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South Korea Working on Plan B amid U.S.-China Trade War
Preparing for the Worst-Case Scenario
South Korea Working on Plan B amid U.S.-China Trade War
  • By Michael Herh
  • June 14, 2019, 08:45
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South Korean Prime Minister Lee Nak-yeon (left) presides over a national policy coordination meeting in Seoul on June 13.

The South Korean government is working on a contingency plan with the U.S.-China trade war having developed into a technology war involving national security. This is to be prepared for a possible collapse of the global value chain.

The South Korean government is assuming the worst-case scenario on a determination that the hegemonic rivalry between the two countries will last long and is seeking for countermeasures beyond protection of South Korean companies.

At present, the United States is urging South Korea as well as the European Union and Japan to join the anti-Huawei campaign. The Blue House recently said that using Huawei equipment does not affect the military security of the U.S.-South Korea alliance and U.S. Ambassador to South Korea Harry Harris refuted the remark at a recent press interview. The ambassador publicly put the same pressure on the South Korean government on three different occasions in just 10 days.

This can be interpreted as a possibility that the United States can sever its direct and indirect production relations with China. If so, a complete overhaul of South Korean companies’ global value chains and production systems will become inevitable although they can benefit from the United States’ anti-Huawei stance in the short term.

The South Korean government’s current stance is that it cannot intervene in private companies. Its strategic ambiguity is to irritate neither the United States nor China and avoid China’s retaliation such as THAAD retaliation. However, South Korean companies are calling for the government to take measures and improve domestic business environments for reshoring. Japan, in the meantime, is focusing on practical interests between Washington and Beijing.