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1. COVID-19, Supply Chains, and Dependence on China: The Indian Perspective

Author:
Amitendu Palit
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
China is India’s largest source of imports, nearly 15 percent of which are sourced from China. Many of India’s major imports—electrical machinery, electronic and semiconductor devices, fertilizers, antibiotics, iron and steel products, and vehicular parts—are extensively sourced from China. The outbreak of the COVID-19 pandemic highlighted the critical dependence of India’s pharmaceutical industry on China for active pharmaceutical ingredients (APIs). The dependence on China for both intermediate and finished products, has encouraged India to incentivize greater production at home through production-linked-incentives (PLIs) and to work with Japan and Australia on reorganizing regional supply chains. The paper examines the repositioning of supply chains in the strategic industry of pharmaceuticals. Efforts to reduce dependence on China assume great importance in this regard as India strives to become the leading supplier of affordable vaccines for tackling COVID-19.) The decade of the 2020’s has begun with India embarking on the dedicated mission of reducing import dependence and increasing self-reliance. The COVID-19 pandemic has starkly exposed the frailties of supply chains relying heavily on China. For India, which relies extensively on China for several critical imports, no sector is more vulnerable to disruptions from over-dependence than its pharmaceuticals. India’s reputation as the “pharmacy of the world” drawn from its great proficiency in making affordable pharmaceutical formulations and vaccines, relies fundamentally on sourcing essential drug intermediates from China. As one of the leading actors in the world’s fight against COVID-19, India is wary of sourcing disruptions from China affecting its ability to contribute to expanding global health security. After focusing on the import dependence of India’s pharmaceutical industry on China, this paper analyzes the recent initiatives announced by India for increasing economic self-reliance and reducing such dependence. It concludes by reflecting on the prospects of India decoupling from China in sourcing pharmaceutical ingredients.
Topic:
Economics, COVID-19, Imports, and Supply Chains
Political Geography:
China, South Asia, India, and Asia

2. Taiwan’s Shifting Role in the Global Supply Chain in the U.S.- China Trade War

Author:
Jinji Chen, Hong-yu Lin, and Yi-ting Lien
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The U.S.-China trade war and the pandemic have had a profound impact on cross-border supply chains. In the past few years of U.S.-China tensions, China has been accused of engaging in unfair competition by abusing its national power, from trade and technology to COVID-19 responses. Amid such accusations, some countries have been stepping back from cooperating with China due to national security concerns. As the lockdowns have further disrupted value chains and highlighted the vulnerability of global supply chains, enhancing supply chain resilience has now become a national imperative for the U.S., Japan, and other countries, with an emphasis on strengthening their production capabilities in the semiconductor and medical care industries.
Topic:
Economics, National Security, Trade Wars, and Supply Chains
Political Geography:
China, Taiwan, Asia, North America, and United States of America

3. The Pandemic’s Impact on Supply Chains from China and their Evolution: The View from South Korea

Author:
Jin Kyo Suh
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Today’s global economy is highly interconnected and interdependent. Supply chains across the world are finely tuned to deliver parts just when they are needed, so that companies and industries do not need to waste money on maintaining big warehouses. The economic system runs with remarkable efficiency, and companies are able to keep inventory to a minimum. However, firms have started rethinking their supply chains in response to changing labor costs, advances in automation, rising protectionism, and external shocks, such as natural disasters. In particular, the COVID-19 pandemic has revealed the structural fragility of current global supply chains and has forced many global enterprises to fundamentally reconsider their approach to global manufacturing and sourcing. The crisis has also highlighted geopolitical tensions, trade restrictions, and nationalist politics aimed at promoting a country’s domestic industries, which are likely to continue reshaping the global business landscape. As a consequence, most global enterprises are going to be under greater political and competitive pressure to increase their domestic production, grow employment in their home countries, and rethink their use of lean manufacturing strategies that involve minimizing the amount of inventory held in their global supply chains. Previously, supply chains were designed to keep costs low and inventories lean. However, supply chains are now being reworked to reduce the risks of future disruption even if doing so means incurring additional costs. Because China is decidedly the world’s largest goods exporter and is also currently mired in a trade conflict with the United States, supply chains going through China may be among the most vulnerable to future disruptions. Hyundai, South Korea’s largest automaker, temporarily stopped production lines at its factories in South Korea because of shortages of Chinese parts. The Hyundai shutdown—encompassing the first factory lines to be idled outside China—could foreshadow considerably more serious disruptions in the complex networks that supply automakers with essential components and materials (Automakers are especially susceptible to interruptions in the flow of goods because the industry is global, and cars are complex products with a myriad of precision parts). Recognizing the risk that dependency on China poses to national industries, some governments have offered manufacturers incentives to exit China and ease the pain of diversification. For example, Japan put $2.2 billion of its COVID-19 economic stimulus package into supporting its manufacturers moving toward shifting production outside of China. There was also mounting public pressure in some countries, such as the United States, to move essential production of pharmaceuticals and medical equipment out of China and closer to home. It is, however, not that simple to reduce global supply chain reliance on China: the nation still retains not only considerable comparative advantages in many areas (e.g. electronics, machinery, and equipment manufacturing), but also enormous purchasing power as the world’s second largest market. Even those companies that have diversified production are finding it hard to break free of China’s pervasive influence. Anticipating a rise in tariffs due to the U.S.-China trade conflict, videogame producer Nintendo shifted the manufacturing of its blockbuster gaming console called Switch to Vietnam in 2019. There was, however, a shortage of Switch consoles in stores in early 2020 due to a lack of essential components flowing to the company’s Vietnamese factories, as COVID-19 paused production of component parts by Chinese suppliers. In addition, most businesses have developed complex interdependencies, resulting in a deep tiering of supply chains. Many manufacturers depend on first-tier suppliers which, in turn, rely on a second-tier, and so on. Therefore, relocating factories or replacing all Chinese suppliers would be infeasible in the short-term. This chapter reviews the impact of supply chain disruption caused by COVID-19 on the South Korean economy and examines the future of regional supply chains centered on China. The rest of the paper is structured as follows. How supply chain disruption caused by COVID-19 will affect the South Korean economy, including trade, is discussed in Section 2. According to the latest national GDP report by the Bank of Korea (BOK), South Korea is going to see a mere 1 percent GDP contraction for 2020, the second-best performance among major economies behind only China. Reasons for why the South Korean economy was not seriously affected by the pandemic are also discussed in Section 2. Section 3 highlights the difficulty of reducing global supply chain reliance on China. China is likely to remain a key player, and the world must look at the reality that global supply chains are highly interconnected with China and that disconnecting from China’s supply chain is not an easy economic task for many multinational companies. The final section offers a few concluding remarks on deepening regionalism specifically in Asia, including policy implications for South Korea.
Topic:
Economics, COVID-19, and Supply Chains
Political Geography:
China, Asia, and South Korea

4. The Future of U.S. Supply Chains: National Security and the Pandemic

Author:
Troy Stangarone
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The COVID-19 pandemic has been the most significant economic disruption to the international economy since the Great Depression. The IMF estimates that the global economy contracted by 3.5 percent last year, while the WTO has projected a 5.3 percent decline in global trade. The economic impact on the United States has been significant as well. Early in the pandemic the United States experienced shortages of critical medical supplies and products, while the need to social distance has continued to place restrictions on the overall economy. For 2020, the pandemic saw GDP decline by 2.3 percent, while exports fell by 12.9 percent and imports by 6.4 percent. All of this has resulted an increased focus on supply chains and their vulnerabilities.
Topic:
Economics, National Security, COVID-19, and Supply Chains
Political Geography:
China, Asia, North America, and United States of America

5. Shared History, Divided Consciousness: The Origins of the Sino-ROK Cultural Clash amid the Pandemic

Author:
Dong Xiangrong
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Since 1992, bilateral relations between China and South Korea have sustained a state of positive development, although there have naturally been some moments of friction and contradictions. Amid the COVID-19 pandemic in 2020, a number of disputes arose between netizens in China and South Korea over such things as the origin of pickled vegetables (paocai in Chinese, kimchi in Korean) and the Van Fleet award acceptance speech of South Korea’s BTS singing group. Different interpretations of a few thousand years of bilateral interactions—cultural, political, military, historical, and other topics mutually entangling the two—have led to some sharply vitriolic disputes between netizens in the two neighboring countries. Today’s tensions over national identity issues are rooted in how history is understood in the two countries and the enduring salience of cultural symbols of identity tied to history. Nobody could have anticipated that pickled vegetables would, ultimately, become a focus of the 2020 dispute between netizens of China and South Korea. Since over a decade ago when the Gangneung Danoje (端午祭) was granted UNESCO recognition and other developments occurred, all the way up to today’s pickles, it seems that almost all ongoing Sino-South Korean identity disputes are connected to the entangled histories of the two sides. Seen from the history of cultural exchanges from long ago, is traditional medicine, after all, your Chinese medicine or my Korean medicine? Is traditional dress our Han Chinese clothing or your Korean clothing? Is the May 5 festival our Duanwujie (端午節，Dragon Boat Festival) or your Danoje? Are vegetables marinated by pickling, our “paocai” or your “kimchi”? A thousand-year cultural legacy should be a factor to strengthen shared identity and tighten cultural connections in Sino-South Korea relations. However, against the current geopolitical and geo-economical background, shared cultural connections unexpectedly became the focus of contention between the two neighbors. Geopolitically, China and South Korea have been involved in different political camps since World War II. During the decades of Cold War, these two countries unfortunately fell into hot war although they were not each other’s main enemy. Each country describes the war and justifies its actions through its own lens. Was the war, after all, our “War to Resist U.S. Aggression and Aid Korea” or your “Korean War”? Different memories of the war led to widespread, fervent protest from Chinese fans against South Korea’s popular singing group BTS’s acceptance speech in receiving the Van Fleet Award by the Korea Society. Sensitivity toward remarks about the war some 70 years ago has unexpectedly heightened recently. Geo-economically, China and South Korea have been interdependent over the past three decades. China has been the biggest trade partner of South Korea for many years. The Chinese market is bigger than the U.S. and Japanese ones combined for Korean products. The market matters. The Samsung Group and Hyundai Group have had to react to the voices of customers and stop showing an advertisement performed by BTS. Also, when Seoul and Washington decided to deploy THAAD in South Korea, Seoul had to face the negative economic consequences of its deteriorating bilateral relationship with China. Both geopolitical differences and historical memories are now capable of arousing economic retaliation. This chapter analyzes from the angle of how history and the present are linked the current identity conflicts between China and South Korea. It recognizes that using today’s concepts to evaluate history leads clearly to tearing asunder Sino-South Korean mutual historical recognition. At the same time, the influence of values, geopolitics, differences in level of development, and other factors, along with cultural clashes between China and South Korea intersecting with political and security topics mutually arouse and even worsen relations between the two peoples. Security confrontations and ideological divergence have severely worsened public relations between the Chinese and South Koreans. These disputes, such as the Korean War and THAAD, have become important backdrops for the emergence and exacerbation of cultural rifts.
Topic:
Politics, Culture, History, and COVID-19
Political Geography:
China, Asia, and South Korea

6. The Pandemic and its Impact on the South Korea-Japan Identity Clash

Author:
Scott Snyder
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The global pandemic caused by the onset of the novel coronavirus known as COVID-19 has tested governance at both the national and international levels by challenging the capacity of nations to provide effective public health solutions to protect their citizenry. The pandemic has deepened preexisting international rivalries while also creating diplomatic opportunities to promote international cooperation and public diplomacy. Rather than serving as a turning point for a new era in international relations, the pandemic and the global response appear primarily to have accelerated preexisting trends. In Northeast Asia, the pandemic has accelerated deepening rivalry between the United States and China, reinforced political paralysis between Japan and South Korea, primarily by providing a pretext for privileging domestic concerns and constituencies at the expense of international relations, and has generated heightened new foreign policy challenges resulting from deepening identity-based major power rivalries. This chapter reviews the deepening of identity-based challenges facing Japan-South Korea relations prior to 2020, examines the conditions generated by leadership responses in both countries to the pandemic, identifies missed opportunities for pandemic-related cooperation between the two countries, and addresses challenges and opportunities facing the Japan-South Korea relationship in the context of anticipated recovery from the pandemic as well as the shifting geopolitical environment as tensions mount between China and the United States.
Topic:
Culture, Domestic Politics, COVID-19, and Identity
Political Geography:
Japan, Asia, South Korea, North America, and United States of America

7. The Coronavirus: Fueling Concerns and Contrasts between India and China

Author:
Tanvi Madan
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
On February 26, 2020, an Indian plane landed in Wuhan carrying medical supplies for China, which was then the epicenter of the COVID-19 outbreak. On its return, it evacuated a number of Indian and Bangladeshi nationals, as well as citizens of other countries. On the face of it, this is the kind of cooperative effort that is expected during a global public health crisis, with countries—even competitors—coming together at a time of need. However, the saga of that flight reflected another (prescient) dynamic—that COVID-19 would reinforce and increase rather than alleviate competition between China and India and complicate cooperation, with pandemic response and recovery efforts being seen through a competitive prism. That flight to Wuhan was not smooth; indeed, it was much delayed. Delhi had announced it a week earlier. It was a way to help China, demonstrate India’s capacity, and assist India’s neighbors by evacuating their citizens. But then Indian officials publicly, albeit anonymously, revealed that Beijing was not clearing the flight. The reason was unclear—China, after all, had been requesting international support. There also did not seem to be a bureaucratic snafu. So, was it the visual of Beijing accepting support from India, which Chinese officials and analysts sometimes dismiss as a less capable, even chaotic, neighbor? Was it the desire not to give India a soft power win, including with its neighbors? Was it because the flight involved a military transport aircraft procured from the U.S.? Was it retaliation for the temporary Indian detention of a Chinese ship bound for Pakistan due to a tip-off of dual-use items on board? Or was the reason Chinese unhappiness about Indian travel restrictions to and from China, or Indian export limits on certain medical products? Whatever the reason, China eventually gave the flight clearance, but only a week later and after much Indian negotiation. It was an early sign that the public health arena would not be immune from the competitive atmosphere prevailing between the two countries, and in the region as a whole. Subsequent events only bore that out. There has been considerable discussion about how countries’ perceptions of China would change due to the pandemic—at the beginning because of its mishandling, and then because of its recovery. This chapter argues that, rather than change perceptions, Beijing’s handling of COVID-19 increased the largely skeptical views of China that prevail in India, which had at least 29 million cases and over 385,000 deaths in India by mid-June 2021 (the 2nd and 3rd highest in the world respectively). This trend was further bolstered by the worst boundary crisis between the two countries since they fought a war in 1962. Together, the pandemic and the boundary crisis have ensured that the competitive and conflictual elements of the India-China relationship have been front and center over the last year. They have reinforced and accelerated concerns in India about China’s lack of transparency, its uncertain commitment to the rules-based order, as well as its growing influence in the Indo-Pacific and in international institutions. And they have demonstrated that despite Delhi and Beijing’s efforts to cooperate and to stabilize their relationship over the last two decades, it remains a fundamentally competitive one that can spill over into conflict. This chapter examines the impact of first the pandemic and then the boundary crisis on perceptions of China among the Indian government, establishment, and public. It proceeds to outline the consequences of these perceptions on Indian domestic policy, its partnerships with like-minded major and middle powers, and its counter-COVID activism. Finally, it considers China’s response, particularly to Indian policy changes.
Topic:
Bilateral Relations, Culture, Domestic Politics, and COVID-19
Political Geography:
China, South Asia, India, and Asia

8. The Sino–U.S. National Identity Gap and Bilateral Relations

Author:
Danielle Cohen
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The national identity gap between China and the United States has become increasingly apparent. Under Xi Jinping, China has sought to reclaim its historical greatness and proclaimed itself to be a responsible great power that offers a credible alternative to Western values, while also promoting increasingly authoritarian policies at home, complete with extensive repression in Xinjiang and renewed state control of the economy. Assertions of U.S. national identity were somewhat muted under Donald Trump, confused by the battle between those who supported the administration’s “America First” policy, its transactional approach to foreign affairs, and its deemphasis on human rights and democracy promotion in U.S. foreign policy, and those who worried about the global repercussions of an isolationist, nativist policy. For a time, the United States seemed more preoccupied with its trade war with China than with claims that the United States should act as the global protector of human rights and democracy. The COVID-19 pandemic further complicated already tense Sino–U.S. relations and called both countries’ national identities into question. While China had, as of spring 2021, succeeded in keeping its COVID-19 outbreak remarkably small, the damage caused by its initial suppression of medical reports, along with successful virus mitigation in a number of non-authoritarian states, called into question its claim to be a responsible world power on the basis of its pandemic performance. Meanwhile, the Trump administration failed to protect U.S. citizens from catastrophic death tolls and prevented the United States from taking a leading role in resolving this global crisis. In January 2021, the Biden administration took office with a focus on swiftly ending the pandemic, while also reasserting the traditional U.S. global leadership role. When combined with its assessment of U.S. power after the 2008 Global Financial Crisis and of U.S. domestic social and political instability evident throughout 2020-2021, the pandemic has strengthened China’s perceptions of the United States as a country in decline, and of China as a “risen” great power that should now play a major role in shaping the global order. At the same time, although U.S. policy towards China remains firm despite the presidential transition, the underlying rationale has shifted from the “America First” approach of the Trump administration to the democratic values-infused approach of the Biden administration. As the world struggles to move beyond the pandemic, the national identities of China and the United States are increasingly defined in opposition to each other and seem likely to drive an ever more challenging bilateral relationship in the coming years.
Topic:
International Relations, Foreign Policy, Bilateral Relations, Culture, and Domestic Politics
Political Geography:
China, Asia, North America, and United States of America

9. The Pandemic as a Geopolitical Game Changer in the Indo-Pacific: The View from Japan

Author:
Glen S. Fukushima
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The coronavirus pandemic that struck in late 2019 has affected the world profoundly, and Japan is no exception. But the direct impact on Japan has been relatively small considering the number of cases of infections and deaths relative to the size of Japan’s population, particularly considering its elderly population and high density. For instance, among the G7 countries, Japan has had the fewest cases of infections (4,690 per million population as of May 2, 2021) compared to 32,276 in Canada, 40,620 in Germany, 64,804 in the United Kingdom, 66,828 in Italy, 86,283 in France, and 99,652 in the United States. Similarly, among the G7 countries, Japan has had by far the fewest number of deaths (81 per million population as of May 2, 2021) compared to 638 in Canada, 996 in Germany, 1,601 in France, 1,776 in the United States, 1,870 in the United Kingdom, and 2,004 in Italy. This chapter argues that although the direct disruptions to Japan resulting from the pandemic have been less than to the other G7 countries, the effect of the pandemic on other nations with strong geopolitical importance to Japan—in particular, the United States and China—coupled with changes in Japan’s domestic political and economic environment have accelerated changes in geopolitical posture and direction that were already in progress in Japan. The fundamental geopolitical challenge facing Japan is how to ensure its military security, political independence, and economic prosperity in the face of a less reliable and less predictable United States and a more powerful and more assertive China. For Japan, the ideal resolution of this challenge is to maintain positive and constructive relations with both countries, while recognizing the reality that even as economic ties with China—whether in trade, investment, finance, tourism, or the exchange of people—are growing relative to ties with the United States, political and security ties (and the sharing of common values) with the United States remain the centerpiece of Japan’s foreign policy. Given this context, it is only natural that Japan would seek to diversify and strengthen its relationships with other countries, regions, economic arrangements, and international organizations and institutions. This diversification, which could be seen since the end of the Cold War in the early 1990s, has gained momentum in recent years, and the pandemic has served only to accelerate it. The analysis proceeds through the examination of the following: 1) pandemic chronology; 2) Japan’s domestic politics; 3) relations with the United States; 4) relations with China; 5) Japan’s diversification strategy; and 6) conclusions.
Topic:
International Relations, Security, Geopolitics, and Economy
Political Geography:
Japan and Asia

10. How COVID-19 Has Affected the Geopolitics of Korea

Author:
Jung-Yeop Woo
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
COVID-19 has not gone away, and observers are now discussing possible long-term effects of the pandemic, including on geopolitics. A report by the European Parliament discussed five COVID-generated factors that could impact the geopolitical environment, i.e., supply chains, health multilateralism, digital diplomacy, climate change, and democratic activism. It predicted a reshuffling of value chains, where cooperation within the same “bloc” would be strengthened, while states continue their reshoring efforts, consequently shifting the current geopolitical environment. The report pointed out that the pandemic necessitated thorough scientific cooperation and information sharing beyond the level that the WHO had initially offered, suggesting changes in patterns of behavior, as in adapting to digital platforms while opening opportunities for nations to counter climate change and strengthen their geopolitical positions. Moreover, it also looked at the number of protests resulting from the pandemic and its economic effects and suggested that such pressure would encourage governments to mollify inequality. Missing is optimism that countries will be stirred to pursue common interests. Missing too is the geopolitical fallout from acutely worsening Sino-U.S. relations, as in South Korea, which stands at the forefront of states facing pressure from both sides. With the unforeseen disruption in both global and domestic economies, much attention has been paid to the effect of COVID-19 on the economic side rather than the political side, perhaps because many did not expect that the pandemic would last this long. However, recent disruptions are clearly rife with serious political implications, both domestically and globally. Above all, as seen from Seoul, their impact on the relationship between Beijing and Washington demonstrated how much the economic forces could spill into geopolitics. Koreans follow this impact attentively, realizing that worsening Sino-U.S. ties may reverberate on one or both powers, increasing pressure on Seoul’s efforts to sustain a precarious balance for the sake of its North Korean policy and its hope for regional stability. Many nations in the Indo-Pacific have recently struggled between the United States and China, trying to find the most advantageous equilibrium between security and economy. South Korea has uniquely stood on the frontlines, as in 2016-17 when it bowed to the U.S. and deployed the Terminal High Altitude Area Defense (THAAD) missile defense targeting North Korea, which was met with strong Chinese pressure—strict economic sanctions through unofficial channels and demands to promise the “three noes” that restricted further missile defense deployment to deescalate the tension. President Biden’s new measures to bridge security and economy through multilateralism call for Seoul to choose between acceding to U.S. requests or risking China’s threats to respond aggressively—even as some anti-THAAD sanctions remain in place. President Xi Jinping’s warnings point to China’s harsh response. South Korean concerns have grown because of the relationship between the current global supply chains and geopolitics, which is a preoccupation of the Biden administration. Situated at the juncture of supply networks centering around China, South Korea’s economy is almost certain to be heavily hit. Furthermore, the pandemic brought ongoing pressures for de-globalization and de-dollarization to the forefront with major ramifications for Seoul. Much of the anxiety has focused on the geopolitics of deteriorating relations between Beijing and Washington. The former is warning Seoul against joining the Quad, agreeing to trilateralism with Japan and the U.S., and tilting the balance away from China in the Sino-U.S.-ROK triangle. Meanwhile, the Biden administration, even before it clarifies its regional strategy, is nudging Seoul in precisely the opposite direction. The year 2020 raised challenging issues for Seoul, which loom in 2021 as more severe geopolitical tests for the Moon administration. To properly gauge the effect of COVID-19 on South Korea’s geopolitics, it is crucial to understand the world before the pandemic. Has COVID-19 functioned as an independent variable in South Korean geopolitics? If there is a discernable difference, we have to see whether that difference was caused by COVID-19. This paper proceeds in four parts: 1) outlining the pre-pandemic status quo up until 2020; 2) assessing how COVID-19 affected international geopolitics; 3) examining how it influenced South Korea’s supply chain and geopolitics; and 4) analyzing ongoing discourse on South Korea’s strategic choice amid the U.S.-China rivalry. These sections are followed by brief conclusions on implications for policy choices.
Topic:
International Relations, Security, Geopolitics, and COVID-19
Political Geography:
Asia and South Korea

11. China, ASEAN, and the Covid-19 Pandemic

Author:
Joseph Chinyong Liow
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
For Southeast Asia, the COVID-19 pandemic was not only a public health crisis. It also provided an occasion for China to deepen its engagement in the region by dint of its own successful containment of the virus within its borders, and the resources it possessed to extend help to regional countries battling COVID-19 and its consequences, including economic, on their own shores. While Chinese help was welcomed, Southeast Asia also sought to avoid being beholden to any single external power. To that end, Southeast Asian states have actively pursued such diversification not only through efforts at reinforcing cooperation within ASEAN but also by using ASEAN as a vehicle to engage external powers. At the end of 2019, Chinese health authorities reported a cluster of pneumonia cases that had emerged in Wuhan, in the province of Hubei, which eventually led to the confirmation of a novel coronavirus. Several weeks later in January, the pandemic struck Southeast Asian shores when the first case outside of China was detected in Thailand. Within a few months, the world found itself in the grip of a global pandemic. By the end of January 2021, there were more than 100 million recorded cases of the COVID-19 infection, with over two million deaths. While the fatality rates are lower than those of previous pandemics of the SARS (Severe Acute Respiratory Syndrome) strain, it has by far been the most infectious, prompting Singapore foreign minister Vivian Balakrishnan to opine that with the pandemic “we are facing a global life and death crisis which requires extraordinary measures.” Threats posed by pandemics are not new to Southeast Asia. In the last two decades alone, the region had been beset by several transnational health crises, of which SARS and the H5N1 Avian Flu were arguably the most lethal. What is striking about the current climate, however, is the backdrop against which the pandemic is playing out: the COVID-19 pandemic has hastened the further bifurcation of an international order that was already threatening to come undone because of the intensification of Sino-U.S. rivalry and American withdrawal from multilateralism under Donald J. Trump. Southeast Asian states found themselves increasingly compelled to reassess their relationships with external powers. Taking the present pandemic as a point of entry, this paper considers its impact on Southeast Asia’s relations with China and the U.S. The paper makes three main arguments. First, it contends that Sino-U.S. rivalry has sharpened over the COVID-19 pandemic by dint of the politicization of this public health crisis by both parties. Second, it argues that China has identified and seized upon opportunities presented by the pandemic to enhance its regional and global standing through continued support for multilateralism and economic engagement through initiatives such as the BRI, in turn creating favorable conditions for the advancement of its foreign policy interests. Conversely, because of the severe deficiencies in how the Trump administration handled the pandemic domestically, the Biden administration will have to prioritize its domestic challenges at the expense of greater bandwidth and resources for foreign policy, especially in Southeast Asia, a region that since the end of the Vietnam War has never featured prominently in Washington’s pursuit of its overseas interests. Third, it posits that while Southeast Asia has doubtless benefited from Chinese support during this crisis, the region remains skeptical of Chinese strategic intent and concerned about overreliance. States have tried to diversify relations with regional powers while strengthening cooperation within ASEAN. The paper first looks, by way of background, at how the pandemic emerged as the latest arena of Sino-U.S. rivalry. It then explores how China has handled the pandemic domestically, where its success has allowed it to expand its influence as a putative provider of “global public goods.” In the interest of brevity, the paper then focuses on ASEAN by documenting collective regional efforts and strategies to navigate great power rivalry in the realm of global public health.
Topic:
International Relations, Security, ASEAN, and COVID-19
Political Geography:
China and Asia

12. The Pandemic as a Geopolitical Gamechanger in the Indo-Pacific: The View from China

Author:
Yun Sun
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
How has the COVID-19 pandemic reshaped or influenced China’s geopolitical outlook and its grand strategy for the years to come? This is a question that will determine China’s relationship with the United States, the Indo-Pacific region, and the rest of the world. In the Chinese strategic community, the pandemic has been regarded as a “watershed” event that has reshaped the structure of the international system and the power equilibrium. Its importance is elevated to the same status as the end of World War II, which determined the bipolar international system between the U.S. and the Soviet Union, and the end of the Cold War which began thirty years of U.S. hegemony in a unipolar world. Although China began as a sheer loser in the pandemic given its culpability in the origin of COVID and its early poor management of the domestic spread of the disease, Beijing believes that it has eventually emerged as a pure winner in the pandemic: the relative gain China has made vis-à-vis the U.S.’s bigger losses in disease control, national power, economic growth, global leadership, and credibility has strengthened Chinese confidence that the tide is turning in China’s favor. The “effectiveness” of the Chinese political system, as manifested in its domestic disease control, has reinforced China’s ideological conviction of its superiority. As China uses COVID diplomacy to demonstrate the superiority and desirability of its political system, the pandemic is perceived as an opportunity for it to shape the new international order and promote China’s desired “Community of Common Destiny.” Challenges remain, as the U.S. revamps its alliance system under the Biden administration and as regional powers and Western countries grow increasingly concerned and anxious about China’s growing confidence and capabilities. However, for China, the pandemic has been a great opportunity, and China has emerged from it as a pure winner. It is an interesting question as to how the pandemic has changed the nature and the dynamics of the great power competition between the U.S. and China. Most would agree that the pandemic exacerbated, accelerated, and aggravated the deterioration of relations that the U.S. and China had already been experiencing before 2020. However, the differences lie in the degree, intensity, velocity, and extensiveness of the damage. Without the pandemic, the downward slope U.S. and China had already been on would not have come to a state of “freefall” in 2020. And that “freefall” period has long-lasting and significant implications for their bilateral relations in the post-COVID world. The damaged trust, confidence, and credibility, and the deeply entrenched sense of hostility, or even antagonism, have made any effort to repair the relations extremely difficult, if not completely impossible. And this reality will affect the regional dynamics in the Indo-Pacific region for the many years and decades to come.
Topic:
International Relations, Security, Foreign Policy, Geopolitics, and COVID-19
Political Geography:
China, Asia, North America, United States of America, and Indo-Pacific

13. The Big Squeeze: Japanese Supply Chains and Great Power Competition

Author:
Mireya Solis
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Japan led, and was transformed, by the global supply chain revolution. Facing growing protectionism in industrialized markets and reeling from sharp yen appreciation in the aftermath of the 1985 Plaza Accord, Japanese firms responded with a drastic increase in their overseas investment activities. In so doing, many of these companies spearheaded the movement towards the fragmentation of production across national boundaries that sought efficiency gains by pooling the competitive advantages of different locations. Japan’s experience with the first supply chain revolution was transformative. It altered its export-led model with important implications for its foreign policy. Japanese investments in the United States helped abate trade frictions; integrated production was at the heart of the project to rebuild relations with China, and Japan’s lead as foreign investor in Southeast Asia has been a pillar of its blueprint for regional integration. The strains in the rules-based international trade order, however, have raised questions about the ability of global supply chains to continue to operate effectively. The U.S.-China geopolitical rivalry has manifested in a damaging trade war, and moves to restrict tech flows are creating decoupling pressures. The COVID-19 pandemic has exacerbated these trends with lockdowns that disrupt supply chains while export protectionism and calls to renationalize production are on the rise. The intensified risk environment could lead to a second supply chain revolution with a greater emphasis on redundancy and diversification and bifurcation of productive chains. How will Japan respond to the challenges to international production, a central engine of its economic prosperity, and with what consequences for its relations with major powers? To provide greater clarity on this overarching question, this paper is organized as follows. Section 1 describes the central role of Japanese firms in the emergence and deepening of regional production networks. Although Japan’s overall share of intra-regional trade has decreased in the 21st century—in tandem with China’s rise as regional hub- Japanese firms have retained their central role in GVCs (Global Value Chains) through their advanced manufacturing capabilities. Section 2 offers a glimpse of past and recent supply chain shocks—China’s embargo of rare earth metals, the Great East Japan Earthquake in Tohoku, and the Japan-Korea export control dispute—to illustrate both sources of vulnerability and resilience of Japanese GVCs. Section 3 assesses the systemic shift brought about by revived great power competition, and identifies some early adjustment responses from Japanese firms to a new normal of heightened geopolitical tension.
Topic:
Economics, Strategic Competition, and Supply Chains
Political Geography:
Japan, China, and Asia

14. Joint U.S.-Korea Academic Studies 2020

Author:
Gilbert Rozman, Mark Tokola, Gilbert Rozman, Dmitri V. Trenin, Yuki Tatsumi, Kathryn Botto, Rush Doshi, Scott W. Harold, See-Won Byun, Cheol Hee Park, Brad Glosserman, Charles W. Boustany Jr., Matthew Goodman, Wonho Yeon, and Kitti Prasirtsuk
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The experts in this volume have thoughtfully addressed themes that are pervasive throughout Asia and are timely for the U.S.-Korea alliance. With the future of Northeast Asia in flux, political leaders are hoping to transform their respective visions into the path forward for the region. Authors in the first section analyze the frameworks of U.S. President Donald Trump, Chinese President Xi Jinping, Russian President Vladimir Putin, Japanese Prime Minister Abe Shinzo, and South Korean President Moon Jae-in to discern the currents underlying geopolitical developments in the region. The second section examines the role of national identity in key bilateral Indo-Pacific relationships where geopolitical fault lines have become clearer. Chapters in this section cover the India-China, U.S.-China, South Korea-China, and South Korea-Japan dyads. The final section provides insights into how several of China’s neighbors and the United States are responding to its economic rise, which, of course, are also guided by strategic concerns. Considering how COVID-19 has exacerbated the rivalry between Washington and Beijing as well as the influence this relationship carries in shaping the future of the region, the contributions here are particularly relevant and timely.
Topic:
International Relations, Security, Economics, and Domestic Policy
Political Geography:
Japan, China, Asia, South Korea, North America, and United States of America

15. ASEAN’s Looming Anxiety

Author:
Kitti Prasirtsuk
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The rise of China generally presents both opportunities and challenges, particularly in economic terms. In the past several years, new kinds of challenges have been emerging and are looming larger in ASEAN countries. While ties with Beijing are, by and large, cordial, there are several signs that relations below the state level are increasingly worrisome. First, Chinese foreign direct investment (FDI) is largely not oriented towards manufacturing. A considerable amount tends to be in non-real sectors, such as real estate and casinos, which may not generate much employment and can be unhealthy to local economies. Second, the way Chinese businesses expand tends to be predatory, as demonstrated in tourism-related businesses and the acquisitions of fruit businesses in Thailand. As a consequence, new Chinatowns are emerging as more Chinese are moving into the region. Third, even business expansion through the Chinese government, e.g., the train projects, is far from smooth. ASEAN countries find themselves in uneasy deals – including onerous loan terms, undue requests for land usage along the train lines, stringent technology transfers, and imported Chinese labor. Moreover, the recent COVID-19 outbreak reveals not only the fragility of economic overdependence on China, but also public resentment towards the Chinese. Overall, the relations at the level of business and the people are far from promising, which can become a risk factor in state-to-state relations. The situation apparently demands good management from both Beijing and the counterpart governments.
Topic:
International Relations, Foreign Policy, Economics, ASEAN, COVID-19, and Real Estate
Political Geography:
China, Malaysia, Asia, Vietnam, and Southeast Asia

16. Is China’s Innovation a Threat to the South Korea-China Economic Relationship?

Author:
Wonho Yeon
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper reviews China’s technological rise and assesses whether it poses a threat to the South Korean economy. In terms of comparative advantage between the two countries, many experts have long believed that China’s strength is low-cost labor and Korea’s is technology and capital. However, this has changed as China’s economy grows. Now China has enough capital to invest in its economy. Some scholars even argue that China has the potential to meet its “innovation imperative” and emerge as a driving force in innovation on a global level.1 This paper examines the Korea-China economic relationship from the innovation productivity perspective, organized into sections: briefly introducing the Korea- China economic relationship; describing the technological rise of China, based on recent data; developing the model to analyze the innovation productivity of China and report the estimation results; evaluating the concern of the South Korean semiconductor industry; and presenting conclusions.
Topic:
International Relations, Economics, Science and Technology, and Bilateral Relations
Political Geography:
China, Asia, and South Korea

17. Strategic Ambivalence: Japan’s Conflicted Response

Author:
Matthew Goodman
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The Abe administration has adopted a strategy that combines three main lines of effort: enhanced diplomatic and economic engagement with Beijing; hedging and balancing, including deepening integration with other countries of the Indo-Pacific region and attempting to keep the United States engaged in the Indo-Pacific region; and leadership on regional and global economic rule-making. The main strands of this approach are likely to continue after Abe leaves office, though uncertainty surrounds them all.
Topic:
International Relations, Foreign Policy, Diplomacy, and Strategic Interests
Political Geography:
Japan and Asia

18. China’s Economic Rise amid Renewed Great Power Competition, America’s Strategic Choices

Author:
Charles W. Boustany Jr.
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
American ideals coupled with the commercial self-interest of American business and industry drove the policy of engagement, and even after the 1989 massacre of student protesters at Tiananmen Square, sustained momentum for China’s accession into the WTO. Despite China’s known unfair trade practices, it was thought that problems would eventually disappear as China adopted rules and norms as conditions of its accession to the WTO while deepening its integration into the global trading system. Yet, despite this strategy of engagement, China has not implemented expected substantive structural reforms consistent with the spirit, if not the letter, of its WTO obligations.
Topic:
International Relations, Security, Foreign Policy, and Economics
Political Geography:
China, Asia, North America, and United States of America

19. Japanese Views of South Korea: Enough is Enough

Author:
Brad Glosserman
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
While the sources of contention are deep and enduring, relations between Japan and South Korea have been especially troubled in the last few years. The two countries are grappling with deeply entrenched, emotional legacies that have been inflamed by recent controversies, rendering history both immediate and real. This chapter explores Japan’s perception of and reaction to those events. While it aims to provide an objective assessment of Japanese thinking, it does not purport to be even-handed or balanced. It is an analysis of the Japanese view of the relationship with South Korea. To be brief and blunt, Japanese are frustrated with and angered by South Koreans. Frustrated because they have been unable to build a future with them that rests on a foundation of shared concerns and values; domestic politics continues to override strategic interests. Angry because Korean complaints deny the many changes that have occurred in Japan since the end of World War II. Japanese do not deny that atrocities took place, but they are offended when they are laid at the feet of current generations. A growing number of Japanese believe that Koreans prefer to occupy the moral high ground over building a mutually beneficial long-term partnership. This belief increasingly colors the way that Korean actions and statements are interpreted.
Topic:
International Relations, Foreign Policy, Diplomacy, Bilateral Relations, and Partnerships
Political Geography:
Japan and Asia

20. South Korean Views of Japan: A Polarizing Split in Coverage

Author:
Cheol Hee Park
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
South Korean views of Japan are neither uniform nor unified. Considering that national strategic identities are competing even within a single country, it is not strange at all that South Koreans have complex and fragmented views of Japan. Depending on their ideological and dispositional orientations, South Koreans hold varying perceptions about Japan. It is much more so in the age of ideological polarization. Not only in the United States, but also in South Korea, identity politics more and more dominate. Widespread social networking service communications made tribal communications, instead of mass communications, permeate the society, which strengthened the trend of polarization. Increasingly people do not cross over ideological divides or social cleavage lines, creating islands of tribes to convince themselves in a particular way. The combination of ideological divide and tribal communications opens an unexplored political domain of contending views in a society. This chapter aims to delineate the development of complex and divided South Korean views of Japan, especially under the Moon administration. It shows South Korea divided within. Then it analyzes the rise of anti-Japanese elements in Moon’s handling of Japan affairs after 2017. Careful analysis of the Moon government’s posture toward Japan reveals that such aspects can be visibly identified. I also analyze the political background of rising anti- Japanese elements within the ruling party of South Korea, while attempting to show that alternative views of Japan are widely available despite the Moon government’s generally negative posture toward Japan. Based on a review of newspaper columns and civic initiatives for reconciling with Japan, this study further illustrates the existence of modest alternative views that are different from the government position. This clearly reflects that South Korea’s discursive space remains relatively democratic and plural. Finally, I address the question of whether political and diplomatic tensions would increase or decrease in the process of South Korean and Japanese interactions. Prescriptions are highly conditional in a sense that the level of tensions will be determined by the way interactions address the issues in contention. I take the position that there is not a single view but multiple and divided views of Japan in South Korea, particularly under the Moon administration. Although the Moon government contains a strong anti-Japanese and nationalist orientation, conservative intellectuals keep a moderate, cooperative stance toward Japan. One can find increasing diversity despite intense bilateral controversies over contemporary and past issues. I conclude that tensions between South Korea and Japan originate from political elites, rather than the general populace. Narrowing the perception gap between political leaders may be easier to do in bettering the relationship.
Topic:
International Relations, Foreign Policy, Public Opinion, and Domestic Politics
Political Geography:
Japan, Asia, and South Korea