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South Korea has joined the US-led Indo-Pacific Economic Framework (IPEF) aimed at countering the Chinese Communist Party, according to economists.
In May, South Korea became a member of the IPEF and joined 12 other countries, including Japan, Australia, New Zealand and India. Other countries are Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam.
Korean Ministry of Industry, Trade and Resources..
The move to join the IPEF is expected to reduce South Korea’s economic dependence on China, but there are some challenges, says a report by the Institute of Economic Research under the Korean Economists’ Federation. Quote According to the influential Maeil Business Newspaper on June 12.
The report said IPEF membership has both positive and negative impacts on the Korean economy.
The report states that if IPEF member countries limit the import and export of strategic commodities to China with reference to minerals containing uranium, raw materials for batteries such as lithium and cobalt, and electricity and electronics, the Korean economy will be in the short term. Products such as semiconductors and telecommunications that have stated that they may adversely affect.
However, despite reducing foreign trade with China, South Korea can find positive and corresponding benefits, such as expanding domestic industry and increasing exports to other regions, the report said. ..
In recent years, South Korea has become able to replace China in the fields of chemistry, general machinery, automobiles, electrical appliances, machinery, etc., centered on the “middle and high-tech industries.”
According to the Korea Institute of Industry, Economy and Trade, the export similarity index of South Korea and China soared from 0.347 in 2011 to 0.390 in 2021 in these industries. A close index of 1 means that it is highly competitive and similar in the export structure between the two countries.
After joining the IPEF, South Korea will curb strategic industrial exports to China and strengthen domestic companies with policies that induce innovation, according to the report.
In this case, economists predict that South Korea’s GDP will increase by up to 4 trillion won (about $ 30 billion) from last year and 2.12 percent from 2021. Negative consequences of reduced exports to China.
But in retaliation, China may limit the export of goods to IPEF member countries, so the South Korean government needs to give domestic companies preferential policies to grow GDP by up to 1.17%. Otherwise, GDP can drop by 0.45-1.61%. According to the report.
It is also important for parliamentarians to support tax R & D and foreign returnees, which the report suggests will allow South Korea to take over the regional markets previously occupied by China. There is.
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Lisabian is a Korean-based writer of The Epoch Times, focusing on Korean society, its culture and international affairs.
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