Foreign Ministers Meeting: A New Step for China-South Korea Relations?

Sophia Shum Gagnier

On May 13, South Korean Foreign Minister Cho Tae-yul arrived in Beijing to meet with his Chinese counterpart Wang Yi. The two reportedly discussed a variety of topics, including the Taiwan Strait, North Korea’s nuclear program, and the upcoming China-Japan-South Korea trilateral summit. The meeting is Cho’s first visit to Beijing since taking office, and the first visit by a South Korean foreign minister to China since 2017.

The two ministers indicated hopeful sentiments regarding the future of bilateral relations. Wang expressed his desire for the development of a “stable and healthy” China-South Korea relationship. Cho, on the other hand, walked a careful line between optimism and pragmatism, noting that South Korea does not see its relationships with the United States and China as mutually exclusive or a “zero-sum game.”
The meeting’s significance is contextualized by recent years of strained China-South Korea relations, which Minister Wang described as “difficulties and challenges.” As Cho explained to the press, the rare meeting is due to a “changing geopolitical environment,” which requires cooperation and reinvestment of conflict minimization. The two countries emerged from the meeting with a mutual pledge to pursue a more “mature” relationship.

South Korean President Yoon Suk Yeol and his administration have a history of being critical of China, despite its key role in the South Korean economy. As a presidential candidate, Yoon condemned his predecessor’s more conciliatory approach to China. In 2021, then-candidate Yoon accused President Moon Jae-in of making South Korea into a “middleman” between China and the United States and “skewing” policies in favor of China. Once elected, Yoon’s administration has repeatedly voiced concerns over China’s conduct in the South China Sea and its role in supporting North Korea. As recently as March, South Korea’s invitation of Taiwan’s Digital Minister to participate in the Summit for Democracy in Seoul garnered Chinese ire. Thus, the meeting’s markedly different tone suggests some reason for optimism leading up to the China-Japan-South Korea trilateral summit.

South Korea Preparing Yet More Support for the Semiconductor Industry

Alexander Eid

Media reports from May 11 suggested that South Korea is preparing a USD 7.3 billion support program for its domestic semiconductor industry, the latest in a series of government moves to boost the competitiveness of the country’s most critical strategic industry. According to South Korean Finance Minister Choi Sang-mok, the forthcoming program will provide targeted policy financing to foster a “semiconductor ecosystem.” In parallel, the Finance Ministry will also pursue preliminary feasibility studies into large scale chip packaging and “mini-fab” facilities, work closely with the National Assembly to extend the chip tax credits contained in the K-Chips Act – which are set to expire at the end of this year – and look to provide direct support to the semiconductor parts, equipment, and materials sector. 

Noticeably absent from Choi’s announcement – and indeed all of South Korea’s recent moves to support the chip sector – was any mention of direct subsidies for chipmakers. As countries around the world, including the United States and Japan, expand direct public investment in the semiconductor sector, South Korea, a global leader in memory chip production and home of Samsung Electronics – one of the few companies on earth capable of fabricating cutting edge logic chips – continues to shy away from such subsidies despite clamorings from the domestic chip sector. 

This conspicuous absense points to the heart of a fundamental taboo in South Korean industrial policy: subsidizing the chip sector means subsidizing the country’s largest, most dominant firms. Politically, this proposition poses significant challenges. Even the most conservative administrations in South Korea’s democratic history have drawn the line at direct subsidies for fear of drawing flak from the public that the government is working too closely with the country’s industrial champions. Deep connections between big business and government carry with them unsavory memories of the Park Chung-hee era, a period of immense economic growth under a crushing dictatorship – what Edward Graham of the Peterson Institute for International Economics famously called a “miracle with a dark side.”  

As such, subsidies remain politically unfeasible, even for the conservative Yoon Suk Yeol administration of today. The question is, will tax credits and public-private financing be enough to keep up South Korea’s competitive edge?