Sangui "Biden Election Brings Comprehensive Changes to Our Economy... Need for Prior Preparation"

[Asia Economy Reporter Ki-min Lee] With the election of Democratic candidate Joe Biden as the 46th President of the United States, it is pointed out that there will be comprehensive impacts on our economy, including trade, oil prices, exchange rates, industry, and North Korea policy.

Accordingly, Korea has urged the need for prior preparation for the B.I.D.E.N scenario, including ‘Bond with Allies’ in the trade sector, ‘Increase in Oil prices’, ‘Dollar decline’, ‘Eco-friendly Growth’, and ‘North Korea Policy Change’.

The Korea Chamber of Commerce and Industry (KCCI) announced on the 8th that it analyzed the impact of President Biden’s election on the Korean economy by various channels, compiling opinions from industry and field experts.

Experts serving as advisors to KCCI foresee Biden’s trade strategy leading to ‘pressure on China’ and demands for solidarity among U.S. allies related to multilateral negotiations. Professor Jung Hyuk of Seoul National University’s Graduate School of International Studies said, “With Biden’s election, the U.S. will return to human rights and strategic engagement diplomacy, and will politically and economically pressure China comprehensively in alliance and solidarity, urging Korean companies to diversify their trade.” Senior Research Fellow Jung Hyung-gon of the Korea Institute for International Economic Policy predicted, “If the U.S. re-pursues joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as part of a multilateral system, Korea may also face pressure to join.”

Experts also called for preemptive measures against the possibility of rising oil prices. Professor Song Ui-young of Sogang University’s Department of Economics predicted, “Since Biden pledged to regulate shale oil development and expand investment in eco-friendly energy, oil supply will decrease, making a short-term rise in international oil prices highly likely.”

Professor Kim So-young of Seoul National University’s Department of Economics mentioned, “In preparation for the possibility of rising oil prices, companies need to make prior efforts such as securing supply sources and replacing inefficient facilities, and at the national level, it is necessary to reassess economic diplomacy strategies in anticipation of the increased economic power and status of oil price beneficiary countries such as Russia and Saudi Arabia.”

Concerns about the decline in the value of the dollar were also raised. Due to Biden’s pledged active economic stimulus measures, the supply of dollars in already liquid markets will increase, and with a lower possibility of tariff hikes on China, preference for risk assets in financial and foreign exchange markets will rise, leading to a strengthening of Asian and emerging market currencies including the yuan. Shin Hyun-han, an advisor to KCCI and professor at Yonsei University’s Business School, emphasized, “Considering this situation, it is necessary to establish next year’s management and export/procurement strategies while also focusing on improving non-price competitiveness such as design, quality enhancement, and development of new technologies and products.”

With the Biden administration expected to inject $2 trillion (approximately 2,200 trillion won) over four years into clean energy and climate change response infrastructure, domestic eco-friendly energy industries and electric vehicle battery sectors are anticipated to benefit. Professor Hong Jong-ho of Seoul National University’s Graduate School of Environmental Studies said, “Especially as demand for solar and wind power industries is predicted to increase, support linked to domestic Green New Deal policies should be expanded to help these industries enhance their competitiveness.”

Experts also urged the industry to respond swiftly to climate change. Professor Hong said, “Since voluntary participation in RE100 (100% renewable energy use) is becoming a global new normal and the introduction of carbon border adjustment tax could effectively act as a trade barrier, domestic companies need to prepare.” The carbon border adjustment tax refers to tariffs imposed on products produced in countries with high carbon dioxide emissions.

Comprehensive changes are also expected in the U.S. North Korea policy. Professor Yang Moon-soo of the University of North Korean Studies predicted, “Unlike the Trump administration’s ‘top-down’ direct negotiation approach, the method will shift to a ‘bottom-up’ approach where detailed discussions occur at the working level before final agreements are made between leaders.”

Accordingly, Professor Lee Jung-chul of Soongsil University’s Department of Political Science and Diplomacy said, “During the ‘period of benign neglect’ until July next year, when the U.S. appoints new policy officials and reviews North Korea policy, there is a possibility that North Korea may escalate tensions due to dissatisfaction with the policy vacuum. This could lead to instability in Korea’s financial and foreign exchange markets and a contraction of investment sentiment, so the Korean government needs to proactively manage peace through measures such as the Korea-U.S. summit.”

Kim Moon-tae, head of the Economic Policy Team at KCCI, said, “While the reduction of trade uncertainties and the forecast of increased global trade volume following Biden’s election are opportunities for the highly externally dependent Korean economy, the direction of oil prices and exchange rates will be another variable. The government and companies must closely analyze changes in U.S. policy direction and macro-financial indicators and prepare response strategies accordingly in advance.”

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