is a geopolitical hotbed, with Russia and North Korea as military threats to the international community beyond any threats present to the south. At the same time, Japan and South Korea are U.S. military allies incomparably more significant than U.S. partners in Asia’s south. Given the legacy of the Six-Party Talks, focus on the strategic battleground here would seem desirable in its own right and as a key indicator of Xi’s evolving strategic thinking.
Topic:
International Relations, Regional Cooperation, Geopolitics, and Xi Jinping
Political Geography:
China and Asia

20. Chinese Media: Why Did the Hanoi Summit Fail and What Comes Next?

Author:
Danielle Cohen
Publication Date:
07-2019
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Chinese media sources reflect a widespread propensity in 2019 to reassure the United States while not compromising vital national interests on the Korean Peninsula. They heartily welcomed Kim Jong-un’s turn to diplomacy. They enthusiastically endorsed Donald Trump’s embrace of Kim. They strongly approved of Moon Jae-in’s bold moves to straddle the two sides and find a way to build momentum. After praising the Singapore summit’s accomplishments, the Chinese faced the uncomfortable reality of failure in Hanoi, with calls to redouble efforts to put diplomacy back on track and repeated idealistic assertions about how the differences could be bridged. At the same time, they left mostly implicit the true objectives of a deal that Pyongyang was expected to accept and that China would consider suitable in order to satisfy its geopolitical aspirations. Reassurances consisted of the following claims: China, as asserted in its 2017 white paper, is not trying to squeeze the U.S. out of the region or break the U.S.–ROK alliance, unlike its earlier policy indications; the Sino–DPRK alliance treaty is a relic of a past era without substantive importance; China is firmly committed to denuclearization, but considers it realizable only by means of talks and a long-term, multi-stage process that encourages Pyongyang to abandon its isolation; China does not take sides on whether a “big deal” is needed first to produce “small deals”; and Moon should be encouraged to keep engaging with Kim Jong-un even if Moon is correct in recognizing that he cannot be a mediator since the ROK is a U.S. ally. Yet, Chinese optimism is premised on notions about limits to North Korean demands, on North Korean willingness to denuclearize in return for conditions that are left vague, and on often unstated assumptions about how the peninsula would evolve during the process of denuclearization and how the U.S. military presence would change.
Topic:
Diplomacy, Nuclear Weapons, Geopolitics, Media, and News Analysis
Political Geography:
China, Asia, North Korea, and United States of America