[The Editors' Verdict] Korean Advanced Manufacturing Added to the "Cheonjo-guk" Shopping List

The world's strongest military power and the world's leading economic powerhouse, the United States. Its status is undeniable. However, many people believe there are some problems with the U.S. economy. The weakness of the U.S. economy lies in manufacturing. There are very few manufactured goods actually made in the U.S. Even Americans themselves think there is a structural problem with their economy. The American magazine The Atlantic Monthly published an article in its New Year's issue this year titled "The U.S. is a country that only invents but cannot actually manufacture products." It cited solar modules as an example. The U.S. was the first country in the world to commercialize solar modules. In 1954, Bell Labs of AT&T created and sold the world's first solar power system.

However, equipping a system capable of generating electricity for a single house cost about 1.8 billion KRW. Eventually, countries like Germany and Japan began mass-producing solar modules. They succeeded in mass production thanks to government installation subsidies. Even now, the U.S. remains weak in manufacturing. The representative manufactured product of the U.S. is the iPhone. But most iPhones are made in China. The same goes for Tesla electric cars. In 2021, 51.7% of global production came from the Shanghai Gigafactory production line. However, there is one product that the U.S. makes best and only the U.S. can make: the reserve currency, the dollar.

The most powerful weapon of the world's strongest military power, the U.S., is the dollar. A new term has emerged in the 21st century to describe the U.S.: "Cheonjo-guk" (meaning "trillion-dollar country"). It refers to a defense budget of 1,000 trillion KRW. In 2024, the U.S. defense budget is $842 billion (about 1,090 trillion KRW). South Korea's defense budget is about 57 trillion KRW, and China's is about 293 trillion KRW. The U.S., which poured its representative product, the dollar, into defense, has recently found a new use for the dollar: shopping for advanced manufacturing plants.

They have also created legal grounds to justify this shopping. These are the so-called Inflation Reduction Act and the CHIPS and Science Act. The Inflation Reduction Act includes spending $369 billion (about 480 trillion KRW) for energy security and climate change response. Simply put, it provides subsidies for making eco-friendly products like electric vehicles and solar power systems in the U.S. Also, subsidies and tax benefits are given for building semiconductor production facilities in the U.S. A budget of $52 billion (about 67 trillion KRW) has been allocated for this. They seem ready to lavish about 1,000 trillion KRW on future-oriented advanced manufacturing plant shopping. The problem is that many Korean companies' production facilities are at the top of the shopping list.

LG and SK have announced plans to build battery production plants, their next-generation core businesses, in the U.S. Hyundai Motor wants to start making electric vehicles in the U.S. as soon as possible. Hanwha is also investing over 3 trillion KRW to establish a solar power system production line in Georgia, U.S. The U.S. government will return over 1 trillion KRW in the form of subsidies and other incentives. Manufacturing facilities enrich the entire country. People must be employed to make products. Also, suppliers of parts and equipment are needed. Suppliers also need people. People spend money to eat, dress, and live. Moreover, the government collects taxes on every product companies make to run the national budget.

Our government recently announced that it would provide tax and subsidy benefits comparable to those of the U.S. when advanced manufacturers build new plants. But it is insufficient. The U.S. offers a basic option free of charge that Korea cannot provide to companies: the massive North American market. Domestic and foreign companies need reasons to build advanced product production bases in Korea. It is difficult, but it is something the government must do for the future of the Korean economy.

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