Several Korean pillar industries such as semiconductors and automobiles are being hollowed out by the US
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Update time : 2022-11-12 11:35:57
The export, which is the main driving force of the Korean economy, is in the doldrums and economic growth is likely to slow down in this context. Some analysts believe that the decline in Korean exports is inextricably linked to various tightening policies in the US. The US has recently introduced the "Inflation Reduction Act" and the "Chip and Science Act", all of which emphasise "America First". This has led to an exodus of investment, talent and companies from South Korea, one of the country's economic allies, including a number of Korean pillar industries such as semiconductors, automobiles, energy and biopharmaceuticals. The Korean Nation News reported that the exodus of Korean manufacturing to the United States has raised concerns about the "hollowing out of manufacturing" in the country. Recently, the Korea International Trade Association sent a letter to the relevant authorities regarding the Biden Administration's Inflation Reduction Act, stating that the Act "runs counter to" World Trade Organization rules and the free trade agreement between South Korea and the US.
According to data, in 2021, South Korea's manufacturing sector will be worth US$422 billion, accounting for 27.57% of GDP. Lan Qingxin, a professor at the National Institute of Foreign Studies at the University of International Business and Economics, told the Global Times, "Among South Korea's manufacturing industries, the production of semiconductors, electronics and automobiles are among the top in the world." Take the semiconductor industry for example, which accounts for 5% of South Korea's total GDP. With Samsung Electronics and SK Hynix as the leaders, there are more than 20,000 large and small enterprises supporting this industry. And on October 7 this year the US Department of Commerce announced a ban on the export of chip equipment to China, causing great concern within South Korea.
Currently, China is not only South Korea's largest semiconductor export market, but also an important global production base. For their part, Samsung Electronics and SK Hynix said that although they were free to bring in equipment for the next year, the unease grew further. According to Yonhap News Agency, the first South Korea-US working group meeting on semiconductor export control was held on November 8, which assessed the impact of the US government's restrictions on chip exports to China on the South Korean semiconductor industry and discussed cooperation options to remove the uncertainty. However, there are no results yet.
On November 11, the Global Times said, "The US Chip and Science Act's policy of supporting the industry will directly contribute to the outflow of capital from South Korea, the emigration of high-end industries, the hollowing out of the industry and the impact on the employment of its high-end workforce."
While the semiconductor industry is struggling, the Korean automotive and energy industries are also suffering from the US Inflation Reduction Act. The bill provides for the US government to introduce tax credits for consumers who purchase electric vehicles. However, the premise of the subsidy excludes Korean-made electric cars and car power batteries using Chinese raw materials, triggering a strong reaction from the Korean government. The Korean government has protested to the U.S. government through various means, including talks between leaders, asking for a "special case" exemption for Korean-made electric vehicles in the U.S., but the U.S. government has been "deaf and dumb". Currently, the Korean government is trying to put pressure on the US through international arbitration and other means.
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