hankyoreh

President Yoon Suk-yeol of South Korea shakes hands with US President Joe Biden ahead of their joint press conference following their summit at the White House on April 26. (Yoon Woon-sik/The Hankyoreh)

From the outset of his state visit to the US, President Yoon Suk-yeol, the self-professed “No. 1 salesperson of South Korea,” emphasized the importance of “economic diplomacy,” so much so that he took a 122-person economic mission with him. But now that his weeklong itinerary has ended, some are questioning whether Yoon deserves a passing grade for his performance.

While he did well to strengthen South Korea-US supply chain cooperation and consolidate technological cooperation in high-tech industries, Yoon also left open the possibility of sparking discontent from China, South Korea’s biggest trading partner.

The fact that Yoon passed the ball to working-level negotiations without having come up with concrete solutions to pending issues that have been giving South Korean companies a headache, such as the Inflation Reduction Act and the CHIPS and Science Act, also leaves much to be desired.

On Sunday, the presidential office, the Ministry of Economy and Finance, and the Ministry of Trade, Industry and Energy (MOTIE) announced that the South Korea-US supply chain cooperation in high-tech industries including semiconductor and battery had been strengthened thanks to Yoon’s recent visit to the US.

In a press release that day, the Ministry of Economy and Finance stated that “that [South Korea and the US], as countries sharing the principles and values of free market economics, agreed to establish a stable partnership even regarding supply chains for high-tech industries, is one of the biggest achievements of [Yoon’s] recent US visit.”

Additionally, the ministry highlighted that Yoon was promised investments totaling US$5.9 billion by US companies including Netflix, which announced its plan to invest US$2.5 billion in South Korea over the next four years, and strengthened technological cooperation in high-tech industries like the semiconductor and battery sectors by signing 50 MOUs between institutions and companies.

The strengthening of supply chain cooperation the government is emphasizing prompts concerns that it may leave South Korean and domestic companies little room for maneuver when it comes to economic exchange with China and with Russia. In particular, it may increase the instability of trade with China, South Korea’s biggest importer and exporter, leading to backlash from the country.

According to data from the Korea International Trade Association, trade between South Korea and China last year totaled US$310 billion, 21.9% of the former’s total trade amount. The US’ share of South Korea’s total trade is 13.5%.

In fact, signs of discontent are already emerging in China.

Calling Yoon’s policy “overwhelming[ly] pro-US,” Chinese state-run Global Times paraphrased experts as saying that “the protection and investment provided by the US are not worth the loss that South Korea will suffer in terms of both economy and security.”

The fruits of the recent summit didn’t even include feasible solutions to “America First” policies. While the South Korean government asked the US to take fundamental measures regarding the restriction of the level of semiconductors South Korean companies can make in China, from which South Korea was granted a grace period until this coming October, the ball was passed to working-level negotiations.

Even regarding the US’ Inflation Reduction Act and CHIPS and Science Act, South Korea merely managed to reaffirm the theoretical position that “close consultations will be continued.”

“The US cast a new net called ‘economic security,’ and our semiconductor and battery industries got caught in the net. The separation of politics and economics, a principle that was tacitly preserved until now, has crumbled, causing our corporations and economy to be swept away by global political variables,” commented Roh Hwa-wook, president of the Association for Advance Semiconductor Industry.

“[The South Korean government] joined the line in the US’ side, propounding the theory of economic security, prompting our companies and economy to be taken hostage,” he said.

Some are raising concerns that the business environment for South Korean companies in China and in Russia could take a turn for the worse.

“During a time of conflict between the US and China, [South Korea] joined the line on the US’ side,” commented a semiconductor industry insider who spoke on the condition of anonymity. “Though direct losses caused won’t immediately become evident because they are entangled with matters like local production facilities and employment, companies operating in China or Russia will have no choice but to consider a strategy of minimizing losses step by step.”

Politicians are voicing critique as well, saying what was given is evident while what was received is not.

Appearing in the CBS Radio program “Kim Hyun-jung’s News Show,” Democratic Party lawmaker Yoon Kun-young said, “It’s as if [South Korea] received a promissory note in return for cash.”

The amount of investments Yoon was promised, totaling US$5.9 billion, and the various MOUs signed, may pale in comparison to the size of South Korean investments into the US, such as the establishment of a joint venture in electric vehicle batteries between Samsung SDI and General Motors as well as the construction of a joint battery factory between SK On and Hyundai Motor Group, the investments Yoon was promised, totaling US$5.9 billion, once all the calculations have been made.

By Ko Han-sol, staff reporter; Ock Kee-won, staff reporter

Please direct questions or comments to [english@hani.co.kr]