The current conflictual dynamics underlying high-tech rivalry between China and the United States and the management of collateral damages by middle-power countries emanate from the clashes of techno-statecraft. Each country’s pursuit of technological superiority for its own prosperity, security, and prestige through deep and wide state intervention has aggravated the situation. Against this backdrop, our paper attempts to elucidate the dynamics of techno-statecraft of China, the United States, and South Korea. First, we examined the concept of techno-statecraft, which can be differentiated from that of economic statecraft, as an analytical framework of the paper. Second, we looked into China’s technological challenge as shaped by its techno-statecraft. Third, we traced the American threat perception of China’s technological rise and its techno-statecraft response. Fourth, the paper discussed the dilemmas Asian countries are currently facing and their choices through a case study of South Korea. Finally, it draws some theoretical, empirical, and policy implications.
Competing Trilaterals: South Korea’s Dilemma (September 2024 Global Asia)
South Korea and Japan find themselves in a complex balancing act as their trilateral relations with China, on the one hand, and with the US, on the other, pull these two countries in potentially competing directions. The focus involves both economic and security issues that aren’t easily reconciled. But China’s failure to acknowledge the global impact that its subsidies and overproduction are having on world trade is making it harder for South Korea to sympathize with Beijing.
Colliding Worlds and Korea's Path Forward (August 27. 2024 Munhwa Future Report)
Panel 2. Deglobalization Era, Where is the Economy Headed?
Speaker Presentation
Wendy Cutler Vice President, Asia Society Policy Institute(ASPI) - U.S.-China Supply Chain Competition and the Crisis in Free Trade
Douglas A. Irwin John French Professor of Economics, Dartmouth College, Peterson Institute for International Economics(PIIE) - Globalization in an Era of Geopolitics and the Risks for Korea
Discussion
Won-ho Yeon Director, Center for Economic and Technology Security Studies, Korea National Diplomatic Academy(KNDA)
Moderated by
Ho-young Ahn Chair Professor, Institute of Far Eastern Studies, Kyungnam University
The US-China strategic competition has engendered a securitization of economic policy among major powers, leading to a fundamental reorganization of global supply chains with inter-state trust emerging as a critical determinant in economic relationships. The proposal to establish 'economic security agreements' with allies represents a timely and potentially constructive approach to creating a new global economic order, providing a framework for like-minded nations to coordinate their economic security policies while minimizing negative impacts on allies and partners. As the intensification of industrial and technological competition leads to a more fragmented global economic landscape, it is imperative to accept this reality while working to minimize its costs and collateral damage through feasible incremental solutions.
Panel 1. Technological innovation and economic security in the context of worsening geopolitical tensions
Salvador Álvarez Pascual, Strategy Director, Grupo Oesía | @grupo_oesia
Raquel Jorge Ricart, Analyst, Elcano Royal Institute | @RaquelJorgeR
Damián Tuset, Head of Section at the General Technical Secretariat, Spanish Ministry of Foreign Affairs, European Union and Cooperation
Wonho Yeon, Research Fellow and Head of the Economic Security Team, Korea Institute for International Economic Policy (KIEP)
Moderated by Félix Arteaga, Senior Analyst, Elcano Royal Institute
First Panel (public panel): ROK-G7 Convergences on International Security
New and old conflicts from Europe to the Middle East, the continuing rise of China, and the economic challenges inherited from the pandemic have led to a decisive convergence between the ROK and G7 countries in the domain of international security. Many questions arise from this convergence: Is a soft security engagement in the Indo-Pacific the best approach for European G7 member states? How can we best face the 'economic security' challenges stemming from China while preserving win-win economic dynamics? Additionally, how do we evaluate the feasibility of supply chain diversification, the risks of economic coercion, and the trade benefits and techno-hegemonic risks associated with China?
Speakers
HON.Byung Se YUN, Former Minister of Foreign Affairs of the Republic of Korea
AMB.Rainer RUDOLPH, Vice-Chairman of the Munich Security Conference (MSC)
AMB.Kak Soo SHIN, Former Ambassador of Republic of Korea to Japan; Former Vice-Minister of Foreign Affairs of the Republic of Korea
DR.Paul SAMSON, President, Centre for International Governance Innovation in Canada
DR.Wonho YEON, Head of the Economic Security Team, Korea Institute for International Economic Policy (KIEP)
Chair
DR. Darice DRAUDT-VÉJARES, Fellow for Korean Studies in the Asia Program at the Carnegie Endowment for International Peace
The United States and South Korea should take the following steps to coordinate their respective approaches toward supply chain resiliency. First, redundancy is critical. Diversifying supply chains by building redundancy in domestic and international supply chains is a response strategy that all major countries are adopting. However, rather than blindly pursuing reshoring, the United States and South Korea should actively utilize strategic friendshoring to minimize inefficiencies. Second, adaptability is essential, especially in the event of a crisis. The two countries should aim to respond quickly through stockpiling and modularization, which can be accomplished by sharing standards and making their products compatible. Third, the United States and South Korea should build transparent and short supply chains and maintain continuous monitoring to identify disruptions in advance. Fourth, the two countries should prioritize sustainability by improving access to financing in times of crisis and expanding talent and research and development. This will help companies to build up their capacity to respond flexibly in the event of a supply chain disruption.
Building International Support for Taiwan: Task Force Perspectives (Feb 13. 2024 CSIS)
Just like many other countries, South Korea supports the “One China” policy, not the “One China” principle. The difference between policy and principle is whether they are mutable or immutable. South Korea will not change its “One China” policy if all countries, including China, the United States, and even Taiwan itself, do not undermine the stability and peace of the region. However, if a country unilaterally tries to change the status quo in the region, South Korea may consider changing its policy. As noted in its Indo-Pacific Strategy, South Korea reaffirms the importance of peace and stability in the Taiwan Strait for the peace and stability of the Korean Peninsula and for the security and prosperity of the Indo-Pacific.
Strengthening U.S.-ROK-Japan Trilateral Cooperation (Feb 12. 2024 CSIS, Washington DC, US)
Session 3: Trilateral Economic Security Cooperation and Supply Chain
Kevin Wolf, Former Assistant Secretary of Commerce for Export Administration, Bureau of Industry and Security, U.S. Department of Commerce; Partner, Akin Gump Strauss Hauer & Feld LLP
Wonho Yeon, Research Fellow and Head of the Economic Security Team, Korea Institute for International Economic Policy
Shihoko Goto, Acting Director, Asia Program and Director for Geoeconomics and Indo-Pacific Enterprise, Wilson Center
Moderated by
Christopher Johnstone, Senior Adviser and Japan Chair, CSIS.
The global economy is becoming increasingly uncertain due to the formation of blocs based on trust and values. To take on this era of uncertainty, governments are strengthening government-led industrial and technology policies and cooperation with trustworthy like-minded countries. Paradoxically, it is likely that these efforts will further increase uncertainty, deepen trade and technology blocs, and strengthen solidarity within the blocs in 2024.
With internationally agreed rules like the WTO not working, countries base their trade, investment, and cooperation decisions on whether they can trust each other. However, given the differences in industrial capabilities and trade structures among countries, specific perceptions of economic security threats and response strategies cannot be the same for each nation. In other words, while coalition to address new challenges seems commendable, there are concerns that the competition for subsidies through industrial policies that is unfolding within the coalition may pose a significant economic loss not only to potential adversary nations outside the alliance but also to allied and similarly positioned countries within the alliance. Therefore, it is crucial for nations that have benefited significantly from free trade, such as South Korea, to take the lead in restoring an order of free trade within their blocs while striving to maintain inter-block trade as much as possible.
Taiwan's Election and the Outlook for Cross-Strait Relations (January 26. 2024 KIEP Opinions)
The incentive to resolve the Taiwan Strait crisis is not only high for the U.S. and China but also for South Korea. It is time for South Korea to pay more attention to the Taiwan Strait issue and consider what it can do to maintain regional peace and stability. While cross-Strait relations themselves may be a domestic issue for China, instability in cross-Strait relations could have national and economic security implications for its neighbors, especially given the recent shift in China's rhetoric on Taiwan. While the Chinese leadership before Xi Jinping spoke of "opposing Taiwan independence," the current administration speaks of "promoting the reunification of China." At first glance, the two phrases seem similar, but while "opposing Taiwan independence" involves maintaining the status quo, "promoting China’s reunification" implies an explicit intention to literally change the status quo. In his New Year's address this year, President Xi Jinping once again emphasized that "the reunification of the motherland is a historical inevitability."
How Should We Understand De-risking? (December 11. 2023 Korea on Point)
De-risking has recently emerged as a word to describe United States policy toward China. The term was first used by European Commission President Ursula von der Leyen on March 30 2023 to describe the EU's China strategy and gained traction on April 27 2023 when White House National Security Adviser Jake Sullivan also referred to the United States' China policy as "de-risking" rather than "decoupling." Some observers believe that the U.S. policy toward China is changing. There is even an overly optimistic view that the U.S.-China relationship is on the verge of a rapprochement. However, I do not believe that there is a shift in U.S. policy toward the PRC. It is important to understand that it is not the word de-risking that matters, but the means by which countries have chosen to achieve it. While the goal of managing China risk is the same, the specific means are different, with the European focus on diversification and the U.S. on partial decoupling.
Policymakers need to think about why the semiconductor industry has become oligopolized. This phenomenon happened not only in the semiconductor manufacturing industry but also in the semiconductor manufacturing equipment industry and the semiconductor components and materials industry. The answer is simple. Recent technological development requires an astronomical investment of money, and few companies can raise such funds. In other words, when seeking to widen the technology gap to guarantee a country’s advantage, securing a stable flow of funds is as crucial as preventing technology leakage. The core of the U.S. and South Korean strategy should be to widen the technology gap through a combination of export controls and utilization of the Chinese market. The widening of the technological gap must be accomplished simultaneously in two directions: by locking down Chinese capabilities and by developing advanced technologies. The United States should not only focus on export controls to close China’s semiconductor production capacity but also figure out how to capitalize on the Chinese market, the world’s largest consumer of semiconductors, at the same time. Now is the time to find a win-win strategy between the United States and South Korea based on an accurate understanding of the semiconductor industry. In particular, it is important to keep in mind that even the slightest policy failure is unforgivable, given the ongoing dynamics of U.S.-China strategic competition.
What Do China’s Neighbors Think of De-risking? (August 24. 2023 The Diplomat)
In 2023, the United States began using the new phrase “de-risking” to describe its policy toward China. De-risking literally means reducing the probability of being exposed to a risk. Diversification, selective decoupling, and full decoupling are all possible means of de-risking, and the United States has adopted a policy of selective decoupling. This can be read literally in the phrase “small yard, high fence” that National Security Advisor Sullivan emphasizes in every speech. The idea is to block Chinese access in selective areas. The U.S. government’s use of de-risking refers to China-risk management in the broadest sense and does not imply a specific change in U.S. policy toward China.
How to Enhance the U.S.-ROK Alliance through Economic Security Policy (June 10. 2023 NBR)
In terms of economic security, the lifting of some export controls related to the ITAR hints at many other things. According to the “U.S. Strategic Framework for the Indo-Pacific,” declassified by the White House in January 2021, the United States has an action plan that calls for a greater role for allies in the region while offering R&D cooperation in return. Although it is not widely known, South Korea still faces U.S. export controls in a number of areas, including nuclear energy, quantum computing, and aerospace. One of the key takeaways from the Korean president’s state visit to Washington was the opportunity to secure greater cooperation from the United States in high-tech areas that are not immediately tangible but will determine Korea’s future competitiveness. Enhancing the advanced technology and future competitiveness of U.S. allies will eventually contribute to protecting the national interests of all.
In this regard, the primary recommendation to both U.S. Congress and the Korean National Assembly is to support cooperative efforts to enhance economic security and ensure that such a vision can be implemented in domestic regulations and policies over the long term. In doing so, both sides should keep in mind that economic security is a condition for economic prosperity, not a means to it.
Panel II - The Future of the ROK-U.S. Alliance: Redefining Security through Trade and Technology
Moderator
Scott Snyder, Senior Fellow for Korea Studies and Director of the Program at U.S.-Korea Policy, Council on Foreign Relations
Panelists
Wonho Yeon, Research fellow and the Head of the Economic Security Team at the Korea Institute for International Economic Policy (KIEP)
Wendy Cutler, Vice President and Managing Director, Asia Society Policy Institute; Former Acting Deputy U.S. Trade Representative
Matthew Goodman, Senior Vice President for Economics, Center for Strategic and International Studies
Miyeon Oh, Director and Senior Faculty Lead of Korea Studies; Senior Fellow, Scowcroft Center for Strategy and Security, Atlantic Council
Yukyung Yeo, Professor, Department of International Studies, Kyung Hee University
Xi Jinping's China and the Korean Peninsula (April 14. 2023 CSIS, Seoul, Korea)
Speaker Presentation
Bonnie Glaser, Managing Director, Indo-Pacific Program, GMF
AHN Ho-young, Former ROK Ambassador to the U.S.
Bonny Lin, Director, China Power Project and Senior Fellow, Asian Security, CSIS
LEE Chung Min, Senior Fellow, Carnegie Endowment for International Peace
Dennis Wilder, Research Fellow, Initiative for US-China Dialogue on Global Issues, Georgetown University
YEON Wonho, Head, Economic Security Team, Korea Institute for International Economic Policy
Discussion
Sue Mi Terry, Director of the Asia Program and the Hyundai Motor-Korea Foundation Center for Korean History and Public Policy, Wilson Center
LEE Jae-Seung, Professor of Jean Monnet Chair in Division of International Studies, Korea University
Andrew Yeo, Senior Fellow and the SK-Korea Foundation Chair, Brookings Institution; Professor of politics, The Catholic University of America
KIM Byung-yeon, Professor, Department of Economics, Seoul National University
HAN Young-Sup, Professor of Defense Policy and Arms Control, Korea National Defense University
PARK Byung Kwang, Director of International Relations, Institute for National Security Strategy (INSS)
Moderated by:
Victor Cha, Senior Vice President for Asia and Korea Chair, CSIS; Professor and Vice Dean, Georgetown University
Panel III - Making "Friendshoring" Work
Moderator:
Chung Min Lee, Senior Fellow, Carnegie Endowment for International Peace; University Professor, Institute of Security Convergence, KAIST
Panelists:
Dan Kim, Chief Economist; Director of Strategic Planning - CHIPS Program Office, U.S. Department of Commerce
Charles Freeman, SVP, U.S. Chamber of Commerce
Myung-hee Yoo, Former Trade Minister of the Republic of Korea
Wonho Yeon, Head of the Economic Security Team, Korea Institute for International Economic Policy
The US Leads China in the Chip Race (December. 2022 Global Asia)
Economic Security is the act of protecting national survival from external economic threats or risks. Response to military threats or dangers is the domain of traditional security, while economic security is about protecting economic survival and future competitiveness. The disruption of supply chains can threaten the survival of a country, while advanced technology may determine future competitiveness. Thus, economic security mainly deals with supply chains, technology and digital domains — the digital space is especially important since it serves as the channel through which data, money and technology flow.
In this respect, semiconductors are at the center of economic security. As we have observed from the widespread economic fallout from shortages of automotive semiconductors in 2021, semiconductors are deeply related to economic survival as core parts of a wide range of products. In addition, semiconductors are the basis of advanced technologies such as artificial intelligence (AI), quantum computing, aerospace, autonomous systems, 5G/6G and other digital advances. In addition, semiconductors have become the most important strategic asset in national security as they are widely used in various weapon systems.
In brief, securing the semiconductor supply chain is the key to economic security, which is directly related to national competitiveness and national security. Accordingly, major countries have recently strengthened their policies to support the semiconductor industry under the banner of economic security and entered the race to secure semiconductor manufacturing capabilities.
Strategic competition between the United States and China is driving the rise of economic security discussions. Economic security is the safeguarding of a nation’s survival against foreign economic threats or risks. The issue of ensuring a reliable supply chain directly affects the economy’s survival in the present, and the survival in the future depends on securing cutting-edge technology and supporting critical industries that will define a country’s competitiveness. Both the United States and China are competing strategically for cutting-edge technology while also reorganizing their core supply chains.
The Future of Global Supply Chains: Opportunities and Challenges (March 16. 2022 KIEP Opinions)
In times of crisis, the market principle of maximization of economic profit is very likely to be disrupted, and the national interest of security is quite likely to take precedence. The growing strategic rivalry between the U.S. and China has prompted us to take this issue more seriously. The recognition of supply chain vulnerabilities, particularly supply chain dependence on certain untrustworthy countries, and the resulting national security issues, provides a fundamental foundation for the recent emphasis on building a stable supply chain. The supply chain restructuring will provide Korea with both opportunities and challenges, and to capitalize on this, the response to the paradigm shift must be as swift and aggressive as possible.
How the U.S.-China Technological Competition Impacts Korea (September 6. 2021 Korea on Point)
Controlling the outflow of strategic goods and technologies and winning the high-tech competition is at the heart of securing national economic security. The tensions between the U.S. and China are expected to escalate as the USICA includes tougher regulations and sanctions against China. In the short term, Korea must prepare for the negative impact that might occur because of the expansion of either U.S. sanctions or Chinese countermeasures. In the long term, Korea should prepare to compete with other nations rapidly closing the technology gap.
The Phantom Menace: The Rise of China’s State-owned Monopolies (Junly 26. 2019 KIEP Opinions)
There is a group of Chinese firms with a little reputation outside China are quietly taking a dominant lead globally in some particular industries: energy and utilities. Among the top 5 of the most recent Fortune Global 500 list, three are Chinese and they are all 1) state-owned and 2) energy-related companies. Probably the sharp growth of Chinas energy state-owned enterprises (SOEs) is linked to the new era of ABC (A.I., Big Data, and Cloud Computing) and China’s long-term global strategy beyond the Belt and Road Initiative. Will the rise of China’s energy SOEs be the menace of reality or the menace of unreality? Will China be exposed as a phantom hiding behind the false facade or emerge as a genuine public leader? Everyone is keeping a close watch on China making its fateful choice: whether to become a global hegemon or to remain as a good global citizen.