[Inside Chodong] National Stature and Battlefield

"Just by changing one president, the national stature of the Republic of Korea has changed." Lee Jun-seok, leader of the People Power Party, evaluated the recent South Korea-U.S. summit this way. Has the national stature and dignity of the country truly risen? The evaluations from companies after the summit differ significantly from those of the ruling party leader. An executive of a major listed company said, "Since joining the IPEF (Indo-Pacific Economic Framework), there are many concerns, but we cannot show them outwardly," adding, "The proportion of battery materials imported from China is high, so if export regulations suddenly occur, honestly, it would be difficult to handle." From the U.S. perspective, securing a safe supply chain by including South Korea, a battery production powerhouse, in the IPEF was strategic, but for Korean companies that must manufacture batteries, the distance from China, the raw material supplier, has increased. Companies now face a situation where they must actively review supply chain risks for materials in preparation for possible retaliation. Yet, the atmosphere is such that they cannot move proactively, wary of the new administration and major powers. This issue is not limited to the battery industry alone.

Let us consider another interpretation of the "heightened national stature." An executive from an economic organization said, "With Biden's visit to Korea, a clear front line of U.S.-China trade conflict has been established on the Korean Peninsula." The Korean Peninsula has become a battlefield in the hegemonic war between the U.S. and China over resources and industries. Biden visited the Korean Peninsula before Japan, showcasing South Korea's IPEF membership. While joining the IPEF was an unavoidable decision for national interest, from South Korea’s position caught between the U.S. and China, quietly joining would have been preferable to receiving the spotlight alongside Biden’s visit. This is why Lee Jun-seok’s remark about "national stature" seems irresponsible. China’s likelihood of being excluded from global supply chains has increased with the launch of the IPEF. The more concrete the IPEF’s substance becomes, the sharper China’s reactions are.

Of course, there is also an interpretation that there is little need to worry excessively about Chinese retaliation related to IPEF membership. This is based on the argument that China’s justification for past economic retaliation, citing security threats, is weak in this case, and that with 13 countries in the IPEF, it would be difficult for China to retaliate against only South Korea. However, the justification for retaliation can be manufactured. Looking at past cases, in 2019, the Japanese government implemented export restrictions as retaliation for the South Korean Supreme Court’s ruling on forced labor compensation, but on the surface, they claimed it was due to inappropriate export management by South Korea. Similarly, during the THAAD (Terminal High Altitude Area Defense) retaliation, China outwardly cited security threats as justification but imposed the so-called "Hanhanryeong" (Korean restriction order), damaging unrelated sectors such as distribution, cosmetics, and automobiles.

If China targets the vital points of our core industries under any pretext, the consequences would be even more threatening. According to a recent report by the Federation of Korean Industries, 75.5% of key imported items in trade with the U.S., China, and Japan are Chinese-made. Among 228 items with over 90% import dependency, as many as 172 are from China. While the government and ruling party have been complacent with "dreamier interpretations" following Biden’s visit, the reality on the ground for companies has become harsher. Companies that have promised large-scale investments in the U.S. are trembling behind the scenes over the risk of Chinese retaliation. This is the true face of our national stature. The government and ruling party must stop self-praise and conduct in-depth research on the vulnerabilities of our industries. Our companies are being held hostage on the battlefield between the U.S. and China.

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