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Begin New Search Political Geography China Publishing Institution Korea Economic Institute of America (KEI) Publication Year within 5 Years

1. South Korea's Critical Moment in Digital Currency Policymaking: Between Regulating Cryptocurrencies and Launching a Central Bank Digital Currency (CBDC)

Author:
June Park
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Why is South Korea pilot-testing its Central Bank Digital Currency (CBDC), and what made it shift from non-issuance to consideration? This paper investigates the Bank of Korea (BOK)’s CBDC-related developments amid the geopolitical contest between the U.S. and China. It examines the Moon Jae-in administration’s defiance of decentralized finance (DeFi) and the BOK’s sudden shift from non-issuance to potential issuance, which led to expedited research, development, and pilot-testing of CBDCs. As in the case of the digital yuan, the BOK envisions a hybrid architecture for the digital won, wherein central banks and associated partner institutions are CBDC distributors, though they are distinguished by placing the digital won on distributed ledger technology rather than by centrally controlling it. However, South Korea’s previously rash decision to forego DeFi under an undemocratic process has deprived the country of the time and opportunity to develop new innovations as a leading country in the digital frontier. By sticking only to digitalizing centralized finance, the country now aims to be in “standby” mode for its CBDC launch if and when required, so as not to fall behind in digital financial architecture. This paper scrutinizes the South Korean government’s moves on crypto and CBDCs and argues that 1) the Moon administration has shown incapability in addressing DeFi amid the crypto boom and bust, and 2) the BOK’s shift from non-issuance to potential issuance of the digital won is driven by its interest to uphold central bank independence amid swaying geopolitics between the U.S. and China and an unpredictable upcoming presidential election in South Korea.
Topic:
Economics, Elections, Finance, Cryptocurrencies, and Digital Currency
Political Geography:
China, Asia, South Korea, North America, and United States of America

2. A Principled Middle Power Diplomacy Approach For South Korea to Navigate the U.S.-China Rivalry

Author:
Saeme Kim
Publication Date:
10-2021
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
In the context of growing US-China tensions, South Korean administrations have opted for degrees of strategic ambiguity, refraining from overt actions that suggest South Korea is taking sides. While strategic ambiguity has been moderately successful, there are limits to this approach which make it unsustainable. This paper will argue that rather, South Korea needs to apply a principled middle power diplomacy, which refers to a middle power carrying out roles expected of it in accordance with a set of rules or values that uphold the liberal international order. The goal of principled middle power diplomacy would be to shape the environment in which the current great power rivalry is unfolding, in order to moderate the fallout of great power competition. After an analysis of South Korea’s middle power diplomacy, this paper will recommend that South Korea double down on its commitment to multilateralism so that it can augment its roles as a facilitator and agenda-setter on the international stage.
Topic:
International Relations, Foreign Policy, Diplomacy, Multilateralism, and Rivalry
Political Geography:
China, Asia, South Korea, North America, and United States of America

3. Building on the Middle: Diversifying South Korea’s Foreign Policy Narrative and Economic Ties

Author:
Carolin Wefer
Publication Date:
11-2021
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The rivalry between the United States and China is affecting countries in its midst. This particularly applies to South Korea. The country is a strong economic player with a successful net of free trade agreements. Additionally, it has branded itself as a middle power, a multilateralist, and good international citizen. However, South Korea’s middle power perspective has recently assumed a literal definition of being situated in the middle of two great powers. Seoul’s dependencies on both the U.S. and China are undeniable. As the conflict intensifies, it is thus essential for South Korea to diversify its ties through trade policy and multilateral fora. This requires leaving the literal middle power definition behind and leveraging its economic standing towards an increase in international status, as well as refocusing on the figurative middle power narrative that brought the country to its initial global esteem. Through diversification and the build-up of its economic and multilateral prowess, South Korea stands to lessen the shocks of the U.S.-China rivalry. Joining RCEP and obtaining a guest role at the G7 were important steps in that direction. They offer an expansion of both regional and global ties and an involvement in discussions on the redefinition of international fora, but more can be done.
Topic:
Foreign Policy, Economics, Multilateralism, Rivalry, and Middle Power
Political Geography:
China, Asia, South Korea, and United States of America

4. Between a Rock and a Hard Place: How Should South Korea Manage its Relations with the United States and China?

Author:
Zhiqun Zhu
Publication Date:
11-2021
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper deals with one of the most critical issues in contemporary international relations: how China’s rise challenges foreign policies of U.S. allies, with a focus on the Republic of Korea (ROK) or South Korea. South Korea has been carefully hedging between the United States and China, its traditional security patron and largest trade partner, respectively. Strategic rivalry between the two great powers has put South Korea in an awkward position as pressure grows from the two powers to pick a side. Using a modified dual-track economics-security nexus framework, this paper suggests that the United States and China each has a significant impact on South Korea’s security and economic policies, making it important but challenging for South Korea to simultaneously manage relations with the two great powers. So far, South Korea has maintained these two sets of relationships remarkably well, but it may be difficult to continue with business as usual in the years ahead. For its own national interests, South Korea must seek to preserve the status quo under which it can continue to benefit from good relations with both great powers. The paper also proposes that South Korea should form a “middle power coalition” with like-minded nations to deflect pressures and avoid the dilemma of having to choose sides.
Topic:
International Relations, Security, Foreign Policy, Alliance, and Trade
Political Geography:
China, Asia, South Korea, and United States of America

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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