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HomeDiplomacyGT Voice: Economic friction to overshadow upcoming Biden-Yoon summit

GT Voice: Economic friction to overshadow upcoming Biden-Yoon summit

Yoon Suk-yeol Photo courtesy of Xinhua News Agency

South Korean President Yoon Suk-yeol embarked on a trilateral visit on Sunday, including his first speech at the United Nations General Assembly and a summit with US President Joe Biden, according to Yonhap news agency.

Since its inauguration, the Yoon administration has actively pursued diplomacy with the United States. Given the South Korea-US security alliance, it is not surprising that Seoul seeks to strengthen its ties with Washington. It should be pointed out that how it was secured remains an unavoidable challenge.

Yonhap News said Biden and Yoon will discuss South Korea’s concerns about the U.S. Inflation Reduction Act (IRA) at an upcoming meeting. The newly passed IRA is getting a lot of attention in South Korea. One of the key aspects of the new law is to provide substantial subsidies for electric vehicles made in the United States, raising concerns about potentially significant trade barriers for cars made in South Korea. It’s from Korea.

It is unclear whether the two countries will address their concerns through an exchange of views, but the economic tensions this time around represent the challenges South Korea faces in protecting its own economic interests while pursuing a strong relationship with the United States. is a manifestation of

While the Yoon administration appears to have aligned South Korea more closely with the United States on an economic level in recent months, the involvement of the United States has shown Washington to be concerned only with its own interests and not with South Korean interests. indicates that there is a possibility that For example, the Biden administration has pressured South Korea to join the so-called Chip 4 Alliance. This reveals the US attempt to use its technological superiority to contain China’s high-tech industrial chain by fragmenting its global supply chain.

Anyone with a basic knowledge of the South Korean semiconductor sector will know that the US proposal for a chip alliance created a dilemma for the Yun administration. The US holds high-end chip technology, and China is South Korea’s largest export market, reportedly accounting for her 60% of all South Korea’s chip exports. In that sense, the US forming a small circle and building a supply chain that excludes China could harm South Korea’s economic interests.

For the Yoon administration, maintaining overall stability in China-South Korea economic and trade relations remains important to the South Korean economy. According to media reports, China will be South Korea’s largest trading partner in 2021, with China’s trade accounting for 24% of total trade and 80% of South Korea’s trade surplus coming from China.

On the other hand, it cannot be denied that South Korea has high expectations for trade with the United States. According to Yonhap, South Korea’s trade surplus with the United States in the first half of this year reached $21.67 billion, up 86.9% from the previous year.

Therefore, the biggest challenge for the Yoon administration is to chart a path to secure economic relations with both the United States and China. Frankly, South Korea doesn’t have many options on how to handle this challenge. To prevent South Korea from becoming a pawn in the US geopolitical game, further strengthen ties with China, including promoting cooperation under the RCEP framework and advancing free trade agreements with China. it is essential to and a free trade agreement between Japan, China and South Korea.

East Asian economic development will never be dominated by the United States. If South Korea does not understand this, it will lose the opportunity to become stronger.

Both China and South Korea are beneficiaries and builders of the global free trading system, and the two countries have important links in international supply chains. Jointly safeguarding supply chain stability and the free trade system is of great significance for the development and prosperity of both countries, the region and the world.

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