'Growl' US-China... Deep Concerns in Korea

Possibility of Expansion in US-China Real and Financial Wars... Experts Emphasize "Do Not Get Caught in Between"
China, Vietnam, Canada, Australia, New Zealand, Singapore Ease Essential Worker Movement
"Strategy Aligns with Korea-Led Middle Power Trade Coalition"
Japan Has Not Responded to "End-of-Month Export Regulation Restoration" and Diplomatic Conflict Continues
Kim Hyun-jong: "Due to Geopolitical Position, There Are Concerns and Worries About Major Changes After COVID-19"

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] As the United States issues a warning against China's plan to enact the Hong Kong National Security Law, relations between the two countries have deteriorated, entering a 'new Cold War.' With conflicts expanding in trade, technology, and finance, South Korea, entangled in various interests with both countries, faces a dilemma. Experts warn that the situation is progressing toward a forced choice between the two sides, which must be avoided.

At the National People's Congress (NPC) that opened on the 22nd, a draft resolution to introduce the Hong Kong security law was submitted. This is the first time since Hong Kong's handover in 1997 that the Chinese NPC is directly creating legislation related to Hong Kong.

U.S. President Donald Trump warned that "if such a thing happens, we will respond very strongly" regarding China's plan to enact the Hong Kong security law. U.S. Secretary of State Mike Pompeo also condemned "the unilateral and arbitrary proposal by the Chinese NPC to introduce the Hong Kong National Security Law," urging China to "reconsider this terrible proposal."

There are speculations that the U.S. may revoke Hong Kong's 'special status' granted under the principle of 'one country, two systems,' which includes customs, investment, trade, and visa issuance. In that case, Hong Kong would have to bear punitive tariffs of up to 25%, like mainland China, when exporting to the U.S.

China expressed displeasure at the U.S. backlash. Zhao Lijian, spokesperson for the Chinese Ministry of Foreign Affairs, stated at a regular briefing that "enacting laws to safeguard the national security of Hong Kong, a special administrative region of China, is entirely China's internal affair, and foreign countries have no right to interfere."

The two countries have been engaged in an all-out economic war crossing real economy and finance, including ▲imposition of tariffs ▲designation as currency manipulators ▲restrictions on transactions with major companies (such as Huawei) ▲limitations on pension fund stock investments.

With the Phase One trade agreement signed in January and the spread of the novel coronavirus disease (COVID-19) having calmed tensions, political conflicts between the two countries have expanded again, raising global concerns that the economic war could resume at any time.

The South Korean government did not hide its 'concern.' At the Innovation Forum for the 21st National Assembly members of the Democratic Party held at the National Assembly Members' Office Building on the 22nd, Kim Hyun-jong, Deputy Director of the National Security Office at the Blue House, reportedly said, "Due to our geopolitical position, there are concerns and worries about significant changes before and after COVID-19."

Jang Ji-sang, President of the Korea Institute for Industrial Economics & Trade, said, "It seems important to strengthen internal capabilities so that our country is not forced into a binary choice in the extended competition for hegemony between the U.S. and China," adding, "It is crucial to have world-class capabilities that both the U.S. and China need."

So far, the government's response strategies include ▲urging Japan to restore export regulations by the end of this month ▲announcing a global value chain (GVC) restructuring strategy by the end of next month ▲leading a middle power trade coalition.

Experts generally agree that the strategy of exploring new markets such as the New Southern Policy and New Northern Policy, and strengthening 'trade coalitions' with middle powers (Canada, Australia, New Zealand, Singapore, Belgium, etc.) that share similar positions, rather than directly mentioning the U.S. or China, is desirable.

However, it is also true that there are criticisms that clear benefits such as tax incentives or labor reforms to induce corporate reshoring have not been presented, and that the effectiveness of trade coalitions may be limited due to political constraints such as conflicts over forced labor with Japan.

An official from the business community said, "There was a recent internal meeting regarding strategies to enter the New Southern region, mainly focusing on Singapore," adding, "As far as I know, there is no official progress on returning domestic production."

The business community is reportedly reviewing government measures related to easing regulations in the Seoul metropolitan area but is placing more weight on whether there will be tax cuts such as corporate tax reductions and labor regulation relaxations. The government has not made any official statements regarding corporate tax cuts.

The Trade Headquarters has achieved results such as easing essential personnel movement to middle powers including China, Vietnam, Canada, Australia, New Zealand, and Singapore.

However, some view that it is unlikely Japan will restore export regulations by the 'end of this month,' the negotiation deadline set by South Korea. Diplomatic tensions on the surface are worsening, as seen when the South Korean government summoned the Japanese Consul General in Korea over Japan's claim that Dokdo is Japanese territory.

This content was produced with the assistance of AI translation services.