[Insight & Opinion] Korea's Regional Industrial Policy Seen Through China's "Ten Cities, Thousand Vehicles" Project

The disappearance and decline of local areas have become a clich?d topic. Along with problems caused by population decline and aging, many regional industries are gradually shrinking. The sense of crisis among traditional local industrial cities is also growing. The central government, including the Ministry of Trade, Industry and Energy, has recognized these issues and established and implemented various regional industrial development programs with each administration to overcome them. However, the results have not been clearly evident. While factors such as lack of funding, lack of project continuity, and fundamental changes in the industrial environment can be cited, one key reason is the lack of autonomy and capacity at the local level. Various projects and programs proposed at the central government level are becoming increasingly complex and require consideration of diverse elements, but local governments lack the capacity to properly understand and keep up with them. Problems caused by limited personnel and insufficient expertise are worsening. In addition, there is a strong tendency to follow trends. Whenever new fields such as artificial intelligence (AI), secondary batteries, electric vehicles, and biotechnology emerge, local governments emphasize their suitability as hubs for these industries, but the basic conditions for this and continuous support are not properly established. The central government, fearing political controversy, consistently opts for distribution rather than selection and concentration, failing to improve project efficiency.

While our industrial policy struggles, China has succeeded in enhancing the efficiency of its industrial policy through effective role-sharing between the central and local governments, achieving industrial advancement and high-tech development. The central government sets the direction, and local governments formulate and implement specific policies accordingly.

A representative example is the secondary battery and electric vehicle sectors. China’s secondary batteries and electric vehicles have developed to a world-leading level. A characteristic policy in this process was the "Ten Cities, Thousand Vehicles" (十城千輛) project implemented in 2009. This policy aimed to operate 1,000 electric vehicles in each of 10 major cities. The central government provided funds to local governments, but the detailed strategies to achieve the goals were left to the local governments to establish and execute independently. Shanghai, rich in capital, utilized private investment; Beijing mainly used taxes and regulations; Shenzhen, leading in innovation and technology, adopted a collaboration approach with technologies like BYD; and Chongqing, which has the Three Gorges Dam and cheap renewable energy, focused on expanding charging infrastructure. By appropriately combining competition and autonomy, China was able to discover various ideas for electric vehicle distribution and identify problems and difficulties during implementation. This efficient method, established through this process, expanded nationwide, enabling rapid electric vehicle adoption and related technological development.

There is an argument that, due to Korea’s small territory and relatively minor regional differences, the application of such a method is limited. However, regional characteristics clearly exist. In the case of hydrogen, considering that transportation costs increase the farther from the production site, it would have been more effective to develop hydrogen vehicle distribution projects centered around regions where petrochemical industrial complexes producing hydrogen are located. In the case of solar power, if the goal had been regional self-sufficiency in agricultural electricity rather than sales through transmission networks, it could have proceeded without major conflicts, fostering mutual development of agriculture and renewable energy. For regional development and change, shifting the perception from relying on external support as the core to seeking development plans suited to each region’s conditions is the top priority for regional progress.

Choi Jun-young, Specialist, Law Firm Yulchon

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