Vietnam is currently facing various environmental problems during rapid industrialization and economic development. Proper knowledge and active involvement of public officers who plan and implement environmental policy are necessary in order to solve environmental problems. However, the Vietnamese government is not paying much attention on training of public officers and is also experiencing difficulties in dealing with those problems due to the lack of environmental management capacity.
This study aims to build basis of environmental training system for public officer of the Vietnam by developing and implementing pilot environmental education program. Using I-AID²E² Model as a development tool, preliminary survey was conducted and pilot training course was developed based on the result of survey. Specialist from both country cooperated through out the process of developing training program. Provincial officers from ten provinces in the northern Vietnam were invited for the pilot training course on “air pollution and acid deposition monitoring” at Vietnam Institute of Metrology, Hydrology and Environment in Hanoi from 27th of September to 28th, 2010.
The training course was successfully conducted and delivered. The provincial officers who attended the course were generally satisfied with the training course and showed strong willingness to attend training next time if there is chance. The demand for environmental training is found to be high from the survey result.
In conclusions, there are strong demands for environmental training for public officers in Vietnam. Financial support and introduction of policy measure for mandatory training are needed to set up regular and periodic environmental training system to meet their demand. Establishment of regular environmental training courses including basic course and expert course and detailed training courses depending upon different level of public officers are also necessary for provision of good quality training in order to settle environmental problems arising.
For cooperation between Korea and Vietnam in the sector of environmental training of public officers, exchange of environmental personals and continuous involvement in education are required. The support on the operation of environmental training program in the Vietnam by Korean Environmental Human Resource Development (EHRD) Institute and Korean environmental experts are also necessary.

The auto industry in Southeast Asia began with CKD assembly for Japanese automakers in the 1950’s. With the formation of ASEAN in 1967, division of labor in parts manufacture was promoted, then proceeding to production of finished cars and development of automobile manufacture as an export industry after the Asian Foreign Exchange Crisis.
Though the market for automobiles in Southeast Asia remains relatively small, with a volume of just under two million in 2009; it should be noted that Southeast Asian economies continue to grow and the presence of countries like Indonesia, the fourth most populous country in the world, gives the region a huge population base. In addition, two (Thailand, Indonesia) out of three (Thailand, Indonesia, Malaysia) largest markets in the region are looking forward to motorization in the near future, thus pointing to enormous future potential for Southeast Asia’s automobile market. Southeast Asia is widely expected to rise as the next major market for automobiles, after the BRICs countries.
In addition, a major transformation in pending in terms of the region’s industrial policy, as major countries in Southeast Asia are moving away from the pre-Crisis focus on intra-regional division of labor. The auto industry was oriented towards exports in accordance with a policy shift from focus on parts to finished cars. This comes in the wake of efforts to nurture and secure the capacity to develop their own automobiles in the 2000s. These efforts are being spearheaded by Thailand, which recently succeeded in turning itself into a production and export base for 1-ton trucks, with Indonesia following on its heels and Malaysia actively seeking partners for technical cooperation. As for the Philippines and Vietnam, where the pace of industrial development has been slow, they are attempting to secure capacity for domestic production and seeking intra-regional cooperation in auto parts manufacture.
The supply structure for the automobile market in Southeast Asia has been presently dominated by Japanese producers. Japanese companies have attained a monopoly over the said market ever since Japanese companies took part in assembly production and consequently became the main driving force in division of labor in parts manufacture, thereby exerting enormous influence over the industry in Southeast Asia. Thailand owes its recent success in becoming a production and export base in one-ton trucks, in large part, to strategies of Japanese automakers. Major auto companies like Toyota and Nissan are nurturing Thailand and Indonesia as bases for production and export of small cars, while simultaneously pursuing a complementary strategy within the region between different production models. As a result, Japanese firms will retain their paramount position in Southeast Asia’s auto industry for the foreseeable future.
As Southeast Asia will likely emerge as the next major automobile market after the BRICs countries, active consideration needs to given for Korea’s entry into that market. But given the significant price competitiveness of products produced within the region, local production has the advantage over exports in competition.
But since much variation exists among the countries in terms of market potential, strengths/weaknesses in industrial development, opportunities, and risks; a comprehensive assessment of the above factors must precede any serious attempt at selecting a base for local production. Initial comparison and analysis of strengths and weaknesses by country reveals Thailand to be the best choice as a production base for finished cars in the short to middle term, while Indonesia is the best option for the long term. Though underdeveloped in terms of the auto industry and markets, Philippines and Vietnam could receive consideration as bases for auto parts manufacture.
As Korean automakers are currently concentrating investment in the US and BRICs countries (China, India, Brazil, etc), substantial investment into Southeast Asia will have to wait until the latter part of 2010’s. This means that for the short and middle term, it would be best to focus on bolstering production systems in existing facilities through gradual expansion of currently small production bases maintained by Koraen automakers in Southeast Asia, as well as assignment of models based on complementarity between countries. It is advised that a strategic choice be made by assigning Indonesia as a key production base for the long term, and begin preparatory measures such as development of low-cost models and establishment of parts supply network.

 Southeast Asia, in general, refers to the area represented by the 10 ASEAN member countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. ASEAN has developed close economic relations with Korea. As of 2009, it is Korea's 4th largest trading partner after China, the EU and the Middle East  with the trade volume of US$75 billion and the 3rd largest overseas direct investment destination after China and the US with the cumulative total of US$17 billion.
The most prominent feature of financial sectors commonly found in Southeast Asian countries is that they are underdeveloped relative to real economic sectors. Also, banks are dominant financial intermediaries with little competition from shallow domestic capital markets.
The Asian financial crisis of 1997 brought about economic recession in Thailand, and in the course of recovering from the crisis the country had to undergo severe financial restructuring process. The Thai government's efforts to move forward to strengthen and diversify financial markets continued with the Financial Sector Master Plan II pronounced in 2009.
When the Asian financial crisis hit Malaysia, it refused to resort to IMF bailout but pushed through fiscal tightening policies of its own. However, as it failed to alleviate the situation, the Malaysian government veered to an expansionary policy. As it attributed the main cause of the crisis not to its own macroeconomic fundamentals but to international hedge funds' attack, it imposed strict capital controls and introduced a dollar peg system. In addition, the government tried to induce financial restructuring led by private sector and reinforced the financial regulatory and supervisory bodies to lessen the financial turmoil. With the measures in place, the financial sector's asset quality and profitability remarkably improved. Malaysia's financial sector is now regarded as the main growth engine growing at an annual average rate of 7.5% since 2000. Competition with foreign institutions driven by the government's strong financial liberalization policy is expected to enhance efficiency and growth of the financial sector.
When Indonesia spiraled into a financial crisis in 1997 triggered by the plunge of rupiah and insolvency in the financial sector, it signed a US$10 billion stand-by agreement with IMF which requested the government of Indonesia to carry out an economic reform program. To comply with it, the Indonesian government undertook financial reform measures such as banking sector restructuring. The banking sector reform policies since the 2000's include higher minimum capital requirements and the single presence policy. Also, to protect depositors from banks' insolvency, the government built a financial safety net, giving the central bank the role as the lender of last resort providing liquidity in case of emergencies and establishing the Indonesia Deposit Insurance Corporation (IDIC) and the Financial System Stability Committee. Additionally, the government adopted the Capital Market Blueprint from 2000 and Capital Market Master Plan from 2005.

This report aims to provide strategic policy suggestions for stronger Korea-ASEAN cooperation in IT by looking into the evolution and achievements of Korea and Southeast Asia’s IT industries since the Asia-wide financial crisis in the late 1990s.
As a politically and strategically crucial region, Southeast Asia is Korea’s one of the most important economic partners that represents significant amount of trade exchanges. It is also a major investment destination for the Korean private sector which increasingly seeks business opportunities in the region. While Southeast Asia looks to enhance economic cooperation with Korea, which has a high degree of industrial complementarity to the region, Korea has also recognized that a stronger engagement is necessary to better use each other’s competitive edge, and develop new markets and resources. In particular, ASEAN is benchmarking Korea for economic growth, and has shown great interest in the Korean IT industry’s role and accomplishments during the Asian financial crisis and continuously extended cooperation with Korea.
Despite frequent natural disasters, weak domestic fundamentals, social instability and global crises like the 1997 financial woes, the Southeast Asian economy has continued steady growth since the 1980s with particular focus on IT development. The region's IT sector has maintained sturdy growth defying the challenges of the past decade and emerged as a major driver of the Southeast Asian economy. The region has shown marked economic progress, but the growth has been limited to the mobile communications sector. Korean telcos that noted the region's potential and set up operations there have been barely successful due to the uncertainty coming from the outdated regulations and policies, and immature market conditions. Still, the region presents significant business opportunities, especially the countries with strong commitment to IT.
Recognizing the saturated domestic market and the need to export home-grown technology-based services, many Korean IT companies are turning to foreign markets, and Southeast Asian countries are on the top of their list. ASEAN countries have a very high level of awareness on the history of Korea's IT development compared to other regions or countries, and have expressed their need for assistance including policy consultation to benchmark Korea's experiences and policies. Korea will be a suitable model for developing nations since it achieved remarkable economic advancement mostly on IT development over a short period of time.
The Korean government―including the Korea Communications Commission―has shared Korea's policy experience in IT through cooperative projects with Southeast Asian countries. Although the projects have been helpful in broadening the policy platform, they have failed to realize wide adoption of Korean technology or service in the region. The region’s protective regulations and practices are of course responsible, but the major constraint is the lack of competitiveness of Korean companies, which are losing to the multinational enterprises with high brand perception and value, Chinese players with strong cost competitiveness, and local firms in Southeast Asia.
Nevertheless, the region is still full of opportunities since ASEAN and the member states have established and implemented policies and initiatives to develop broadband network, which is considered essential for future growth. Korea’s WiBro(WiMax) and DMB technologies, which have been adopted as global standards, are likely to be well-received in the region whose fixed networks remain unsophisticated. In addition, the now effective Korea-ASEAN FTA will offer greater business/investment opportunities to Korean firms.
A support plan and viable efforts from the government based on thorough SWOT analysis will substantially raise the chances for Korean IT companies to succeed in Southeast Asia and other foreign markets. With ASEAN taking firm root as a regional community, Southeast Asia is also seeking to expand the association into a pan-East Asian community. Since Southeast Asia has become a key player of the Asian economy and also a gateway for Korean IT companies' overseas expansion, the Korean government should further strengthen cooperation with the region. Suitable strategies would be: establishing a collaboration system that meets the need from ASEAN, and combining or aligning different cooperative projects; expanding ODA, especially for leading member states; generating new content for cooperation; and raising effectiveness of the cooperation system.

This report investigates the state and development of medical tourism in Southeast Asia by focusing on Singapore, Thailand and Malaysia. It considers ‘push factors’ and ‘pull factors’ in the development of their medical tourism industries.
‘Push factors’ in the global medial tourism industry are (1) a sharp increase in the ‘un-insured’ or ‘under-insured’ in advanced countries especially in the USA due to rise in medical costs, (2) a need to restrain the continued rise in insurance premiums by insurance companies in advanced countries, (3) an increase in waiting time for medical services in advanced countries, especially in Western Europe, (4) the overall increase in demand for medical services due to the rapid progress of aging society, (5) an increase in diverse demand for medical services in emerging markets including Asia due to their economic development and the growth of wealth people who look for better medical services abroad, (6) an overall increase in tourism demand, and so on.
‘Pull factors’ of those ‘push factors’ are (1) the overall improvement of medical technologies and services in emerging markets, (2) their low cost services, (3) increasing confidence and recognition in quality of their services, (4) increasing convenience and accessibility to medical tourists, (5) increasing possibility of combining medical services with foreign travel and so on.
Singapore, Thailand and Malaysia are developing their medical tourism sector by providing competitive pull factors as below. Above all, they are rapidly catching up with advanced countries in terms of medical technologies and services. Singapore has already reached the most advanced state of medical technologies based on its unique private-public partnership. Thailand, though its overall level of medical technologies may not be up to those of advanced countries, some private hospitals like Bumrungrad are leading medical tourism in the region by equipping themselves with technologies and facilities comparable to advanced countries. Malaysia has also raised the level of its medical technologies and services rapidly. While they are converging to advanced countries in medical technologies, these countries provide those services at significantly lower prices, i. e., about 60% to over 90% lower than those in the USA.
The three countries are also making various efforts to raise visibility of and international confidence in quality of their medical services by getting certifications from JCI, ISO and so on. They offer various convenient services to medical tourists, too. Singapore Medicine, ThailandMed, Malaysia Healthcare Travel Council (MHTC) are organizations dedicated to one-stop services for medical tourists. They even provide prospective medical tourists with services to calculate estimated costs directly in their websites. Comprehensive concierge services, seamless connection to related tour programs and so on also provide an exquisite ‘total experience’.
The three Southeast Asian countries adopt different policies and systems on medical tourism reflecting their differences in developmental levels, historical heritages and so on. However, they are common in following aspects. First, public hospitals are backbones on their local medical service systems. On this basis, private hospitals are creating and/or absorbing new demand from medical tourism. Second, private hospitals are corporatized. Bumrungrad, Parkway Holdings, Pantai and so on are listed in the stock market and expanding international networks through mergers and acquisitions (M&As). Third, foreign doctor licenses are recognized and those leading private hospitals employ many of those internalized medical staff.
Korea seems to be close to advanced countries in medical technologies and service standards. It also maintains price competitiveness. According to the Korea International Medical Association (KIMA), the overall price in Korea is 20~30% of the cost in the USA. However, Korea seems to have more room to improve in international confidence and convenience. For instance, there is no credible way for prospective medical tourists to estimate medical costs objectively, unlike Singapore’s ‘hospital bill size’ or Bumrungrad’s ‘REALCOST’.
It looks better for the future development of Korea’s medical tourism to provide medical tourists as well as foreigners residing in Korea with comprehensive price information. It will be also desirable to allow foreign licenses through a quota system to accommodate the need for international manpower in the medical tourism industry. The overall policy towards medical tourism should be focused on developing the sector as a next export industry competing in the world market.

 This study reviews policy responses of four countries-United Kingdom, France, Netherlands and Japan-to low birth and population aging, focusing on the interaction between social welfare and economic growth policy. Particular attention is given to whether there exists an explicit growth strategy in these countries in an era with an aging population.
The case study on the United Kingdom shows that the British government has not taken specific measure in terms of family policy to increase the birth rate, but the government has pushed for family-friendly policies based on tax reduction and promotion of work participation by women. As for labor policy, the British government traditionally put priority on flexible labor markets rather than job security, which has been reflected in labor policy for old workers. The government tends toward 'market mechanism' in labor policy and the pension system. In this regard, the British model is clearly differentiated from the ‘Continental model’ in Europe.
The French case is unique in that France has enjoyed the highest fertility rate among OECD countries. In France, there has been a deep-rooted tradition that children are ‘public goods’, and that the government has responsibility for their care and education. It is this tradition, reminiscent of ‘The Republic’, which contributed to the high fertility rate in France. As for labor policy, it would be difficult to consider the French case as successful, because employment rate among the older population in France is very low, compared to other European countries. This is partly due to the French model of employment based on corporatism and its culture of early retirement. Recently, the French government has pushed for increasing employment rate among the older population through compulsory measures, such as extension of legal retirement age for state pensions and enforcement of job seeking efforts for older jobless people, in combination with certain incentives such as rights to pension benefit for holding an additional job.
The case of Netherlands is characterized by its ‘flexicurity approach’ on labor policy for women. The Dutch government has emphasized flexible labor markets but has developed various measures for job security as well, based on the equal treatment between male and female workers and between full-time and temporary workers. The government makes efforts to secure fiscal consolidation through stricter policy on unemployment benefits and by raising the age for state pensions.
The study on Japan provides us with various insights on aging population policy, because Japan was the first country to begin experiencing serious problems associated with population aging. This had led to worries in government and society in general concerning the loss of economic growth potential. The consecutive governments have enacted policy initiatives to tackle low birth rates, but they were not successful. In the course of implementing these policies, Japan’s public finance has deteriorated and this necessitated the current welfare reforms to secure fiscal consolidation. However, major reforms, such as pension reforms, have been delayed due to political conflict; uncertainty in state pension reform caused downturns in domestic demands in fear of loss of disposable income for the future.
These case studies provide us with some important policy implications. First, it is important to develop well-designed combination of policies in different areas. Until now, Korea's policy response to low birth and population aging have tended to consider low birth, population aging and growth momentum separately. The focus was on securing growth momentum in an ageing society. But case studies show that it is necessary to interweave policies of different areas so that they can contribute collectively to sustainable economic growth.
Second, labor policy should focus on increasing total amount of employment, rather than replacing employment between different categories of workers. The previous French government encouraged older workers to retire early to reduce the unemployment rate of the younger segment of the population. This initiative turned out to be a failure, resulting instead in a very low rate of labor participation by older people without achieving the initial goal.
Third, it is important to provide some incentives to firms to cooperate with the government's policy initiatives on aging. Without voluntary (though incentives) or compulsory (through legal obligation) participation of the private sector, it can hardly be expected that labor policy for the older population would bring about tangible outcomes.
Against these case studies, some policy initiative should be considered as follows. First, it is recommended that the Korean government develop Sejong City as a model of compromise between work and family life. Given that construction for Sejong City is ongoing and important sections of various Ministries and public institutions will move in, the government initiating various policy experiments would not be unreasonable. Second, it is urgent to develop concrete measures for evaluating the performance of government policies on low birth and population aging. Considering that the government plans to invest more in these policies will entail budget constraints, it will be more important to evaluate adequately performance of such public spending.

While the international community tried to resolve North Korea’s nuclear crisis, it has remained an ongoing challenge. North Korea’s nuclear crisis is a significant and impending task for the international community, in terms of enhancing security on not only the Korean peninsula but also in Northeast Asia while simultaneously achieving consistent economic development in that region. The crisis has become even more serious once the North withdrew from the Six Party Talks in 2009 and the North attacked the South, violating the Armistice Agreement for the Korean Peninsula. This book introduces three cases of disarmament: South Africa, Libya and Ukraine. Based upon the case studies, the book states how the three cases can be applied to the case of North Korea.
This book is summarized as follows. In the first chapter, the authors provide an overview of this study; including the study’s background, purpose, range, and types of methodologies adopted. In the second chapter, the authors analyze reasons why and how South Africa, Libya and Ukraine developed nuclear weapons. In the third chapter, reasons for the three countries deciding to give up nuclear weapons and how they gave them up are analyzed. In the fourth chapter, types of efforts made by the international community in order to resolve the nuclear problem involving the above three countries are introduced and the effectiveness of those international efforts are assessed. In the fifth chapter, correlation between the withdrawal of economic sanctions levied upon the three countries and their economic prosperity are analyzed. In the sixth chapter, authors summarize lessons from the three case studies and their implications for North Korea.
In conclusion, economic assistance could be a significant factor in the development of meaningful relations between the international community and North Korea, but it does not constitute the key factor in resolving its nuclear crises. One of the outstanding reasons why the North tried to develop and retain nuclear weapons stem from their intention to use those weapons as a means for survival, and to maintain the Kim Jung-Il regime in particular. Unless North Korea’s fundamental concern remains unresolved, the crises will continue. This means that the strategy to provide the North with ‘carrots’will not likely induce North Korea's disarmament. Therefore, the international community should engage in special efforts to resolve the crises in a more practical manner, such as by helping North Korea create a more friendly international environment and assimilate itself to the international community, but economic sanctions upon North Korea should be maintained in the meanwhile to remind everyone of the danger that nuclear weapons poses, maintain the will for enforcement of those sanctions among the international community, and to prepare responses for the various scenarios in which the North gives up nuclear weapons.

 This report analyzes Chinese policy measures to cope with the global economic crisis and the economic relationship between China and the US. It focuses mainly on China’s policy responses to the global economic crisis and their effects, followed by the impact on Sino-American economic relationship of policy changes made by China in the direction of economic development for the long term. Especially, it attempts to analyze policies related to trade, Renminbi exchange rate and the foreign reserve operations for a more precise understanding of present Sino-American relations.
After the explosion of the American financial crisis that engulfed the rest of the globe in mid-September of 2008, the Chinese government opted for a more aggressive economic stimulus policy, setting a goal of 8% economic growth by providing a boost for the domestic market. A 4-trillion yuan (US$586 billion) stimulus package over 2 years was announced on November 9, 2008, subsequently revised and confirmed with detailed expenditures for specific sectors.
In addition, the government continued active efforts to boost domestic consumption by lowering tax rates, expanding the home appliance trade-in policy, developing the 10 Major Industry Plan, invigorating the real-estate market, and taking measures for stabilizing exports etc. These policy measures resulted in the rapid recovery of the economy in terms of GDP growth, industrial production, consumption, investment, exports, employment, etc.
The government investment to overcome the crisis, however, was biased toward the infrastructure investment; including SOC investment, reconstruction of areas hit by the earthquake and housing construction etc. Consequently, growth driven by large-scale public investment intensified the imbalance between investment and consumption, and actually created new problems in the form of redundant facilities and overinvestment in state owned enterprises. Furthermore, bank loans surged as expansionary fiscal policy was implemented simultaneously with a loose monetary policy, and overcapacity became a problem in some industries. Also, the reform of state- owned enterprises fell behind and the real wages of the workers increased.
After the crisis, the trade dispute between China and the US became more intense. The bilateral trade volume was only US$2.4 billion at the time when Sino-American diplomatic ties were established in 1979, but rose sharply to US$409.2 billion in 2008 after China became a member of the WTO. The two countries have remained most important trading partners for each other even after the global recession and the US is the largest export destination and third largest source of imports for China. China has achieved the biggest trade surplus vis-à-vis the US since 2001, and the increasing volume of the bilateral trade between the two countries deepened the trade imbalance in favor of China.
In other words, American deficit in trade with China has widened since the global economic crisis, reaching its highest level in 2008. Under the circumstances, demands for a strong trade policy against China became much more vocal, which led to trade remedies against China and increasing pressure for Renminbi appreciation. But in responding to such pressures actively and aggressively, China has aggravated the bilateral trade disputes between it and the US.
Meanwhile, the dialogue channel between high-level officials of the two countries has changed after the global economic crisis. The two countries started the U.S.-China Strategic and Economic Dialogue (S&ED) in 2009 to discuss global issues in anti-terrorism, science & technology, education & culture, and environment & energy (including climate change) as well as economic and trade issues. Though S&ED has not presented obvious solutions to sensitive issues, it is still significant as a comprehensive mechanism to coordinate the various issues intertwined with national interests of the two countries and for maintaining stable bilateral relations. Also, S&ED ingrained the rising status of China in the international society, highlighting the fact that a new phase of Sino-American relations have just begun, where the two countries are now ‘equal’ partners leading the global political economic order in the 21st century.
The Chinese exchange regime has been the crux of the bilateral trade dispute even before the global economic crisis, and especially after Chinese government fixed its exchange rate against US dollar after the crisis.
Some American scholars or policy makers argue that the low exchange rate of Renminbi maintained artificially amounts to de facto subsidies for Chinese export companies that cause harm to China’s trade partners. They claim that the Chinese government's manipulation of the Renminbi exchange rate should be met with the trade sanctions. This prompted a change in China from the fixed exchange rate into the managed floating system in June 2010, but it is argued that the real currency appreciation of the Renminbi has been modest, at best.
Meanwhile, in September 2010, the US Congress passed the “Currency Reform for Fair Trade Act” aimed at China; that enables retaliation with tariff on goods imported from countries suspected of manipulating the exchange rate. Also, the second quantitative easing policy called QE2 was announced in November 3, 2010 and the current account target was presented in Seoul G20 summit in November 2010. The long argument related to the Renminbi exchange rate policy is still continuing.
The Renminbi appreciation issue is at the center of ever-sharpening dispute between the US and China. Some Chinese studies recently assessed that the undervalued Renminbi is one of the various factors causing the external imbalance of the Chinese economy. Therefore, they suggest that the policies for reforming systems such as privatization, normalization of the financial system functions, fiscal reform to minimize the internal reserves of state-owned enterprises and the reform of the factor market etc., are more important than Renminbi appreciation for decreasing the Chinese current account surplus and resolving the external imbalance.
China is actively investing much of its foreign exchange reserve investment into buying US treasury bonds. China’s US Treasury Bond purchase accounts for 33.4% of total foreign exchange reserve as of the end of September 2010 and China surpassed Japan to become the largest holder of US Treasury Bonds in 2008. Though the global economic crisis caused the US dollar to become weak, which created the risk of net loss for China in holding on to US dollar assets, China could not help but continue its purchases of US treasury bonds because it could not find any other place to invest its huge foreign exchange reserve. At the same time, buying US dollar assets has similar effects to the US economy as Renminbi appreciation so that the pressure could be relieved. Even without abrupt exchange rate appreciation, China could secure some time to change its economic development strategy from an export-and-investment driven economy into one driven by domestic consumption. In the short and medium term, the current trend where China keeps buying US dollar assets is likely to continue, but for the longer term, it is accepted that there is a rising need for a strong international currency that can replace the US dollar. The Renminbi is considered by some as an influential currency which can assume such a role, and the Chinese government has been accelerating the Renminbi internationalization after the crisis.
The bilateral trade disputes in the future will continue due to the national interests of both the US and China, and attempts to arrive at a compromise will occur at the same time. Meanwhile, a serious confrontation is expected concerning the Renminbi exchange rate policy. A consensus has developed inside China that a too rapid Renminbi appreciation is not the solution to the surplus in current accounts. On the contrary, it may harm its export industries.
Finally, we will examine the direct and indirect influences of the Sino-American trade dispute on the Korean economy so that Korea can stay prepared, as detailed analysis and strategies on Korea’s position are required in coping with a potential Renminbi appreciation.

It had been difficult to find repeating patterns of business cycles in the Chinese economy previously. Instability seems to have been its general trait, with repeated fluctuation from drastic overheating to shrinkage in short periods until the 1980s. However, as it entered the 1990s, the business cycle in the Chinese economy settled into very stable conditions and it succeeded in maintaining an economic growth rate of over 7% during the Asian economic crisis. It was deemed that all the accomplishments of the Chinese economy were due to the strengthened ability on the part of the Chinese government to forecast and adjust to changing macroeconomic conditions. Since entering the 2000s, China’s economic growth accelerated again, in connection with its WTO membership. And before the global economic crisis in 2008, China had shown consistently high rates of economic growth, stable prices and huge trade surpluses. But, since the third quarter of 2007, there were some changes in basic economic conditions in China which were represented as a high growth-stable prices pattern that had lasted almost 10 years. And from that point in time, the importance of adapting macroeconomic policies aimed at achieving conflicting goals of economic growth and price control began to increase.
When we look at the changes in major economic indices in the recent business cycle in China; such as consumption, investment and export; the most unstable index was export, being sensitive to influence from global economic conditions. Meanwhile, the Chinese government would offset the unstable export demand by controlling the government sector’s investments, including those by state owned enterprises. However, although exports are shaky, the impact of sudden change is limited in reality, because of the high proportion of processing trade in Chinese exports. In other words, even though China has a high level of dependence on exports, the percentage of exports connected to domestic added value is quite limited.
In case of China, the economic indicator with the closes connection to trends of GDP growth rate change is the industrial production growth rate, rather than demand side indicators such as consumption, investment and export. We can observe this fact in the process where the impact of the global economic crisis in the second half of 2008 was passed on to the Chinese economy. At that time, while there were no changes in consumption, investment and export indicators, the industrial production growth rate changed drastically and it lead to slowdown of the GDP growth rate.
In this paper, we studied the main determining agent of the Chinese macroeconomic policy, along with the structure and process of decision-making in order to forecast and deal with changes in macroeconomic policy. And we also suggest some examples as to how Chinese macroeconomic policy is determined.
Despite the limitations of one party rule, the process of policy decision making is becoming more regular, specialized and diversified. However, it still has the distinctness and limitations expected in a transition country. The party center and the State Council depend on achieving control and conformity in wielding the power of decision without the institutionalized or the verification procedure in the policy process. This practice, based on democratic centralism, is of a systemic nature and constitutes a limitation of structure of Chinese policy determination.
It is important to know the structural characteristics of the Chinese economy to understand its’ business cycle and macroeconomic policy. In this paper, we divide the structural characteristics into characteristics related to policy objectives and structural characteristics of each economic field.
China is likely to keep growing and could attain a high growth rate of 7~8% through steady mobilization of production factors and improvements in efficiency. And the Chinese government suggested the increase of domestic consumption, improvement of income distribution and gradual opening of the capital market in its 12th Five Year Plan, which will be implemented from 2011 till 2015. This kind of mid-to-long-term strategy might influence the structure of consumption, investment, export or the direction of the execution of the macroeconomic policy substantially.
Aside from character of its policy objectives, there are some important things concerning China’s economy. First, the portion of private consumption in the demand side is decreasing continuously. Second, there is a need for the restructuring of its enormous excess capacity. Third, there is also a need to achieve a balance between price stabilization and supply expansion in the property market. Fourth, China may use an aggressive fiscal policy that is based on sound financial capacities. We also discussed the Chinese economic policy implementation during the economic upsurge and slowdown in recent years.
This paper forwards some implications for understanding the flow of the Chinese economy, and policy recommendations for the Korean government in establishing a policy direction toward China. First of all, the export factor acts as a connection between changes in Chinese economic conditions and the Korean economy. Korea’s export to China is connected directly with Chinese exports to the world. And Korean exports to China is immediately precedes that of China’s to the world, as Korea’s exports to China mostly consist of raw materials and parts.
Second, it is important to understand and make use of changes in China’s development strategy that emphasizes the role of domestic demand in the economy. This paper emphasizes that the Korea-China FTA is the most influential method for Korea in entering the Chinese domestic consumer market. Furthermore, there is a need for active efforts to enter the Chinese services market, which is expected to grow rapidly as a result of the enlargement of the consumer market and technical development. We also need to be ready for new risks that changes in China’s development strategy might bring forth.
Third, it is necessary to understand the structural characteristics of the Chinese economy. There were changes before and after 2007, and the condition of the Chinese economy is changing, as the Chinese economy is moving from a pattern of high growth-low inflation into high growth-high inflation. We must pay attention to these kinds of pattern change because there won't be any high economic growth based on low material prices in the future. We have to pay particular attention to trends of product prices and the capital market when making forecasts on Chinese economic trends and policy changes. Also, this paper emphasizes that greater attention be given to mid-to-long-term effects on industrial competitiveness by changes in the Chinese business cycle and macroeconomic policy. Finally, this paper suggests the necessity of building a system for sequential analysis of the Chinese macro-economy, by monitoring the policy determination process and announcement of key economic indicators etc.

 

 Throughout the globe, many free trade agreements (FTAs) have been signed, negotiated or implemented. Amidst the increasing trend in FTAs, Korea has also been actively pursuing FTAs with many strategic trading partners. Recently, Korea has completed seven FTAs, including Korea-Chile FTA, Korea-Singapore FTA, Korea-EFTA FTA, Korea-ASEAN FTA, Korea-U.S. FTA, Korea-EU FTA, and Korea-India CEPA.
As for gains and losses of having multiple FTAs, the first thing that comes to attention is benefits of enhanced market access opportunities vs. costs of complexity created by rules of origin (ROOs). As existing studies have already pointed out, the positive economic effects from trade liberalization can be reduced due to the complexity of ROOs. With multiple FTAs, the operational complications stemming from different ROOs lead to higher compliance costs for local firms, which are likely to exceed benefits from FTA preferences. Therefore, firms may eventually give up on the use of FTA preferences.
Indeed, there have been growing concerns regarding the complexity and inconsistency imposed by the ROOs in Korea’s FTAs. Accordingly, there is a growing consensus that Korea needs to build its own position on the ROO and apply them to the remaining FTAs. Motivated by this necessity, this study attempts to propose possible suggestions for Korea’s FTA rules of origin.
After completing the FTA negotiations with the U.S. and EU, the remaining task for Korea’s FTA policy is to form FTAs with China and Japan. It should be noted here that in the case of Korea’s FTA with China and Japan, any kind of FTAs can be possible: a series of bilateral FTA with each country, a trilateral FTA, or a plurilateral FTA including ASEAN countries. In this regard, the scope of our discussion is expanded to include the issue of East Asian Integration, to cover all possibilities.
This study begins with a discussion of the dynamics of East Asian Economic Integration and the importance of adopting a unified ROO for this region. Then, it follows a detailed examination of ROOs in Korea’s existing FTAs as well as ASEAN+1 FTAs. The ROOs in the ASEAN+1 FTAs are relatively simple and consistent across agreements compared to the ones in Korean FTAs. In fact, the ASEAN+1 style would be a good starting point as an enabling model for the ROO in achieving East Asian Integration. Given the above, Korea’s position on ROOs in FTAs with East Asia countries should not be different from the ASEAN+1 FTAs.
Then it goes on to analyze the results of the survey conducted by Gallup Korea. In all, 1,500 firms participated in this survey and around 80 percent were SMEs. The main part of this survey asked for suitable rules of origin to receive FTA preferences. Noticeably, most of firms in the manufacturing sector chose ‘wholly obtained criteria’ as the suitable rules of origin to receive FTA preferences, which reduces the reliability of the overall survey results.
So far, five FTAs have entered into force in Korea, and the main focus of Korea’s FTA policy now is on implementation of the FTAs. However, it turns out that domestic firms still lack information about the ROOs, which is the basic concept they would need to know in order to use the FTAs. Collecting reliable information from firms is a prerequisite for a building a proper model of Korea’s own position on FTA rules of origin. Therefore, it is necessary to help domestic firms acquire correct and practical information about FTAs. Given the different level of expertise among firms; various seminars, training opportunities, or consulting should be provided frequently throughout the countries.
Finally, this study sets out guidelines for Korea’s own model of FTA rules of origin. In building Korea’s position on ROOs, emphasis is placed on the need to support the sophisticated production networks in East Asia, to maintain consistency vis-à-vis ROOs in the existing FTAs, and to improve the domestic regime related to the ROOs.
Knowing that the ROO is the result of the FTA negotiations, Korea seemed to put the least priority on the ROOs among the various FTA negotiation topics. It can be explained by the fact that Korea has not built a concrete position on ROOs. For the remaining FTAs, Korea should engage in efforts to adopt a simple, unified and consistent ROOs to reap the full benefits of the multiple FTAs.