Sagong Il: "The Global Economy Faces a Kindleberger Trap... South Korea-China-Japan Must Lead FTA Agreement"

Sagoongil Honorary Chairman of the World Economy Research Institute

Sagong Il, Honorary Chairman of the World Economy Research Institute, diagnosed that the global economy is falling into the ‘Kindleberger Trap’ due to an international leadership vacuum. He argued that South Korea, caught between the conflicts of the United States and China, should take proactive leadership to spearhead the conclusion of a Free Trade Agreement (FTA) among South Korea, China, and Japan.

On the 25th (local time), in his keynote speech at the ‘Global Great Transformation Era, South Korea’s Foreign Economic Policy Direction’ hosted by the Korea Institute for International Economic Policy, Chairman Sagong said, "Some worry about the possibility of war between the U.S. and China, falling into the so-called ‘Thucydides Trap,’ but considering that the U.S. and China currently have higher economic interdependence and complementarity than any previous hegemonic competitors, the probability of a full-scale war between the two countries does not seem high."

Chairman Sagong suggested that a compromise between the U.S. and China is more likely than military conflict. He did not rule out the possibility that Chinese President Xi Jinping might attend the Asia-Pacific Economic Cooperation (APEC) meeting held in San Francisco, U.S., this coming November. Considering recent in-depth discussions on the ‘Japanization of the Chinese economy’ and the ‘possibility of China being trapped in the middle-income trap,’ China may show pragmatic flexibility to achieve its ultimate goals.

Chairman Sagong analyzed, "Rather, due to the prolonged U.S.-China hegemonic competition and the resulting global leadership vacuum, the world economy is likely to fall into the so-called ‘Kindleberger Trap’ experienced in the 1930s, leading to prolonged low growth and stagnation." American economist Charles Kindleberger viewed that the U.S., as the emerging hegemon replacing Britain, failed to properly provide global public goods under a protectionist stance, which led to the economic depression and World War II.

Chairman Sagong continued, "South Korea should prepare countermeasures anticipating increasing pressure to choose between the U.S. and China in domestic and foreign policy decisions," emphasizing, "Above all, consistent policy implementation based on values and principles and persuading them with logic are essential."

Chairman Sagong also saw economic cooperation with China as important. In particular, he advised, "South Korea should complete the necessary domestic procedures and officially apply as soon as possible for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which China has applied to join," and "South Korea must exercise proactive leadership between Japan and China to resume the currently stalled South Korea-China-Japan Free Trade Agreement (FTA) negotiations."

Furthermore, he stressed that South Korea should demonstrate collective leadership alongside middle powers, befitting its status as a member of the Group of Ten (G10). To this end, he said South Korea should actively participate in and lead the G20 summits and processes. Chairman Sagong forecasted that the 2024 Rio G20 Summit, to be held next year, could be a good opportunity for South Korea to demonstrate leadership on development agendas.

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