KIEP "More Efforts Needed to Reduce Trade Dependence on China if Biden Wins"

"Green New Deal Linked to Biden's Energy Plan... Opportunity to Establish Strategic Cooperation Measures"

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] A national research institute has diagnosed that if a regime change occurs in the upcoming U.S. presidential election in November, there is a high possibility that pressure on China through alliance solidarity will intensify. This means that more efforts should be made to reduce dependence on trade with China to minimize risks.

The Korea Institute for International Economic Policy (KIEP) released a report titled "2020 U.S. Democratic Presidential Candidate Confirmation and Major Pledges" on the 11th containing this content.

As of the 6th, KIEP reported that Democratic candidate Joe Biden's approval rating was 49.7%, while President Donald Trump (Republican) had 42.8%. Although the gap narrowed from 10.2 percentage points in June to 6.9 points, Biden is still ahead.

They identified key variables in the U.S. presidential election as ▲minimizing economic shocks caused by the novel coronavirus disease (COVID-19) ▲possibility of a second pandemic of COVID-19 ▲rising preference for Biden ▲possibility of full mail-in voting.

◆"Biden to Pressure China Through Alliance Solidarity...Stronger Than Trump"

The Korea Institute for International Economic Policy analyzes that conflicts with China may increase during the US regime change. (Image source=Reuters Yonhap News)

KIEP analyzed Biden's major pledges by dividing them into three parts: trade, economy, and other policies.

First, in the trade sector, Biden is expected to pursue a China pressure strategy by strengthening solidarity with allies, unlike the Trump administration.

He is promoting the establishment of a U.S.-centered supply chain as a major pledge to resolve vulnerabilities in the global value chain (GVC) revealed by the COVID-19 crisis.

In the economy, his tax policy to raise the corporate tax rate from the current 21% to 28% stands out. Separate from the additional stimulus package currently under discussion in Congress for COVID-19 response and economic reconstruction, he plans to allocate a budget of $700 billion (approximately 831 trillion KRW).

This separate budget will be used to expand the use of American-made products, promote innovation, reshore manufacturing (return of overseas companies to domestic), and support research and development (R&D).

Additionally, he pledges to expand and improve Obamacare in the healthcare sector. In the climate change sector, he proposes a 'Clean Energy and Infrastructure Plan' worth about $2 trillion (approximately 2,374 trillion KRW).

Various immigrant protection policies and stronger regulations on major information technology (IT) companies are also key pledges of the Biden administration.

◆"Biden Will Embrace Allies to Weaken China's Justification...Must Focus on Risk Mitigation"

In May of last year, warships from four countries?the United States, Japan, the Philippines, and India?conducted joint exercises in the South China Sea. The external relations sector believes that if candidate Biden reduces the dissatisfaction of allied countries in trade matters, he can apply stronger pressure on China. South Korea may face a situation where it has to choose between the United States and China. (Image source=Yonhap News)

KIEP warned that considering the Democratic camp's trade, economic, and other policies comprehensively, South Korea is more likely to be forced into a situation where it must choose between the U.S. and China.

The Trump administration has so far tried to reduce the trade deficit with China to resolve trade imbalance issues. It adopted a unilateral tariff imposition strategy on Chinese imports, ignoring the dissatisfaction of allies. Naturally, the trust of allies in the U.S. declined.

From China's perspective, it became much easier to adopt a trade strategy focusing solely on the U.S. For example, China imposed retaliatory tariffs on imports from the U.S. or partially accepted U.S. demands in other areas as part of its trade strategy.

If Biden is elected, he is expected to implement a China pressure strategy by strengthening solidarity with allies, increasing the likelihood that countries will be forced to choose between the U.S. and China.

KIEP advised, "If Biden is elected, the likelihood of being forced to choose between the U.S. and China will be higher than under the Trump administration. South Korea should reduce its trade dependence on China and attempt to diversify exports to other trading partners to minimize risks."

◆"Green New Deal and Biden's Energy Plan Overlap in Investment Areas...Opportunity for Cooperation"

President Moon Jae-in explaining the importance of strengthening offshore wind power competitiveness and green energy at the "Korean New Deal, Green Energy Site - The Wind Blows" event held on July 17 in the offshore wind power demonstration complex in Buan-gun, Jeollabuk-do. (Image source=Yonhap News)

Meanwhile, KIEP predicted that if Biden is elected, there could be an opportunity to establish strategic cooperation between South Korea's Green New Deal policy and the U.S.'s 'Clean Energy and Infrastructure Plan.'

Biden's 'Clean Energy and Infrastructure Plan,' announced in July, includes ▲achieving zero carbon dioxide emissions in the electricity generation sector by 2035 ▲doubling investment and tax incentives for carbon capture technology development ▲providing 'green hydrogen' at the same cost as conventional hydrogen within 10 years, among other contents.

KIEP analyzed that the investment areas of Biden's plan align with the three major sectors of South Korea's Green New Deal policy: ▲green transformation of urban, spatial, and living infrastructure ▲spread of low-carbon and distributed energy ▲establishment of a green industry innovation ecosystem.

KIEP stated, "We believe it will be possible to establish sector-specific energy cooperation measures between the two countries."

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