Korea in Asia Conference 2020: Economic Impact of Geopolitical Transformations in Asia

Speakers:

• Kim Kye-Hwan, Executive Director, Center for Industry and Trade, Korea Institute for Industrial Economics and Trade (KIET)
• Devesh Kapur, Director of Asia Programs, Johns Hopkins SAIS
• Wonkyuk Lim, Professor, KDI
• Aaditya Mattoo, Chief Economist of the East Asia and Pacific Region, World Bank
• Vikram Nehru, Distinguished Practitioner-in-Residence, Johns Hopkins SAIS
• Tami Overby, Senior Director, McLarty
• Chung Sung-hoon, Professor, KDI
• Josh White, Professor, Johns Hopkins SAIS
• Jong-il You, Dean, School of Public Policy and Management, KDI

The school hosted a conference with experts on Asia to share insights on the economic impact of geopolitical transformations in Asia.

You began the discussion by addressing the major shocks that global value chains have recently suffered, and how the role of China as a key supply chain player will remain central in a world where the Biden administration would be caught up in potential domestic concerns.

Lim introduced the first panel centered on the reconfiguration of global value chains. He noted that RCEP shows that a new Cold War is not imminent, and that even though China wishes to promote itself as indispensable to global supply chains, the US for now could not afford the cost of decoupling. Nehru weighed in by noting that supply chains have played a key role in globalization and the rise of Asia, but these complex value chains have led to the domination of East Asia in many ways. He stated how because of greater anti-foreign sentiment and protectionism, Eastern countries were rapidly investing in technological innovation and research.

Mattoon shared the recent WB report on global value chains (GVC), noting how GVC’s were leading to hyper-specialization among countries. He noted how COVID has led to greater contraction, regionalization, and protectionism. Concluding the second panel, Sung-hoon presented on Korean reliance on Chinese supply chains. He noted that how really only Germany, China, and the US were GVC hubs, and all countries revolved around them. Korea was in the Chinese hub, and mainly traded and relied on China and then ASEAN. While Sung-hoon believed that Korea should diversify, he was pessimistic it could decouple from China.

The second panel addressed the economic implications of the Biden presidency for Asia. Kapur noted that China’s changing international posture, and the rapid geographic shift taking place in China, Japan, and South Korea would have profound reverberations for the region and the world. Kye-Hwan commented that the trade war between the US and China had reduced trade between the two giants who were both attempting to shift their markets more towards ASEAN. Yet in the case of Korea, its reliance on China especially in automobiles, electronics, and other critical components remained high. Kye-Hwan closed with noting that China’s smart plus, new infrastructure, Made in China 2025, and Digital Silk Road, would all lead to a more competitive and dominant Beijing.

Overby joined the conversation by noting that the incoming Biden administration would focus on greater multilateral initiatives to reign in China and use allies and international forums to mitigate negative behaviors out of Beijing. Regarding Korea, she noted that Seoul will look towards Washington in protecting intellectual property, and hope that cooperation in technology and trade is prioritized. White commented on how the messaging coming out of the Biden administration will be very important to Asia (statements like Indo-Pacific vs. Asia-Pacific, statements on alliances, the Taiwan straits, and so forth). He predicted that a desire to leave the Middle East and complete the “Obama Pivot” to Asia will dominate the national security policy, but will come up against the wing of the Democratic Party that wishes to retreat and focus on social justice, climate change, the pandemic, and income inequality.