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The Rise of China and Korea's Strategy
The recent full-blown global financial crisis, triggered by the bankruptcy of Lehman Brothers, has been called the worst financial crisis since World War II. Since China's financial institutions have been relatively isolated from ..
Chang Kyu Lee et al. Date 2009.12.30
Competition policy, Economic cooperationDownloadContentSummaryThe recent full-blown global financial crisis, triggered by the bankruptcy of Lehman Brothers, has been called the worst financial crisis since World War II. Since China's financial institutions have been relatively isolated from the global financial system, the initial impact from the global financial crisis were not so severe. Consumption in most developed countries has, however, shrunk in the aftermath of the global financial crisis. As a result, China's export industries suffered from sluggish overseas demand, meaning that the current global economic crisis clearly caused some serious damage to the Chinese economy. Amidst an unprecedented and distressing economic situation, China's policymakers quickly came up with stimulus packages of RMB 4 trillion for two years. This stimulus package effectively boosted the Chinese economy, achieving the target growth rate of 8% in 2009. It means that in the midst of a severe global economic recession, only China was able to achieve meaningful economic growth. On the other hand, the US which was once touted as the world's main growth engine, has stagnated. The unemployment rate has recently hit double digits and the status of dollar has been weakened as trust in the dollar as the key currency has been undermined. In addition, a rising China is becoming one of the world's most influential buyers at the market for oil and other natural resources. With cash flowing from huge foreign exchange reserves, China is in a comfortable position to buy oil and other strategically important resources in the world. The other example of the rise of China can be seen in the automobile industry. China was expected to produce over 13 million vehicles in 2009, becoming the world's largest automobile producer and consumer. In the automobile industry, some Chinese automakers are eager to acquire brands and technologies from foreign firms as the domestic auto industry struggles to produce high-end vehicles and break into markets of developed nations. At this point of time, it seems uncertain what the world's political and economic landscape would look like after the end of the current global economic crisis. It is, however, clearly certain that China would be the only winner in the midst of the current global economic crisis and that China will join the ranks of the great powers in world politics and economy. As illustrated above, the main purpose of these books is to analyze the rise of China and to seek out the various implications for Korea-China relations. All 22 topics were selected in order to elicit detailed strategies for Korea facing various circumstances related to the rise of China. To give some examples, Korean policymakers are recommended to maintain stable relations with China in a consistent and predictable way. Also, it will be critically important to seek a balance between Korea's relations with the US and China in the future. With respect to economic relations, Korea should not be reluctant to explore China's potentially immense domestic market and to expand the exchange between the two countries. However, Korean policymakers must urgently find ways to reverse the current overdependency of the Korean economy upon China. In conclusion, more efforts should be made to improve bilateral relations between Korea and China, politically and economically because China is fast emerging from the status of a regional power to become one of the world's powerhouses. -
The Rise of China and Korea's Strategy
The recent full-blown global financial crisis, triggered by the bankruptcy of Lehman Brothers, has been called the worst financial crisis since World War II. Since China's financial institutions have been relatively isolated from ..
Chang Kyu Lee et al. Date 2009.12.30
Competition policy, Economic cooperationDownloadContentSummaryThe recent full-blown global financial crisis, triggered by the bankruptcy of Lehman Brothers, has been called the worst financial crisis since World War II. Since China's financial institutions have been relatively isolated from the global financial system, the initial impact from the global financial crisis were not so severe. Consumption in most developed countries has, however, shrunk in the aftermath of the global financial crisis. As a result, China's export industries suffered from sluggish overseas demand, meaning that the current global economic crisis clearly caused some serious damage to the Chinese economy.
Amidst an unprecedented and distressing economic situation, China's policymakers quickly came up with stimulus packages of RMB 4 trillion for two years. This stimulus package effectively boosted the Chinese economy, achieving the target growth rate of 8% in 2009. It means that in the midst of a severe global economic recession, only China was able to achieve meaningful economic growth.
On the other hand, the US which was once touted as the world's main growth engine, has stagnated. The unemployment rate has recently hit double digits and the status of dollar has been weakened as trust in the dollar as the key currency has been undermined.
In addition, a rising China is becoming one of the world's most influential buyers at the market for oil and other natural resources. With cash flowing from huge foreign exchange reserves, China is in a comfortable position to buy oil and other strategically important resources in the world. The other example of the rise of China can be seen in the automobile industry. China was expected to produce over 13 million vehicles in 2009, becoming the world's largest automobile producer and consumer. In the automobile industry, some Chinese automakers are eager to acquire brands and technologies from foreign firms as the domestic auto industry struggles to produce high-end vehicles and break into markets of developed nations.
At this point of time, it seems uncertain what the world's political and economic landscape would look like after the end of the current global economic crisis. It is, however, clearly certain that China would be the only winner in the midst of the current global economic crisis and that China will join the ranks of the great powers in world politics and economy.
As illustrated above, the main purpose of these books is to analyze the rise of China and to seek out the various implications for Korea-China relations. All 22 topics were selected in order to elicit detailed strategies for Korea facing various circumstances related to the rise of China.
To give some examples, Korean policymakers are recommended to maintain stable relations with China in a consistent and predictable way. Also, it will be critically important to seek a balance between Korea's relations with the US and China in the future. With respect to economic relations, Korea should not be reluctant to explore China's potentially immense domestic market and to expand the exchange between the two countries. However, Korean policymakers must urgently find ways to reverse the current overdependency of the Korean economy upon China.
In conclusion, more efforts should be made to improve bilateral relations between Korea and China, politically and economically because China is fast emerging from the status of a regional power to become one of the world's powerhouses.
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The Rise of China and Korea's Strategy
The recent full-blown global financial crisis, triggered by the bankruptcy of Lehman Brothers, has been called the worst financial crisis since World War II. Since China's financial institutions have been relatively isolated from ..
Chang Kyu Lee et al. Date 2009.12.30
Competition policy, Economic cooperationDownloadContentSummaryThe recent full-blown global financial crisis, triggered by the bankruptcy of Lehman Brothers, has been called the worst financial crisis since World War II. Since China's financial institutions have been relatively isolated from the global financial system, the initial impact from the global financial crisis were not so severe. Consumption in most developed countries has, however, shrunk in the aftermath of the global financial crisis. As a result, China's export industries suffered from sluggish overseas demand, meaning that the current global economic crisis clearly caused some serious damage to the Chinese economy.
Amidst an unprecedented and distressing economic situation, China's policymakers quickly came up with stimulus packages of RMB 4 trillion for two years. This stimulus package effectively boosted the Chinese economy, achieving the target growth rate of 8% in 2009. It means that in the midst of a severe global economic recession, only China was able to achieve meaningful economic growth.
On the other hand, the US which was once touted as the world's main growth engine, has stagnated. The unemployment rate has recently hit double digits and the status of dollar has been weakened as trust in the dollar as the key currency has been undermined.
In addition, a rising China is becoming one of the world's most influential buyers at the market for oil and other natural resources. With cash flowing from huge foreign exchange reserves, China is in a comfortable position to buy oil and other strategically important resources in the world. The other example of the rise of China can be seen in the automobile industry. China was expected to produce over 13 million vehicles in 2009, becoming the world's largest automobile producer and consumer. In the automobile industry, some Chinese automakers are eager to acquire brands and technologies from foreign firms as the domestic auto industry struggles to produce high-end vehicles and break into markets of developed nations.
At this point of time, it seems uncertain what the world's political and economic landscape would look like after the end of the current global economic crisis. It is, however, clearly certain that China would be the only winner in the midst of the current global economic crisis and that China will join the ranks of the great powers in world politics and economy.
As illustrated above, the main purpose of these books is to analyze the rise of China and to seek out the various implications for Korea-China relations. All 22 topics were selected in order to elicit detailed strategies for Korea facing various circumstances related to the rise of China.
To give some examples, Korean policymakers are recommended to maintain stable relations with China in a consistent and predictable way. Also, it will be critically important to seek a balance between Korea's relations with the US and China in the future. With respect to economic relations, Korea should not be reluctant to explore China's potentially immense domestic market and to expand the exchange between the two countries. However, Korean policymakers must urgently find ways to reverse the current overdependency of the Korean economy upon China.
In conclusion, more efforts should be made to improve bilateral relations between Korea and China, politically and economically because China is fast emerging from the status of a regional power to become one of the world's powerhouses.
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The World Economy with the G-20
The ongoing financial crisis and global economic downturn is reshaping the global economic and financial architecture represented by the surge of the G-20. This book addresses the core policy agenda for the G-20 process. The G-20 ..
CEPR et al. Date 2009.12.30
Economic development, Regulatory reformDownloadContentAcknowledgements
Notes on the Contributors
1 Introduction/Yonghyup Oh
2 Global Imbalances, Twin Crises and the FinancialStability Role of Monetary PolicyHyun-Song Shin
1. Introduction
2. Twin Crises in Emerging Countries
3. Securitization and Global Imbalances
4. Financial System Perspective
5. Policies to Deal with Emerging Country Twin Crises
6. Lessons for Monetary Policy
3 Crisis-Era Protectionism and the G20: Prospect and Retrospect/Simon J. Evenett
1. Introduction
2. The G20, commercial policymaking, and protectionism
3. The resort to protectionism since the first G-20 summit in November 2008
4. The G-20's contribution to “fighting protectionism”: A preliminary assessment
5. Possible commercial policy roles for the G-20 in 2010
6. Concluding remarks
4 Proliferation of FTAs and the WTO/Shujiro Urata
1. Introduction
2. Growing Bilateralism and Regionalism in the World and in East Asia
3. FTAs and Global Trade Liberalization under the WTO
4. Economic Impacts of FTAs
5. Multilateralizing FTAs
6. Concluding Remarks
5 Regulatory Reform after the Crisis: Opportunities and Pitfalls/Thorsten Beck
1. Introduction
2. Restricting or harnessing markets―searching for a new approach
3. Failure resolution schemes―the core of regulatory reform
4. Regulatory reform―the global dimension
5. Concluding remarks
6 Global Crisis and Currency Competition in the Asia-Pacific Region/Seung-Gwan Baek and Yonghyup Oh
1. Introduction
2. Why would Asia-Pacific economies want to internationalize their currencies?
3. Determinants of international currency status
4. Policy implications
5. Concluding remarks
7 Epilogue: What policies for the G-20?
SummaryThe ongoing financial crisis and global economic downturn is reshaping the global economic and financial architecture represented by the surge of the G-20. This book addresses the core policy agenda for the G-20 process. The G-20 process is launched and the last three meetings, without any enforcement mechanism, have helped identifying the problems such that the economies were induced to coordinate on actions of macroeconomic recovery and minimize egoistic actions. The large scale global liquidity injections during the peak of the crisis and fiscal stimulus packages executed by governments were remarkably well coordinated in timing. Now as the world is recovering from the crisis, early actions of exit strategies are discouraged as the G-20 expresses concerns on the right timing.
This book is an early and timely attempt to provide proposals for policy makers and academia alike what should be considered as important policy agenda for future G-20 forums. The five themes studied in this book tackle some of the most important economic agenda in the fields of trade, macroeconomics and finance.
The contributors of the book analyses the situation leading the crisis and major macroeconomic responses required to overcome the current global economic problems Hyun-Song Shin (Chapter 2) who highlights the causes of the crisis with fresh look and proposes policy responses to deal with global imbalances. Simon J. Evenett (Chapter 3) shows one aspect of the global economic down fall. He shows that protectionist measures have actually increased during the crisis. Thorsten Beck (Chapter 4) addresses financial regulatory reforms, one of the most important agenda of the G-20 process. He highlights the roles and challenges emerging markets could face in international financial reforms. Shujiro Urata (Chapter 5) addresses the issue of free trade, another important issue in the G-20 forum. He warns that the FTAs have protectionist characters. The G-20 system will address mainly global issues, but in so doing the forum must take into account the regional interests, because the member countries will have to deal with both regional and global issues. Seung-Gwan Baek and Yonghyup Oh (Chapter 6) address a regional problem, for which a solution should be found not just by a global cooperation.
The book also includes comments of keynote speakers, discussants, panelists and other participants who expressed their views at the seminar on the G-20 progress organized jointly by the CEPR and the KIEP, in Seoul, on 20 November, 2009. They include Svein Andresen, director-general of Financial Stability Board (FSB) who expressed his wish that the G-20 forum should support FSB's reforms. He also made a remark that a global liquidity standard is part of the works that the FSB is now preparing. SaKong Il, chair of the Korea's G-20 advisory group, stresses that sustainable and balanced economic growth should be a major objective the future G-20 summit forums should address. Richard Portes, president of CEPR, says that the G-20 is the premier forum whose role and responsibility will be very different from the G-7/G-8 meetings. Wook Chae, president of KIEP, emphasizes the importance of outreaching to the non-members. Vitor Gaspar of European Commission shares this view and further stresses the importance of social cohesion as another important economic issue to be addressed in the G-20 process.
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Studies in Comprehensive Regional Strategies Collected Paper II
KIEP Date 2009.12.30
Economic relations, Energy industry -
Studies in Comprehensive Regional Strategies Collected Paper I
KIEP Date 2009.12.30
Economic relations, Energy industry -
An Evaluation of the Revised Draft Modalities for DDA Agricultural Negotiations and Policy Implications
This study delineates major contents of the 4th amendment in the modality concerning the agricultural sector, which was the most recently released and proposes directions on how to formulate strategic country schedules based on th..
Jin Kyo Suh et al. Date 2009.12.30
Multilateral negotiations, Trade policyDownloadContentSummaryThis study delineates major contents of the 4th amendment in the modality concerning the agricultural sector, which was the most recently released and proposes directions on how to formulate strategic country schedules based on the results after their evaluation.
Ever since agricultural negotiations were included as a theme of the Doha Development Agenda in 2001, modality negotiations on opening markets and reducing agricultural subsidies have continued for 9 years. Even though DDA negotiations in the agricultural sector have proceeded slowly, most people evaluate that it is now time for a conclusion to be drawn, if major countries are willing to settle politically. As mentioned in previous modality amendments, issues in agriculture have been settled already to a considerable degree. Even though differences between developed and developing countries in the core issues such as reducing agricultural subsidies, number and treatment of sensitive and special products and Special Safeguard Mechanism still remain; the differences have been bridged sufficiently for the negotiation and the 4th modality amendment, which was recently released, and revealed specific figures as single ones for subsidies and tariff reductions.
Each member country is to submit its own country schedule if the modality is settled. Therefore, it is necessary for us to prepare Korea's own country schedule to meet the demand for submission.
First, we need to establish categories with as much detail as possible to secure flexibility in providing agricultural subsidies for products for domestic support in the future. In this case, we have detailed a total of 56 products including 8 grains, 17 vegetables, 7 livestock products, 4 other crops, 9 fruits, 4 forest products, 2 mushrooms, 3 flowering plants and 2 medicinal crops.
In case of establishing product-specific AMS limits, it is the best ① to establish with average performance between 1995 and 2000 for rice, barley, corn and rape and ② to establish with performance for the recent 2 years for soy and malting barley and ③ to establish with 10% of the production amount between 1995 and 2000 for the rest of the products if Korea gains its status as a developed country. Also, it is the most reasonable for product-specific AMS limits to be established with 20% of average production amount between 1995 and 2004 if Korea remains a developing country.
Also, the de minimis may not be decided in advance because it is based on a certain ratio of production amount for each product in the said year. However, there is a need to notify if 5 or 10% of the production amount is used for basic ratio for the de minimis.
In addition, it is desirable to select a Blue Box which does not require production(New Blue Box). It is optimum for products with extremely low AMS limits to be established as Blue Box products and for the rest to be established with AMS products in case of establishing Blue Box limits for products. Particularly, rice should be shifted to the New Blue Box, rather than AMS, to increase flexibility in managing AMS.
Finally, it is necessary for the DDA country schedule to be in harmony with tariff reduction schedules in the contracted FTAs. Most major agricultural and livestock products in Korea may be protected to a substantial degree with sensitive and special products proposed in the 4th modality amendment. However, it may cause inefficient border protection, as well as difficulties in import management in case that the tariff reduction schedules in the contracted FTAs are different from those in the WTO. Therefore, it is desirable for tariff lines with small portion of imports from the contracted FTA counterparts to Korea to be independent of tariff reduction schedules, in accordance with DDA agricultural negotiations. However, it is reasonable for tariff lines accounting for most of imports from contracted FTA counterparts to Korea to coincide with the schedules in the contracted FTAs, rather than making independent tariff reduction schedules to accord with DDA agricultural negotiations.
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Study on ways to Utilize Skilled Foreign Workers in Korea Through Policy of Recruiting Foreign Students
A precipitous decline in birth rates is presently forcing Korea to seriously consider increasing the number of foreign employees in its economy. However, inflow of low income laborers would delay extinction of marginal firms, whic..
Yeongkwan Song et al. Date 2009.12.30
Economic opening, Trade policyDownloadContentSummaryA precipitous decline in birth rates is presently forcing Korea to seriously consider increasing the number of foreign employees in its economy. However, inflow of low income laborers would delay extinction of marginal firms, which will not only keep the Korean economy from converting to a high value-added form, but also give rise to many social problems.
In order to prevent such an eventuality, it is imperative that foreign manpower coming into the Korean labor market consist mainly of highly-skilled experts and professionals. Nevertheless, the focus of Korea's policy on foreign workers has hitherto been on unskilled workers, while systematic study of expert foreign workers has so far been lacking. This study is based on the idea that active use of expert workers from overseas is necessary to raise the Korean economy to a new level, and that the most effective way of accomplishing that goal is to link the policy of attracting foreign students with similar plans for expert foreign workers.
In this study, we will learn about the present state of foreign workers in Korea and policies on their employment, and those for attracting foreign students. Based on examples from the US and Japan, a search was conducted for methods on how to facilitate attracting foreign students for work as experts in the Korean labor market. To increase the proportion of foreign experts in the Korean labor market, this study suggests a more flexible visa policy and more job fairs for foreign students in order to draw in elite foreign students to the Korean labor market. Because of various limitations, this study should be considered an initial, preliminary research presenting ways on how foreign students can work comfortably as experts in Korean labor market. Therefore, a more systematic and analytical investigation on the issue would be necessary in the future.
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The World Economy after the Global Economic Crisis: Current Status and its Prospects
The collapse of Lehman Brothers in September 2008 has precipitated the US economic crisis as well as a downfall of the worldwide economy. Many countries have responded immediately to tackle the unprecedented recession by enforcing..
Heungchong KIM et al. Date 2009.12.30
Competition policy, Economic outlookDownloadContentSummaryThe collapse of Lehman Brothers in September 2008 has precipitated the US economic crisis as well as a downfall of the worldwide economy. Many countries have responded immediately to tackle the unprecedented recession by enforcing aggressive fiscal stimulus plans, lowering prime interest rates, and implementing unconventional financial measures including buy out of private bonds by central banks', something unthinkable in peacetime.
These policies proved to be quite successful in stopping the 'free fall' of the global economy. The data shows that private consumption and export are picking up, albeit slowly, while the level of employment is still in the doldrums. As for emerging markets, led mainly by China and India, they have shown signs of economic recovery that was stronger than originally expected. Developed economies, after reaching its trough, have shown positive growth compared to the previous quarter during the first and second quarters in 2009. Inferring from the fact that emerging markets are showing higher growth rates than developed countries, we can anticipate the economic trend in 2010, where emerging markets will be in the lead in terms of the recovery in the world economy, although the final signal of economic recovery will come in the form of resurgence of the developed countries.
During the first half of 2010, many of the unconventional financial measures are expected to be withdrawn, while monetary tightening such as a raise in interest rates is expected to be postponed until the second half of 2010, or even 2011. Exit strategies in fiscal policies are expected in the latter half of 2010.
There will be considerable structural change in the world economy after the global economic crisis. Rapidly emerging counties including China, India, Indonesia and Brazil have leaped ahead in the midst of economic crisis, and they will continue their catch‐up process in the future. While the United States will slowly recover from its recession, the economic power of Japan and Europe will likely shrink in the future. Australia may regain its economic significance by joining together with Asia to become Australasia. In the course of structural changes in the world economy, Korea needs to reset its external economic policies. It is especially important to elaborate region‐ or country‐specific economic strategies. As for specifics of said strategies, such measures to enhance economic cooperation with the emerging markets, to strengthen relationship with resource‐rich countries, to apply strategic foreign investment, to diversify FTAs, etc. are some of the more strongly recommended measures.
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Structural Impacts of the Global Financial Crisis and Implications for Trade Policies
In the early 1930s, extensive recession, increase in unemployment and financial crisis caused the uprise of protectionism. Accordingly, world trade collapsed from 3 US$ billion in January 1929 to 1 US$ billion in January 1933. Wha..
June Dong Kim et al. Date 2009.12.30
Financial crisis, Trade policyDownloadContentSummaryIn the early 1930s, extensive recession, increase in unemployment and financial crisis caused the uprise of protectionism. Accordingly, world trade collapsed from 3 US$ billion in January 1929 to 1 US$ billion in January 1933. What explains the variation among countries in succumbing to protectionism? In fact, economic policies connected to foreign exchange rate system are the key determinants of the trade policies in the early 1930s. This study analyzed the evidences that such trade policy measures as import tariffs, import quotas and foreign exchange controls were used as substitutes for devaluation.
In addition, this study compared the impact of the foreign exchange crisis of 1997 on the Korean economy with that of the recent global economic crisis in the context of international trade. Commonly, current account surplus in both periods were due to contraction of the overall volume of trade, especially imports. However, the pattern of terms of trade are different. The terms of trade were exacerbated during the aftermath of the 1997 crisis. However, the terms of trade have been improving recently. This is due to the fall of import prices of raw materials including oil.
Finally, this report studied the effect of the recent global economic crisis on the labor market. After the global economic crisis, unlike the United States which suffered rise of unemployment, there turned out to be no major impact on unemployment rates or labor stability. However, labor stability of women becomes worsened comparatively. This implies that labor market policies need to be focused on specific target groups.
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