The global trading environment is changing rapidly due to disruptions in global supply chains caused by the COVID-19 pandemic and the Russia-Ukraine war. This combined crisis, accompanied by inflation, tight monetary policies, and a consequent decline in investment, is changing the trade paradigm. The emphasis on participating in the Global Value Chain(GVC) and maximizing efficiency through a global division of labor is shifting to reducing the length of the value chain and developing the Regional Value Chain(RVC). In Addition, the pace of digital and green transformation is accelerating to build economic resilience for inclusive and sustainable growth.

As the global market becomes more fragmented, Africa, with its 54 countries, is attracting attention for its potential for market growth, abundant resources, and geopolitical influence in the international community. Major powers such as the U.S., EU, China, and Russia are moving to strengthen their cooperation with Africa. Korea is facing demands to diversify economic partnerships in order to achieve economic security. Therefore, it is high time to consider expanding its relations with Africa as an emerging economic partner.

Korea and Africa can establish a mutually beneficial cooperative relationship and become complementary partners in economic cooperation by combining Africa’s natural resources, labor force, and market potential with Korea’s experience in economic development and technological innovation. In the face of the increasing uncertainties in both the domestic and international economic and trade environment, Korea is seeking to diversify its export partners, secure its supply chains, and identify new growth drivers. On the other hand, Africa, in the midst of a green transition, needs to achieve industrialization and export diversification. This would enable it to expand its participation in GVC while developing RVC.

In this regard, this study aims to develop medium to long-term strategies for economic cooperation between Korea and South Africa. As a member of both BRICS and G20, South Africa occupies a significant position in the African economy, ranking first in trade volume and second in foreign direct investment within the region. It serves as a strategic gateway to entering the sub-Saharan African market and is a leader in the economic integration process of the Southern African Development Community (SADC), the Southern African Customs Union(SACU), and the the African Continental Free Trade Area(AfCFTA) agreement. In particular, as a beneficiary of the United States’ African Growth and Opportunity Act(AGOA) and the European Union’s Economic Partnership Agreements(EPA), the country can serve as a manufacturing hub for the U.S. and EU markets.

In Chapter 2, the study examines the supply chains in South Africa and Africa, and offers suggestions on how Korea can cooperate with South Africa in the automotive and critical minerals sectors, where South Africa is internationally competitive. In the African region, economic integration has been pursued, with AfCFTA, launched in 2021, serving as the flagship. AfCFTA aims to create a single market encompassing 54 countries and a population of 1.3 billion, with the goal of increasing both intra- and extra-African trade, promoting industrialization, and enhancing the capabilities of the manufacturing and services sectors. However, the successful implementation of AfCFTA depends on the development of infrastructure such as transportation, ICT, and energy.

The Southern Africa participates significantly in the global mining value chain and is engaged in downstream manufacturing activities . To enhance the regional value chain, it is necessary to expand the high value-added manufacturing sector and improve the value chain in the mining sector. Despite its advanced economic structure, South Africa relies on minerals like platinum, gold, manganese, nickel, and copper for more than half of its exports. As a result, the government is pursuing strategies to diversify exports by enhancing the competitiveness of the manufacturing sector, including automotive, clothing, agro-processing, pharmaceuticals, and electronics.

South Africa, the largest automotive producer and consumer in Africa, has a long history in the automotive industry dating back to the 1920s. The government has strategically implemented protectionist policies to boost the global competitiveness of the automotive industry, resulting in its growth to become the largest manufacturing sector. Major automotive companies have made their way into South Africa to produce cars through outsourcing. With the stable establishment of the South African automotive industry ecosystem, Japanese, European, American, and Korean automotive companies have expanded their investments in South Africa. European companies mainly export cars produced in South Africa to Europe, while Japanese companies use South Africa as a base to penetrate the sub-Saharan African market. With the implementation of AfCFTA, South Africa could potentially become a regional hub for automotive manufacturing.

Korea can view South Africa as a gateway to sub-Saharan Africa and a detour to markets in Europe and the United States. As demand grows, the prospect of cooperation in electric vehicle production becomes increasingly viable. In the long term, Korea can support the development of the regional value chain with a hub-and-spoke model, where South Africa becomes a center of finished vehicle production, while neighboring countries manufacture and supply automotive components.

As the green transition gains momentum, the demand for green minerals is predicted to soar. A stable mineral supply chain has never been more critical, prompting the US and the EU to develop strategies to reduce their dependence on specific countries and to internalize their mineral supply chains. The US established the Mineral Security Partnership(MSP) to underline supply chain diversification and stabilization, investments in the supply chain, ESG compliance, and recycling of core minerals. For Korea, active participation in multilateral organizations such as the Indian-Pacific Economic Framework(IPEF) and MSP is necessary. In addition, the establishment of industry-specific channels for technology cooperation, information sharing, and research and development is crucial to ensure a stable supply of critical minerals. Korea can support the improvement of value chains in African mineral-producing countries. South Africa, as a major producer of critical minerals, is a crucial partner for Korea. Korean companies should proactively engage in overseas resource development, and the government should formulate policies to promote investment in the mineral sector. Companies venturing into the local market should take responsibility for the entire spectrum of the critical mineral supply chain to avoid problems such as environmental pollution, human casualties, labor exploitation, and human rights violations.

In Chapter 3, the analysis focuses on the cooperation between Korea and South Africa in the area of digital trade. Globally, the demand for contactless services has surged in the wake of the COVID-19 pandemic, spurring a parallel increase in the demand for digital transformation across Africa. As a result, digital trade, encompassing the trade in goods and services using digital technology and trade in ICT services , has grown in importance. The volume of the ICT services trade in South Africa has been on a steady upward trajectory, with Europe and Asia emerging as key partners. AfCFTA is poised to expand digital trade within the African region in the future. However, hurdles such as digital taxation, consumer protection, cybersecurity, regulation, and infrastructure need to be addressed to facilitate the expansion of digital trade in the region. Korea can support the the establishment of digital trade standards and systems during the implementation of AfCFTA and help expand digital trade within Africa.

The South African government’s Integrated ICT Policy White Paper underscores the importance of digital accessibility, digital security, digital infrastructure development, digitization of government services, and digital inclusion. South Africa, home to the highest number of e-commerce companies in Africa, is witnessing rapid market growth. Among South Africa’s digital technology start-ups, the proportion of e-commerce/retail companies(10.2%) is second only to fintech(30%). South Africa has recently enacted legislation such as the Consumer Protection Act, the Electronic Communications and Transactions Act, and the Protection of Personal Information Act, in line with these strengthened regulatory policies.

The United States announced the Digital Transformation with Africa Initiative(DTA) in 2022 with the aim of broadening cooperation in the digital economy, infrastructure, human resource development, and the digital environment. The U.S. exports ICT services from global technology giants to South Africa, while primarily investing in the establishment of data centers. India boasts significant ICT service exports to South Africa in the telecommunications, finance, retail, manufacturing, and healthcare sectors, mainly to small and medium-sized enterprises. Although the volume of China’s trade in ICT services with South Africa is not substantial, Chinese telecommunications companies have recently made considerable investments in ICT infrastructure, including the construction of 5G networks and data centers in South Africa. trade in ICT services between the EU and South Africa is active, with Ireland being South Africa’s largest trading partner in ICT services and the Netherlands being the largest investor in South Africa. The EU has announced the Global Gateway Strategy, which includes projects for enhancing infrastructure in developing countries, and for digital inclusion and sustainable network development in the African region. Korea should enhance its cooperation with South Africa in areas such as technology transfer, infrastructure development, digital convergence such as e-government and smart cities, digital trade regulations, and digital skills development.

Chapter 4 analyzes cooperation in tackling climate change, a pressing issue that significantly influences economic growth in Africa. Although Africa contributes a mere 4% of global greenhouse gas emissions, it bears the brunt of climate change impacts, including increased precipitation, temperature fluctuations, and natural disasters. Given the region’s heavy reliance on fossil fuels for economic growth, the transition to a low-carbon economy is pivotal. South Africa, in particular, ranks among the world’s top 20 carbon emitters, with annual emissions exceeding 430 million tons. The 2022 floods in the KwaZulu-Natal region underscore the escalating risks of climate-related natural disasters.

The Southern African Development Community(SADC) has adopted a Green Economy Strategy that addresses sustainable resource management, energy efficiency, climate change technologies, green infrastructure, and waste management. South Africa is aligning with the Paris Agreement through its Nationally Determined Contributions(NDC) and a Low-Emission Development Strategy 2050, aiming to halve coal-fired power generation from 88% in 2020 to 44% by 2030.

In light of the burgeoning global cooperation on climate change, Korea needs to identify its comparative advantages to carve out a unique position in the South African market. China, dominating 70-80% of the global solar value chain, is actively partnering with South Africa in green energy development. China has established solar panel factories and energy storage systems in South Africa. The UK is bolstering ties with South Africa in solar energy and green hydrogen, participating in the construction of Africa’s largest green hydrogen and green ammonia plant, and supporting technology transfer and workforce training.

South Africa’s growing demand for small-scale self-generation and improved power transmission efficiency presents opportunities for collaboration in energy storage systems. In the wind and solar energy sectors, Korea should capitalize on its technological prowess and competitive pricing. With over 80% of Korea’s hydrogen demand projected to come from overseas by 2050, South Africa’s abundant renewable energy sources offer potential for green hydrogen production. Initial collaboration could focus on hydrogenpowered vehicles and hydrogen transportation, and eventually expand to renewable energy and electrolysis technology for long-term cooperation. Furthermore, Korea could consider collaboration in the nuclear power sector, considering South Africa’s emphasis on nuclear power for a balanced energy mix.

Chapter 5 delves into the potential for cooperation in South Africa’s health sector. Despite improvements in health-related Sustainable Development Goals(SDG) indicators, South Africa grapples with challenges such as a growing elderly population, a gap in health services coverage relative to the escalating incidence of non-communicable diseases, and pronounced disparities between public and private healthcare services. South Africa is striving to enhance access to medical services, boost transparency and effectiveness of these services, and broaden universal health coverage. South Africa has the largest medical device market in sub-Saharan Africa, and the market size is projected to grow by over 20% over the next five years. However, the country relies heavily on imports for medical devices, with a 90% import dependence rate, mainly from Germany, the United States, and China. The pharmaceutical industry is also substantial, but it imports over 80% of pharmaceuticals.

In Africa’s health sector, the U.S. is working to develop the health workforce, fortify pharmaceutical capacity, and construct medical infrastructure, while Japan concentrates on enhancing public health and sanitation, and establishing sustainable medical resource and disease management systems. The EU has established a Global Health Strategy to aid developing countries with integrated health services and universal health coverage(UHC). Its major projects in Africa underscore local pharmaceutical development, strengthening public health facilities, and building digital health systems.

In South Africa, the healthcare sector offers growing opportunities for Korea to collaborate in areas such as universal health coverage, medical devices, pharmaceuticals, digital health, and healthcare service management. To begin with, Korea can share its experience and best practices in economic development and policies in the health sector. Policy advice projects can be funded through ODA, while private sector participation is essential for the other sub-sectors. Anticipating the growth of South Africa’s healthcare industry and the demand for high-quality medical equipment, Korea can strategically expand exports of medical equipment. In pharmaceuticals, establishing joint ventures with local companies may be a viable option given the highly competitive market and stringent regulations. Furthermore, collaboration in digital healthcare and hospital management systems can be intensified.

In the medium to long term, it is crucial to enhance collaboration between Korea and South Africa in areas such as supply chain restructuring, digital trade, climate change response, and healthcare. Formulating a unified strategy for South Africa and sub-Saharan Africa is vital, and this should be complemented by establishing regular channels for discussion on economic cooperation. Trade agreements can serve as a catalyst for a long-term and stable economic relations. There is a growing need for the private sector to expand its presence into core sectors such as mining, manufacturing, and the digital economy. To create a stable investment environment for Korean companies, it is necessary to establish an integrated market information system, provide assistance in the initial stages of market research and feasibility studies, and expand financial support to mitigate the risks associated with entering new markets. Korea should strive to establish itself as a reliable partner that provides high-quality products and services, thereby expanding economic cooperation with South Africa. 

To achieve carbon neutrality and increase energy security, the international community is accelerating the energy transition to reduce fossil fuels and increase renewable energy. Solar power, in particular, has emerged as a fast-growing renewable energy source, as its generation costs have fallen to the level of fossil fuels and it is relatively easy to install. Demand is growing rapidly and is expected to exceed the cumulative installed capacity of coal by 2027. In addition, demand for energy storage systems (ESS) is growing in line with the expansion of renewable energy generation. Since the production of electricity from solar and wind power fluctuates depending on the amount of sunlight available and wind speeds, it is necessary to build an ESS to store the generated electricity and release it when it is needed. Among ESS, the demand for battery energy storage systems (BESS) based on lithium-ion batteries (LiB) is growing rapidly, as it is less constrained by location and can be easily dismantled and moved compared to pumped storage hydroelectricity, in which power is generated by utilizing altitude differences in locations such as reservoirs.

The problem is that China accounts for 74.7-96.8% of capacity at each stage of the global solar supply chain, and about 70% of capacity in the upstream and midstream of the LiB-based BESS supply chain.  

South Korea has technological competitiveness in LiB used for solar power generation and BESS. However, the domestic solar industry remains overly dependent on imports of solar products from the People’s Republic of China and struggles to compete with price-competitive Chinese products. In addition, Korea lost its leading position in the global market share of LiB for BESS to China in 2021.

This article analyzes how the US and Europe, the main markets for solar and LiB-based BESS, are responding to China’s dominance in the supply chain. We examine the Chinese government’s policies and company strategies behind the monopolization of each industry, and consider a comprehensive response that governments and companies can adopt.

Chapter 2 analyzes the US and European responses to China’s dominance in the solar industry, including import restrictions and policies to strengthen domestic supply chains, and identifies Chinese government policies to promote the solar industry and Chinese company strategies.

First, the United States began imposing high anti-dumping and countervailing duties on Chinese solar products in 2012, significantly reducing its dependence on imports from the People’s Republic of China. However, Chinese companies set up production facilities in Southeast Asia to redirect their exports, increasing US reliance on imports of solar products from Southeast Asia to 70-90% in 2022. In response, the US government launched an investigation into circumvention exports via Southeast Asia and identified five Chinese companies in violation, but these only amounted to a portion of the major cell and module companies in China. While the US has ostensibly reduced its reliance on imports of solar products from the People’s Republic of China, it continues to make decisions that leave room for Chinese products. The US is also pursuing a policy of building its domestic solar supply chain by offering an IRA-based investment tax credit (ITC, AEPC) and per-unit production credits (AMPC) for each stage of supply. The US solar supply chain currently lacks wafer or cell production capacity, and module production capacity is insufficient to meet Biden’s carbon neutrality target. The US is therefore trying to attract competitive companies to internalize the supply chain and expand production capacity. The US’ strategy can be summarized as: the establishment of a complete supply chain for crystalline silicon solar wafers domestically, led by South Korea’s Hanwha Solution, which is currently building the largest solar farm in North America; and the ramping up of thin-film solar cell production, led by First Solar. Through this, the US will likely succeed in internalizing the solar supply chain as it intends, however it will be difficult to wholly exclude China from the supply chain.

Europe has also imposed anti-dumping and countervailing duties on Chinese solar products since 2013, but unlike the US, it discontinued the tariffs in 2018. Since then, Europe’s dependence on imports of solar modules from the People’s Republic of China has risen to more than 80 per cent in 2021. Instead of reducing its dependence on the PRC for solar products, Europe seems to be focusing more on securing renewable energy, mainly solar, by importing large quantities of cheap Chinese products. The EU Commission’s declaration in 2019 to reach carbon neutrality by 2050, coupled with Russia’s reduction of fossil energy supplies to Europe in the wake of the Russia-Ukraine war in 2022, has put Europe in a position where it needs to secure more renewable energy faster. In response, the EU Commission published the Carbon Neutral Industry Act, identifying solar power generation as one of eight carbon-neutral strategic technologies and setting a target of producing 40 per cent of the EU’s needs locally by 2030, based on the promotion of strategic projects. The EU also announced that it would extend subsidies through the Temporary Crisis and Transition Framework (TCTF) to attract private capital investment in the sector, which requires significant funding. However, the European solar industry is already struggling in the face of low-cost Chinese products and cannot afford to increase investment.

Since the early 2000s, China has provided active support to promote exports in the solar industry, support for domestic and overseas stock market listings, and investment subsidies to localize the production of equipment and technology. However, as major markets such as the US and Europe began to impose import restrictions, China began to develop its domestic market based on the Gold Sun pilot program (50 per cent of total investment in solar PV projects subsidized) and feed-in tariff (FIT) policies. Since 2017, when the industry entered into a mature stage, subsidies have been gradually reduced and the approach to strengthening R&D capacity has shifted from unconditional subsidies to selective incentives for companies with technological prowess. As a result, China’s solar industry has been reorganized around leading players, with companies lacking core competitiveness being eliminated. In August 2021, the Chinese government abolished the FIT scheme for the solar industry, entering the phase of marketization from subsidy-led growth. In addition, the policy direction for the solar industry through 2025 is expected to focus on expanding solar power application areas such as BIPV, developing next-generation solar technologies around perovskite, and protecting indigenous technologies (e.g. adding wafer technologies to the list of prohibited and restricted technologies).

The Chinese solar industry is currently oversupplied and internal competition is fierce. Chinese companies have already gained in-house production capacity and technology, and are now strengthening their competitiveness by securing unique flagship technologies and setting industry standards that other companies cannot match. In addition, Chinese solar companies are responding to US import restrictions by expanding production bases in Southeast Asia to redirect exports, and to the US IRA by building solar production facilities in the US.

Chapter 3 analyzes the Chinese-led LiB-based BESS industry, the US and European responses described in Chapter 2, and Chinese government policies and corporate strategies.

Although the US has imposed a 7.5 per cent tariff on Chinese LiBs under Section 301 from 2019, in addition to the existing 3.5 per cent tariff, the share of US imports of LiBs from the PRC has continued to grow, reaching a 10-year high of 70 per cent in 2022. This is because, with the exception of the key mineral mining and refining stages of the US LiB-based BESS supply chain, the four core materials and cell stages already have formed domestic supply chains, but production capacity is far from sufficient to meet demand. In addition, refined products (such as lithium compounds) and cathode materials (graphite) for core materials are dominated by China. Therefore, the US seems to have adopted a realistic strategy of strengthening domestic production capacity at each stage of the supply chain, based on the IRA, and not imposing discriminatory rules on LiB for BESS. The IRA provides an investment tax credit (ITC) for BESS investment costs and a manufacturing tax credit (AMPC) for LiB cells and modules, core materials and minerals. This is a win-win situation as LiBs for BESS are almost entirely produced by Chinese and Korean companies, but the AMPC incentives will favor Chinese companies as they already have a competitive price and technology advantage over Chinese-made lithium-ion batteries (LFPs).

Europe’s LiB-based BESS supply chain is also facing a supply shortage in the region relative to demand at the upstream and midstream levels. Unlike the US, Europe has not adopted regulatory measures such as anti-subsidies for LiB in China. As a result, the share of LiB imports from China has increased proportionally, reaching 45 per cent in 2022, in line with the growing demand in the European market. The low price and volume of Chinese LiB in Europe is under increasing pressure. Along with solar, the EU Commission has included battery and storage technology as one of the eight strategic technologies in its Carbon Neutral Industry Act and aims to produce at least 40% of the annual demand for battery and storage devices in the region by 2030. It also announced the Critical Raw Materials Act (CRMA), under which China aims to achieve 10% local mining, 40% local refining (processing and treatment) and 25% local production of recycled raw materials in terms of annual consumption by 2030, and to diversify its raw material imports to avoid relying on any single source for more than 65%. In addition, a battery law will come into force in 2024, imposing high environmental standards on the battery supply chain and preventing non-compliant batteries from entering the market. Taken together, Europe’s strategy reflects concerns about over-reliance on China, as seen in the solar power section. The focus is on diversifying sources, particularly upstream in the LiB supply chain, to spread risk. However, there appears to be no movement to exclude China from the supply chain. Of course, the implementation of the EU battery legislation will make it more difficult for foreign battery companies to enter the European market by giving LiB a higher exchange rate, but this is not a discriminatory measure as European companies will also have to comply.

On the other hand, by 2020, China’s new ESS (BESS, compressed air energy storage, flywheel energy storage, etc.) will have moved from the R&D demonstration stage to the early commercialization stage. In addition, internally, BESS and compressed air ESS technologies, led by LiB, have reached world-leading levels. The Chinese government sees 2021 as the pioneering year of the new ESS industry and aims to develop it to the scale-up stage, as stated within the 14th Five-Year Plan for 2021-25. For LiB in particular, the focus is on improving productivity through technology upgrades and reducing operating costs, as well as strengthening cohesion in the domestic supply chain. The government will focus on encouraging upstream and downstream companies in the LiB supply chain to develop closer cooperation, including signing long-term contracts and clarifying quantities and prices at each stage of the supply chain to ensure stable supply.

Internally, Chinese LiB companies have formed their own alliances between upstream and downstream companies to stabilize their supply chains. In response to the US IRA, they are also building local production bases in the US, cooperating with US FTAs, expanding into Europe, and increasing investment in LiB recycling in anticipation of the European Battery Directive.

In Chapter 4, based on the above analysis, we suggest responses for the Korean government and companies. First, it is time to develop a comprehensive solar industry policy for Korea. Specifically, it is necessary to: (1) expand solar applications and subsidize production to revitalize the domestic market; (2) provide government support for exports and financing; (3) provide funding for solar companies that are expected to expand into the North American market through the US IRA; and (4) provide government R&D support to maintain the super-gap technology of perovskite solar cells and pre-emptively promote commercialization. Second, it is necessary to consider developing LiB recycling technology and increasing investment to respond to the European battery legislation and to secure key minerals. Third, Chinese upstream companies and Korean midstream and downstream companies in both the solar and LiB-based BESS industries should urgently sign long-term supply contracts in the short term, and focus on securing proprietary technologies in the long term. 

Since 2011, Timor-Leste has prioritized ASEAN membership as its highest diplomatic agenda. Although Timor-Leste had obtained the ‘in-principle’ membership and observer status, the time for the full membership has not yet been confirmed. This report analyzes the conditions and capabilities for the Timor-Leste’s accession to ASEAN and examines the support strategies and cases of major donor countries. Based on these analyses, this report aims to suggest the Korea’s plans for the development cooperation and support plans for Timor-Leste’s accession to ASEAN.

In chapter 2, the conditions for development cooperation of Timor-Leste on various perspectives including politics, diplomacy and society, are examined. We also analyzed the Timor-Leste’s general capacity such as economic conditions, Sustainable Development Goals (SDGs) implement status, etc. Timor-Leste has the unique political systems, such as dual executive system and four separations power (president, executive, legislative and judiciary). In the field of diplomacy, Timor-Leste has a identity of the Community of Portuguese-Speaking Countries (CPLP), and has been adapting an active diplomacy in the form of “Comprehensive and Collective Engagement” with ASEAN and Pacific island countries. Based on these, Timor-Leste has been strategically utilized the geopolitical importance and adopted the accession to ASEAN as its top diplomatic priority. Timor-Leste has a pyramidal population structure typical of developing countries, with Tetum and Portuguese as official languages, and Indonesian and English as working languages. Timor-Leste is a least developed country with a nominal GDP of $2.2 billion a per capita of $2,491 as of 2022. Due to the weak agriculture and manufacturing industries, it has been highly dependent on the Petroleum Wealth generated by the Bayu-Undan oil field. Recently, the economic growth rate has been gradually recovering from the impact of Covid-pandemic, but there is a concern about the loss of growth momentum due to the end of Bayu-Undan oil field development. Oil and gas takes more than the 90% share of the total export. Excluding the oil and gas, coffee can be considered as the only export commodity which accounts about 7% share of the total export. There is an urgent need to attract FDI for industrial development. However, little FDI is taking placed other than investment on oil-field development due to the weak manufacturing base and domestic demand. The working-age population of Timor-Leste is approximately 800,000 with a low labor force participation rate of 30.5%, and the education level is only about the 48.8% with primary education or less. Bayu-Undan oil field is considered as a representative natural resource. As the reserves are nearing depletion, the development of Greater Sunrise oil field as an alternative is urgently needed. The Sustainable Development Goals (SDGs) implementation status has remained at “challenges”, “significant challenges” and “major challenges” in various sectors.

The chapter 3 analyzes the Timor-Leste’s readiness and capacity to join ASEAN, especially the membership requirement stated in the ASEAN Charter and the level comparison with ASEAN member countries using key indicators. Regarding the fulfillment of the requirement of the ASEAN Charter Article 6, Timor-Leste has been considered positively. However, there are concerns about “ability” such as the weak economic development and financial situation, lack of physical infrastructure and low diplomatic capacity. Regarding the obligation of ASEAN Charter Article 5 paragraph 2 (Domestic legislation), we have monitored the legislation status to meet the obligations of ASEAN communities and other sectoral agreements based on Timor-Leste ASEAN Mobilization Plan (TLAMP) and Critical Elements for Accession (CEA). However, it is not easy to confirm whether Timor-Leste meets the requirements for ASEAN membership due to the difficulty of quantitative evaluation by the difference and wide range of membership requirements for each ASEAN communities and ‘Non-disclosure approach’ of ASEAN and Timor-Leste. Regarding the ASEAN Economic Community (AEC) 2025 Blueprint, Timor-Leste could not meet a series of requirements such as legal regulations and global trade order excluding a few trade and people movement related requirement. In comparative analysis on the capacity with ASEAN countries by key indicators, such as income level, human development index, finance, communication, urbanization, literacy rate, Timor-Leste has scored the similar level to ASEAN latecomer countries. However, in democracy index which measures democracy development, Timor-Leste has ranked on 44th among 167 countries, higher than most of the ASEAN countries. This high ranking is believed to be due to the stable establishment and operation of democratic regime without any military coup or dictatorship after the independence in 2002.

The chapter 4 analyzes the ODA and support for Timor-Leste’s accession to ASEAN from major donor countries and institutions. For the ODA analysis of Timor-Leste, we used the OECD Creditor Reporting System (CRS). We also adapted the case studies of the major donor countries and institutions regarding supports for Timor-Leste’s accession to ASEAN. The bilateral ODA had taken the major share of ODA for Timor-Leste from international community. By donors, Australia (31.3%), and Portugal (13.2%) have taken the largest share, and socialinfrastructure (60.9%) and economic-infrastructure (13.1%) have accounted for a large portion by sectors. For the case studies of the support for Timor-Leste’s accession to ASEAN, we adapted the cases of Japan and Australia for country cases, also ADB’s support for the institutional case. Japan has been supporting Timor-Leste’s accession to ASEAN by the Country Assistance Policy for Timor-Leste (2017) and by the supports through institutions such as JICA and ADB. Australia, the largest donor country of Timor-Leste, has been operating a series of mid to long-term development cooperation programs on various fields such as human development, village development, public administration, bio, agriculture & rural development, police-capacity building, etc. Australia had established a funding package (6.6 Mil AUD) in a period of 2022-2026, which supports Timor-Leste’s accession to ASEAN by capacity and infrastructure building projects such as government & private capacity building project, workshop for the partnership with ASEAN secretariat and member countries, etc. ADB has been supporting Timor-Leste by the 5-year mid-term strategy, Country Partnership Strategies (CPS) since 1999. During the period of Timor-Leste’s independence, ADB had it's focus on recovery & maintenance of infrastructure, but the support area has gradually expanded to pandemic, climate change, SDGs, etc. ADB’s supporting strategy for Timor-Leste’s accession to ASEAN has its main focus on the capacity building projects by Capacity Development Technical Assistance (CDTA). The results of analysis of supporting case studies of major donor countries and institutions implies that Korea also needs to actively prepare the support plans in the area of capacity building for Timor-Leste’s accession to ASEAN, national system building, infrastructure, etc.

The chapter 5 provides the forecast of Timor-Leste’s full membership to ASEAN, and policy recommendations for Korea’s supporting plans. Although Timor-Leste has been granted the ‘in-principle’ accession and observer status at the ASEAN summit in November 2022, the formal accession to ASEAN has been delayed due to reasons including the concerns about Timor-Leste’s lack of preparations and capacity, disagreement among ASEAN member countries, etc. The majority of the ASEAN countries have a positive stance on Timor-Leste’s accession to ASEAN, but there is uncertainty that the situation may change depending on a certain moment or political situation. For Timor-Leste, accession to ASEAN has great significance, including economic benefit, participation to regional economic integration, establishment of security and collective identity, national growth and advancement, geopolitical interest as well as ‘the second founding of the nation’. From ASEAN’s perspective, Timor-Leste’s accession to ASEAN has implications such as ASEAN’s expansion, peace and stability in Southeast Asia, and containment of China’s influence. To support Timor-Leste’s accession to ASEAN, Korea needs to establish strategies focused on capacity building to implement the roadmap, the Korea-ASEAN Solidarity Initiative (KASI), and its strengths and competitiveness, as follows. First, Korea needs to support Timor-Leste in enhancing the foreign trade capacity and trade law experts. Second, human resource development and training, and third, support for the construction of digital infrastructure is required. To expand development cooperation with Timor-Leste, Korea should expand its ODA focused on the industrial restructuring & diversification, rural development, economic infrastructure development, etc.

Korea should prioritize the foreign trade capacity and trade law expert of Timor-Leste, and promote the its support for Timor-Leste’s accession to ASEAN and development cooperation plans as outlined in Chapter 5. At the same time, Korean government needs to stipulate the supports for Timor-Leste’s accession to ASEAN in the Country Support Plan (CP) for Timur-Leste. In addition, there is a need to consider tripartite cooperation with Indonesia, Vietnam and ASEAN Secretariat, ways to link with the approaches to WTO accession, and select & focus strategy based on the Korea’s competitiveness. 

Global supply chain disruptions and the ensuing rise in uncertainty have rendered it imperative for each country to reassess its foreign policies. Amidst these shifts in the international landscape, Mexico has recently garnered considerable attention as an ideal candidate for nearshoring to penetrate the North American region. Mexico emerges as a compelling nexus, offering a strategic gateway for North America, Central America, and South America expansion, alongside its abundance in core minerals crucial for rechargeable battery manufacturing.

South Korea, confronted with national imperatives such as ensuring a stable supply chain for critical minerals, diversifying exports, expanding market reach, and adapting to supply chain restructuring, must recognize the strategic importance of Mexico. The primary objective of this study is to delve into Mexico’s strategic significance and explore avenues for collaboration. Specifically, this study conducts a comprehensive analysis of Mexico’s diverse trade and policy initiatives, categorizing them into sectors such as supply chain restructuring, digital transition, renewable energy, and health and medical. Subsequently, we aim to outline directions for collaboration within each sector.

Mexico, forming a pivotal axis within the North American economy alongside the United States and Canada, is not immune to the recent U.S.-led supply chain reorganization. It is believed that Mexico aims to leverage this supply chain restructuring for its own benefit. Seizing the opportune moment, as it garners attention as an optimal candidate for nearshoring, Mexico seems poised to integrate into a new supply chain or global value chain while fortifying its existing global value chain. Consequently, the analysis and forecast of Mexico’s supply chain policies are crucial for identifying fresh opportunities for collaboration.

As Mexico experienced growth in exports across various industries, its engagement in global value chains also strengthened. This was propelled by a rise in the percentage of foreign value-added, attributed to the expansion of imports of intermediate goods from abroad. The heightened backward linkages in Mexico, coupled with its substantial exports to the United States, underscore the country’s significance as a hub in the Americas and a strategic gateway for entering North America.

Another noteworthy aspect in the context of the global value chain is that Mexico’s share of value-added in its exports to the United States is lower compared to its trade with other countries. This presents a concerning scenario for Mexico, indicating a potential inclination to undertake various political and policy initiatives aimed at augmenting the value-added of its exports to the United States in the future. Indeed, Mexico revised its mining law in April 2022, and in February 2023, a bill was passed, transferring the responsibility for buried lithium to the Ministry of Energy and designating a portion of Mexico’s Sonora region as a lithium mining protection area. This move is intended to further enhance domestic value-added and strengthen Mexico’s forward linkage in the global value chain by minimizing foreign capital participation and reinforcing state control in the mining sector, where the country’s value-added and global demand are substantial.

In contrast, in technology-intensive industries characterized by low value-added, Mexico is adopting a strategy to integrate into the new global value chain by increasing foreign value-added. The tax benefit legislation, announced by the Mexican government in October 2023 to promote nearshoring, can be interpreted as a measure encouraged against this backdrop.

Meanwhile, with the global spread of digital transformation, Latin American countries, including Mexico, are actively embracing digital technology and intensifying efforts to transition towards a digital society. The impact of digital transformation is evident in significant changes across major countries in Latin America, with governments expanding their initiatives to develop digital infrastructure and e-government. As society undergoes rapid transformation due to digital advancements, and new collaborative needs arise, it becomes essential to assess Mexico’s digital transformation policy, trade, and commerce issues, and explore opportunities for cooperation.

Mexico’s digital environment is exhibiting ongoing improvement, as reflected in digital access and usage indicators. Notably, Mexico’s Mode 1 imports (cross-border supply) are experiencing a notable uptrend, particularly in distribution services, transportation services, and insurance and financial services.

As part of its digital transformation phase, Mexico is implementing various policies to establish norms and address unfair practices in the digital sector. Simultaneously, the country is formulating the National Digital Strategy 2021-2024 to outline the government’s overarching digital policy direction. A central focus of this strategy is universal Internet accessibility, affirming the Mexican government’s commitment to prioritizing the resolution of the digital gap problem.

Examining the digital-related provisions of Mexico’s recent trade agreement, it is evident that Mexico intends to refrain from permanently imposing tariffs on electronic transmissions. The country is concurrently introducing a legal framework and measures designed to protect consumers. Furthermore, in agreements such as the Mexico-Panama FTA, CPTPP, and USMCA, Mexico is incorporating highly binding provisions that ensure the free movement of data, including personal information, through electronic means for the purpose of conducting business among the agreement parties.

Notably, Mexico’s digital trade policy aligns with U.S.-led liberal digital norms. This strategic direction is anticipated to play a pivotal role in establishing a foundation for the expansion of trade and investment in digital products and services within Mexico.

Turning our attention to renewable energy, Mexico boasts strengths in renewable energy production, owing to its geographical and climatic characteristics. Consequently, with the growing global demand for renewable energy, investment opportunities in Mexico’s renewable energy generation of electricity are expected to expand, leading to an increased demand for technological cooperation in this field. It is opportune to proactively examine Mexico’s major policies related to renewable energy at this juncture and forecast its future direction. Such insights are valuable as crucial data in exploring ways for cooperation between Korea and Mexico.

Mexico’s electricity production is predominantly fossil fuel-based. In contrast to the previous administration, the AMLO government is pursuing a policy that prioritizes fossil energy development over renewable energy, resulting in the suppression of the latter. This seemingly restrained stance on renewable energy is believed to be geared towards securing energy independence and security by reverting to the pre-2020 energy reform system. This involves diminishing the influence of foreign companies while bolstering the market power of state-run entities. Nevertheless, considering that Mexico’s domestic laws and civil society actively support greenhouse gas reduction and climate change initiatives, it is essential to comprehend changes in Mexico’s energy policy under the assumption that Mexico will engage in climate change responses in the mid to long term.

The health and medical sector in Mexico has become a focal point for cooperation, especially during the COVID-19 pandemic, as the country faced challenges in securing essential medical supplies such as masks and vaccines. Due to its robust manufacturing base and proximity to the United States, notable shifts are evident in the health and medical devices and services sector post-COVID-19. With an increasing number of companies, domestic production of Mexican medical devices is on the rise. Measures are being introduced to facilitate market access and alleviate regulatory burdens. If this trend persists, Mexico’s exports in the health and medical sectors are expected to grow, necessitating exploration of opportunities for cooperation with Mexico to diversify Korea’s exports.

In this context, the AMLO government revised the Federal Procurement Act on Medicines and Medical Supplies to streamline the international procurement of medical devices, medical services, and pharmaceuticals. Additionally, efforts are underway to resume treatment for diseases unrelated to the COVID-19 pandemic. As interest in digitalization has surged in both the public and private health and medical service sectors due to the pandemic, technology adoption has proliferated in the medical industry. A policy to promote this technological integration was actively pursued.

Given the challenges that Mexico is currently confronting and its recent policies in the four areas mentioned above, what cooperation can we explore with Mexico?

In the ongoing initiative to attract foreign investment, as promoted by Mexico in the fields related to semiconductors, batteries, and electric vehicles, Korea must establish itself as a key participant in the value chain centered on North America through robust trade with Mexico. Simultaneously, efforts should be directed towards expanding market share in North America. To achieve this, various avenues, such as the negotiation of a Korea-Mexico FTA or becoming an associate member of the Pacific Alliance, should be explored. Given the increased activity of Chinese manufacturing companies in Mexico amid the recent US-China competition, a different landscape is emerging compared to before. Consequently, there is a potential risk that Korea’s position in the global value chain centered on North America might weaken in the future.

With the anticipation of increased nearshoring in the future, it is crucial to focus on cooperation in infrastructure and transportation-related services in Mexico. The growth in industrial complexes, driven by the influx of multinational companies into the manufacturing sector, will naturally elevate the demand for infrastructure construction. Moreover, given Mexico’s strategic approach to participating in new supply chains in technologyintensive industries such as semiconductors and batteries, ensuring stable and efficient transportation becomes paramount. Continuous attention must be devoted to the transportation service sector.

In the face of global uncertainties, including supply chain disruptions, Mexico may be inclined to decrease its excessive reliance on the North American economy in the long term. Consequently, anticipating potential policy initiatives by Mexico to diversify exports, currently concentrated in the United States and Canada, towards Central and South American countries becomes crucial. It is imperative to be mindful of preparing cooperative measures that recognize Mexico as a strategic gateway for entering Central and South America.

With regard to collaboration in the digital transformation, the Korean government, local authorities, education-related organizations, and private companies might consider actively suggesting partnerships with Mexico’s relevant organizations in digital education. It is anticipated that in the future, a substantial portion of the population in Mexico, who previously lacked access to the digital environment, will swiftly become part of the digitally engaged population. However, the Mexican government has not implemented significant policies focused on enhancing digital literacy for those vulnerable to internet access issues.

Moreover, the hastening pace of digital transformation is amplifying the need for and underscoring the significance of cybersecurity. In this context, a collaborative project can be envisioned, wherein different agencies of our government offer guidance based on their diverse experiences in formulating Mexico’s cybersecurity policy and establishing a cyber attack response system. The escalating demand for cybersecurity is not only rapid but, given the transnational and interconnected nature of cyberspace, elevating the cybersecurity standards of partner countries can also enhance our own cybersecurity.

While the AMLO government exhibits a reserved stance toward renewable energy, the demand for distributed power generation using renewable sources is substantial, given Mexico’s inadequate transmission and distribution infrastructure. In line with the PRODESEN 2023-2037 energy development plan, the Mexican government intends to expand distributed power generation. Consequently, there is an opportunity to explore participation in the construction of distributed electricity generation facilities under 500kW, which are subject to fewer government regulations. Besides meeting the demand for distributed power generation, it is crucial to consider this option from a short-term perspective as it does not necessitate approval from the Energy Supervisory Commission.

In Mexico’s pharmaceutical production and consumption market, the competition between global pharmaceutical companies and local firms is intense, posing challenges for Korean companies entering the market as new entrants. Therefore, establishing strategic partnerships with local pharmaceutical companies and distributors is crucial, and one viable option is to engage in license-based drug exports. Moreover, considering the specificities of Mexico’s drug registration and procurement environment, if a product is equivalent to patented offerings and demonstrates price competitiveness, it has the potential to gain acceptance in the market. Pharmaceutical companies can facilitate product uptake through various cooperation channels such as academic conferences and exhibitions. It is essential to enhance market awareness by consistently disseminating information.

As a result of Mexico’s policy to broaden access to universal health and medical services, the demand for medical supplies in hospitals and clinics, diagnostic equipment including imaging devices, and general home health care devices is on the rise. Notably, the policy targets the provision of services to underprivileged individuals residing in small cities, rural areas, and remote regions, with the potential for increased utilization of remote medical services, particularly due to the COVID-19 pandemic.

Considering the capabilities of Korean companies in the health and medical fields, the case of India’s collaboration with Mexico holds significance. The Indian government and pharmaceutical companies actively initiated a collaborative system with Mexico during the COVID-19 pandemic when Mexico sought alternatives to expensive branded drugs and raw materials traditionally provided by pharmaceutical companies in developed countries. Through strategic partnerships, India successfully entered the market by proactively establishing a cooperation system aligned with the health and medical environment and demands. This included actively promoting technology transfer for local manufacturing of vaccines and medicines. Therefore, by supporting companies’ advancement through the establishment of a cooperative network between policy agencies and regulatory authorities, there is a need to reexamine and revitalize the representative cooperation channels established in the past by both of Korea and Mexico.

Recently, China has signed and applied for membership in several trade agreements, including RCEP, CPTPP, and DEPA, which are expected to promote the reform and opening up of China’s trade sector. Specifically in the area of services trade, China needs to prepare itself for transitioning from the current positive list approach to the negative list method within three years after the implementation of RCEP in 2022, while also adopting an internationally recognized methodology. Several policies are being implemented. This study analyzed the Hainan Free Trade Port policy, which prioritizes the introduction of regulatory reform and trade liberalization measures in China’s services sector. It aimed to explore ways for Korea and China to cooperate in the service industry while also assessing the potential for decentralizing the functions of the Hong Kong Free Trade Port.

The conclusions and implications of this study are as follows. First, China is initially promoting the reform and opening up of Hainan’s service industry through the implementation of market access relaxation measures and negative lists, which constitutes a fundamental aspect of the Hainan’s Free Trade Port policy. China is anticipated to elevate trade standards by conducting openness assessments, amending domestic laws and regulations, and simultaneously applying a negative list and market access relaxation measures for the Hainan Free Trade Port, renowned for its highest level of openness.

Second, although the product trade liberalization and the operation of the tax system at the Hainan Free Trade Port are expected to be partially aligned with those of Hong Kong, there still remains a need for further progress in promoting capital movement liberalization. Consequently, in the medium to long term, Hainan is expected to offer foreign investors entry conditions comparable to Hong Kong’s tax system. However, unless significant progess is made in opening up the services sector and liberalizing capital movements, Hainan’s potential role as a free trade port may be limited.

Third, changes in Hainan’s trade, investment, and duty-free shopping need to be interpreted in light of the impact of the COVID-19 pandemic. Notably, there has been a noticeable increase in imports affected by Hainan’s duty-free allowance adjustments and duty-free import measures. Additionally, the services trade has recently shifted from a deficit to a surplus, primarily due to the escalation of transit trade. In terms of investment, domestic investment by Chinese companies has notably surged, particularly in industries with preferential corporate income tax rates and those with corporate income tax exemptions on offshore earnings. At present, the investment surge is primarily driven by domestic companies, but the foreign investment is poised to rise, depending on the outcomes of Hainan’s policy implementations The impact of these policies on duty-free shopping is expected to be felt after 2023. If Chinese citizens’ overseas duty-free shopping decreases in the future, it is expected to have a significant impact on our country.

From our country’s perspective, the first step is to carefully analyze Hainan’s upcoming irregular announcements regarding reforms and opening up in the service sector, and use them as a reference to prepare a negotiation plan that is advantageous for our country in the future Korea-China FTA service and investment negotiations. By leveraging insights from Hainan’s policies, we can assess China’s reform and opening strategies in terms of priority areas, direction, and pace. Additionally, we can explore methods to streamline market access and implement national treatment at the regional level.

Second, given Hainan’s burgeoning growth prospects, there is an urgent need to expand cooperation, with particular emphasis on the cosmetics and medical sectors. While Hainan has risen to become the second-largest region for cosmetics imports in China, Korea’s response pales in comparison to rival nations. Simultaneously, China is utilizing Hainan as a testing ground for institutional reforms within the medical sector, thereby bolstering Hainan’s role as a gateway for foreign companies seeking to penetrate the Chinese medical market.

Third, it is necessary to prepare for enhancing the long-term competitiveness of Hainan’s service industry. Hainan aims to enhance its competitiveness by adopting international service standards similar to those in Hong Kong. This will be achieved by implementing mutual recognition of professional qualifications and providing preferential treatment. If the overseas consumption of services by Chinese citizens shifts to domestic demand, this could potentially impact Korea’s service exports to China. This shift might directly affect duty-free shopping for tourists and medical tourism. Therefore, it is imperative for us to explore ways to enhance the competitiveness of our country’s service industry while providing products and services in Hainan. 

This study analyzes Australia’s medium-term and long-term trade strategies with a focus on supply chains, digital trade, climate change, and development cooperation. Based on the Australian government’s policy measures in response to these key economic issues, this study derives cooperation plans between Korea and Australia. The authors diagnose the situations Australia faces in these four areas to understand the background of the Australian government’s policy responses. Based on an analysis of Australia’s domestic industrial and international cooperation policies, it discusses ways in which Korea and Australia can expand their cooperation.

In the 2020s, the world has experienced a global outbreak of pandemic, strategic competition among major powers, and a series of armed conflicts between nations, leading to supply chain crises and an expansion of protectionist trade policies. As a result, nations are formulating strategies to expand cooperation, focusing on alliances or groups of nations with shared values. Korea also aims to expand economic solidarity with likeminded countries such as Australia to establish resilience against potential deteriorations in global economic conditions coming from geopolitical risks.

In regard to restructuring of the supply chain, Australia has faced a series of challenges caused by disputes with China. As the trade relations between the two countries deteriorated, retaliatory tariff measures and import restrictions followed. With China being Australia’s largest trading partner, and both countries heavily relying on each other for various products, these trade disputes had a significant impact on the stability of supply chains. While Australia was successful in swiftly diversifying its trade partners, the Australian government recognized the necessity of establishing a national supply chain management system and strategies to adapt to rapid changes in the international economy.

The Australian government consistently endeavors to strengthen the stability of its supply chain through international cooperation. It has fostered extensive supply chain cooperation in manufacturing, healthcare, energy resources, and food resources through initiatives such as the Supply Chain Resilience Initiative with India and Japan, the Australia-UK Joint Supply Chain Resilience Initiative, cooperation within Quad, and active participation in the IPEF. Additionally, the Australian government has established the Office of Supply Chain Resilience under the Department of Industry, Science and Resources to coordinate collaboration among departments. The Australian government also announced the Critical Minerals Strategy in 2019, 2022, and 2023, focusing on critical raw minerals for key strategic industries.

This report proposes enhancing bilateral collaboration between Korea and Australia in supply chain early warning systems. As Korea has launched its own national strategy to secure core minerals, the two nations can engage in stronger communication for the supply and demand of critical raw minerals. The comparative advantages of both countries in international technology certifications, technology standardization, ESG, and eco-friendly mining technology allow joint projects in mineral infrastructures to be promising and productive.

Leveraging one of the world’s most advanced digital transformations proceeding in Australia’s private sectors, the Australian government is promoting its Digital Economy Strategy and Digital Trade Strategy. The nation plans to emerge as a global top ten digital economy and society by 2030, toward which it is engaged in multiple core tasks, including efforts to commercialize quantum technology and 5G technology innovation. In pursuit of advanced digital trade, Australia’s Department of Foreign Affairs and Trade has established 13 digital trade rules to focus its management capacities.

Based on the leadership role it already plays in digital trade at the APEC, OECD, and G20, the Department of Foreign Affairs and Trade remains proactive in leading digital trade-related cooperation agendas. This research proposes upgrading the Korea-Australia bilateral Free Trade Agreement to establish norms for upcoming digital trade expansion and suggests coordinating new agendas for APEC in 2025, hosted by Korea. Additionally, it recommends active cooperation between the two countries in setting international standards for digital trade and collaborating on quantum technology development by aligning Korea’s Quantum Science and Technology Strategy and Australia’s National Quantum Strategy for joint projects.

 To actively respond to societal and economic changes caused by climate change and adapt to structural changes in related industries, the Australian government has formulated national strategies such as Powering Australia, Climate Change Act 2022, and the National Hydrogen Strategy. The Powering Australia strategy is the government’s primary response to climate change, focusing on the utilization of renewable energy sources, reducing greenhouse gas emissions, creating jobs in related industries, and easing electricity cost burdens. The National Hydrogen Strategy encompasses 21 measures to foster hydrogen-related businesses as a core energy industry in the future.

In addition to promoting national strategies, the Australian government is broadening its efforts toward international cooperation for climate change response, aligning with Japan, Germany, Korea, and others. Korea is expanding climate change cooperation with Australia in both governmental and private sectors. In 2022, multiple MOUs related to climate change response were signed, and a Korean firm was selected for financial support from a state government in Australia. Building upon the existing collaborative achievements between Korea and Australia, this study proposes advancing cooperation in the hydrogen sector, enhancing collaboration in eco-friendly transportation, and expanding joint discussions on trade barriers in carbon. Particularly, to strengthen cooperation in the hydrogen sector, there is a need to develop medium- to long-term blueprints for collaboration in hydrogen carrier ships, reinforce support for companies that enter the Australian hydrogen sector, provide financial support for pilot projects, establish local company information databases in Australia, and streamline customs clearance for related products.

Australia’s recent development cooperation initiatives, in line with its Indo-Pacific strategy, have been heavily focused on Pacific Island nations and Southeast Asian nations. Australia’s International Development Policy prioritizes Pacific Island nations, and Australia aims to stimulate private sector investments in Southeast Asian nations based on its Southeast Asia Economic Strategy to 2040. Since Korea is also formulating its own IndoPacific strategy, Australia’s achievements in developmental cooperation targeting Pacific Island nations and Southeast Asian nations provide significant insights for Korea to enhance its development cooperation initiatives.

This report suggests for the Korean government to leverage cooperation with Australia to explore tailored and optimized development cooperation programs for Pacific Island nations. Further emphasis is placed on the need for coordination among donor countries to prevent inefficiencies resulting from aid competition. Exploring promising avenues for trilateral cooperation among Korea, Australia, and the US or supporting Australia-led development cooperation programs should be considered. Regarding ASEAN, exploring options to jointly support relevant projects for implementation of the ASEAN Outlook on the Indo-Pacific (AOIP), already supported by both Korea and Australia, could be considered. Building upon the major cooperative projects identified in the existing multilateral channels between Korea, Australia, and ASEAN, Korea and Australia need to expand cooperation in emerging fields such as Southeast Asian infrastructure development, smart cities, and cyber/digital innovation. 

Digital transformation represents a paradigm shift that covers every facet of corporate management, including production, development, ordering, customer management, and business strategy. Rooted in digital technology, this transformative shift has become essential for corporate survival, fostering industrial competitiveness, elevating the quality of life, and contributing to national development. While the attention on digital transformation has escalated recently with the rapid integration of fourth industrial technologies such as the Internet of Things, 3D printing, cloud computing, big data, and artificial intelligence, its essence is deeply related to long-term processes like process automation and the evolution of information and communication technologies (ICT). This study investigates global and industry-specific trends in digital transformation, examining its correlation with the labor market in the United States, Germany, and Korea, and analyzing pertinent labor market policies.

In Chapter 2, the study examines various definitions of digital transformation from previous research and measures and compares the digital transformation of industries in major countries using indicators such as ICT capital stock, ICT intermediate input, and robot capital stock. The analysis of data from 2000 to 2017 indicates a significant increase in digital transformation in most of the 16 countries studied. While Korea maintained a top position in ICT equipment capital stock and intermediate spending from 2000 to 2017, software concentration and intermediate spending remained in the mid-range. Particularly, Korea’s robot concentration in manufacturing increased significantly, making it the country with the highest robot concentration among the 16 nations.

Despite Korea’s prowess in traditional digital transformation, its adoption of digital technologies (Internet of Things, 3D printing, cloud computing, big data analysis, and artificial intelligence) between 2018 and 2021 lags behind the OECD average, particularly in artificial intelligence. This analysis underscores Korea’s dominance in conventional digital transformation but reveals a deficit in adoption of cutting-edge technologies.

Chapter 3 delves into the intricate relationship between industryspecific digital transformation and employment dynamics in the U.S., Germany, and Korea. The analysis unveils diverse correlations between digital transformation variables and employment across countries. Notably, South Korea experiences a unique scenario where the positive and negative effects of digital transformation are concentrated among high-skilled workers, distinguishing it from the polarization observed in the U.S. and Germany.

Chapter 4 examines global policy responses to the transformative impact of digital transformation on the labor market. Categorizing policies into employment, education, and social security domains, the study emphasizes the need for adaptive measures to address the evolving employment landscape. Noteworthy examples include the introduction of minimum wage systems and collective bargaining rights for platform workers in response to the changing nature of employment.

Drawing upon the cumulative insights from Chapters 2 through 4, Chapter 5 provides key implications of this study. It supports for a shift in Korea’s digital transformation focus towards the service industry and underscores the importance of tailored policies for small and medium enterprises (SMEs) to bridge the technology adoption gap. The analysis of the labor market highlights the imperative of upskilling and reskilling programs to mitigate the impact on low- and medium-skilled workers.

In conclusion, the study underscores the multidimensional nature of digital transformation, ranging from its historical trends to its intricate relationship with the labor market and the evolving policy landscape. As countries navigate the challenges and opportunities presented by digital transformation, adaptive policies and a holistic approach are essential to ensure a balanced and inclusive transition in the workforce. 

Since the 2008 global financial crisis, Korea's external financial sector has undergone significant structural changes. Korea's net international investment position (IIP), the difference between external financial assets and liabilities, achieved a surplus in 2014 for the first time in its history. In 2018, the net IIP, excluding foreign exchange reserves, also turned into a surplus and has steadily expanded since then. This structural shift has broader implications beyond numerical values. It can impact financial stability and the pursuit of financial internationalization policies, which have traditionally been challenging to reconcile in Korea. Therefore, this study analyzes the influence of net IIP on financial market stability, economic volatility, and financial internationalization. It also examines financial internationalization procedures in the cases of Germany and Japan. Based on these analyses, this study aims to provide policy implications that can enhance Korea's economic stability and strengthen its financial internationalization capabilities.

This study consists of six chapters, excluding the introduction. Chapter 2 examines the trends in Korea's International Investment Position (IIP) and compares them internationally to identify the characteristics of Korea's IIP. When we break down Korea's net IIP into sub-categories, foreign direct investment and other investment turned into surpluses in the early 2010s, and equity portfolio investment also turned into surpluses in 2022. This shift was driven by several external factors in the Korean economy, such as the persistent current account surplus, the expansions of foreign direct investment by companies since 2000, the expansions of bank lendings to Korean overseas subsidiaries, the rapid growth of overseas investments by the general government (notably, the national pension fund) since the global financial crisis in 2008, and the elaboration of overseas investments by securities companies, insurance companies, and individuals. In addition to these observations, several characteristics can be drawn from international comparisons. Firstly, there are only a few countries that have a surplus in their net IIP. As of 2022, only 15 out of 46 major countries have net IIP surpluses, with Korea ranking 11th in net IIP (as a percentage of its GDP). Secondly, most of these surpluses have been achieved recently, since 2010. In case of Korea, its net IIP (excluding foreign exchange reserves) turned positive in 2018, somewhat later than other countries. Lastly, it is important to note that countries that have moved from a deficit to a surplus, including the case of Korea, have generally remained in surplus for the most part. This implies that the shift to a net IIP surplus represents a structural change rather than a temporary one.

In Chapter 3, we investigate the relationship between a country's status as a net creditor and the stability of financial markets, specifically focusing on episodes of sudden capital inflows and outflows. We measured surge, stop, flight, and retrenchment in accordance with the definitions provided by Forbes and Warnock (2012) for the four distinct episodes of sudden capital inflow and outflow. Our empirical analysis comprises a dataset of 66 countries, covering the period from the first quarter of 2001 to the fourth quarter of 2020. The analysis revealed that the variable of interest in Chapter 3, whether a country is a net creditor, is closely associated with the retrenchment episode among the identified episodes. If a net creditor country experiences a stop episode, the probability of retrenchment occurring in the following period increases. In other words, net creditor countries act as a buffer, preventing a deterioration in external soundness as foreign assets return to the home country in potential crisis situations. This suggests that Korea, a country still affected by the trauma of the currency crisis, has a market-friendly stabilization mechanism that can help mitigate the risk of potential currency crises.

In Chapter 4, we delve into the relationship between yields on external financial assets and liabilities and consumption growth to assess whether an international risk-sharing mechanism can diversify the risk of consumption fluctuations in domestic and foreign. Based on the consumption-based asset pricing theory, the relationship between external financial assets and liabilities and domestic and international economic fluctuations, measured by consumption, was examined in a three-stage model. The result reveals that the yields of external positions in emerging economies exhibit procyclical to the impact of global risks while counter-cyclical to domestic risks, indicating that emerging countries have international risk-sharing through their external financial assets and liabilities. On the other hand, the yields on external positions of advanced economies demonstrate independence from both global and domestic risks. We also find that the unexplained composition of these yields positively correlates with the size of net IIP and the level of economic and financial market developments. While external positions can mitigate idiosyncratic risk through international risk-sharing mechanisms while magnifying systemic global risk in emerging countries, advanced economies, including Korea, mitigate international risk-sharing through the interaction of their external balances and gain stable yields regardless of domestic and global fluctuations. Notably, the net IIP contributes additional returns on the net return on external financial assets and liabilities.

In Chapter 5, this study examines how net international investment position (IIP) impacts the international competitiveness of financial services, measured by the revealed comparative advantage of financial service exports (referred to as financial service RCA). The results of the fixed effect panel analysis reveal that external financial assets have a positive effect on the financial service RCA, and there is a significant difference in the impact's magnitude based on whether the period had a surplus or deficit in net IIP. Specifically, the positive relationship between external financial assets and financial service RCA is more pronounced during periods of net IIP surplus compared to net IIP deficit periods. Furthermore, we investigate the relationship between financial service RCA and subcomponents of external financial assets, such as direct investment, portfolio investment, and other investment. The empirical results show that portfolio investment has a positive effect on financial service RCA during net IIP surplus periods, while other investments have a positive effect on financial service RCA during net IIP deficit periods. This may be attributed to the shift in global fund flows from other investments to portfolio investments in the aftermath of the 2008 global financial crisis when the frequency of net IIP surpluses significantly increased. As for direct investment, no statistically significant linkage to financial service RCA was found.

Chapter 6 examines Germany and Japan's financial internationalization cases and compares them with Korea to identify commonalities and differences. Germany and Japan, like Korea, have a surplus in net IIP and a significant presence in manufacturing industries. However, they exhibit higher levels of financial internationalization and financial competitiveness than Korea. Regarding the degree of financial internationalization, Japanese financial companies have the highest proportion of overseas assets among the three countries, followed by Germany, with Korea having the lowest. While Germany and Japan have expanded their international presence both before and after the Plaza Accord in 1985, Korea briefly expanded its financial internationalization in the early 2000s due to the Northeast Asian financial hub and overseas investment activation policy, but this growth waned significantly during the 2008 global financial crisis. Since the early 2010s, Korea has gradually expanded into emerging markets such as ASEAN. In terms of their approach to internationalization, all three countries primarily follow a banking-centered model in response to foreign customer demands, with a preference for independent overseas subsidiaries and branches over M&A. However, Japan has increasingly expanded into the non-banking sector since the 2010s, actively targeting local customers and engaging in M&A. Another key difference lies in the direction of outbound financial internationalization policy. Germany's internationalization is primarily market-driven, mainly thanks to the peculiarities of the EU system, whereas, in Japan, government policies have played a more significant role. Korea's approach is more similar to Japan's than Germany's.

Chapter 7 provides the study's conclusions and policy implications. In summary, the surplus in net IIP was found to significantly contribute to both economic stability, including financial market stability, and the enhancement of international competitiveness in financial services. This surplus represents a crucial structural change with implications for both economic stability and financial service internationalization. Several policy implications can be derived from the results of this study. First, Korean policy authorities have an opportunity to promote both financial stability and financial internationalization simultaneously. Second, it's important to review the macroprudential measures for capital flows introduced during periods of net IIP deficits, as the private sector's role in financial stability has evolved due to changes in the net IIP surplus structure. Additionally, there's a need to improve regulations and create an environment that fosters financial internationalization. This involves enhancing regulations on financial companies' overseas expansion and businesses and expanding financial cooperation with emerging countries. Finally, for financial stability, adherence to international norms like Basel III is essential, rather than relying on macroprudential measures for capital flows. Finally, the government's approach to financial stability needs to be changed to faithfully implement international norms such as Basel III rather than focusing on regulating capital inflows and outflows. 

With the geopolitical and geoeconomic importance of the Indo-Pacific region in the spotlight, India’s strategic value has come to the fore, and its eventual positioning in the G3 is more likely than ever. The United States and other like-minded countries are committed to building diplomatic, military, and economic ties with India. In response, India is more actively pursuing strategic autonomy. While increasingly estranged from China and relatively close to the United States, India is clearly seeking to minimize its dependence on any one country and maximize its autonomy to consider its own interests and make alliances on a case-by-case basis. This is true in the economic sphere as well as in foreign and security affairs. Therefore, it is important to understand the nature of the issue and India’s unique position and needs on it. For example, while India has some cooperation with China in the Asian Infrastructure Investment Bank and the Shanghai Cooperation Organization, it opposes the Belt and Road Initiative. Meanwhile, it continues to engage in military and economic exchanges with Russia, despite the cold shoulder from the US and other Western countries.

Major players in the international community, such as the United States and Japan, have significantly strengthened their strategic economic cooperation with India in recent years, especially as they have begun to reshape their global supply chains. While complete decoupling from China is unlikely at least in the short term, it is clear that India is emerging as an alternative partner in the new Asia (Altasia). With a growing network of strategic, economic, and technological partnerships already centred on India, there is every likelihood that India will become a major player in global supply chains in the medium to long term. South Korea seems to have started to ride this wave. By adopting Korea’s Indo-Pacific Strategy to strengthen its role as a ‘global pivot’, the South Korean government has created an opportunity to share its strategic vision with India. It should develop the bilateral relationship into one of close strategic solidarity and cooperation, and adjust its approach to India.

India, which has recently taken the lead in global cooperation by hosting the Global South Summit and the 2023 G20 Summit, should be recognized as an important anchor partner in the Indian Ocean and South Asia. India’s close ties with key countries in the Indian Ocean, the Middle East, Africa and Europe, and its leadership role in several multilateral organisations, can serve as an important bridgehead for expanding Korea’s regional cooperation and economic security networks. To this end, it is important to formulate Korea’s India policy from a medium- to long-term perspective rather than seeking immediate results.

The growing strategic rivalry between the United States and China has led to a visible geopolitical and technological competition that is clearly changing the face of economic cooperation with India. Trade, value chain resilience, clean energy and climate change, and digital are some of the areas where the strategic environment is changing and where major countries’ bilateral cooperation with India is noticeably changing or strengthening. These are areas where India’s internal drivers and needs align with the strategic and economic considerations of major countries, and where the value of cooperation with India is rapidly increasing, making them a priority area to explore.

Traditional forms of trade policy, including free trade agreements (FTAs), have entered a new phase in light of India’s rising strategic importance, its market potential to replace China, and the trend towards de-risking of value chains centered on high technology. While India’s trade policy towards major economies has moved beyond or expanded beyond traditional areas and modalities, new trade deals are being actively negotiated for market and industry linkages with India. India is responding by leveraging its rising status to strengthen its industries and export competitiveness.  

Value chain resilience is an area where India is very active in outreach. There are two main streams of cooperation: the high-tech-oriented cooperation with India by the US and the EU, with a view to decoupling from China, and the broader industrial cooperation promoted by Japan. There is also cooperation through (sub-)multilateral organisations. India has been very receptive to projects that can help foster domestic manufacturing, and has shown a favourable attitude towards foreign investment.

Clean energy and climate change is an area where India is very active in external cooperation. As a net importer of crude oil, India needs to reduce its dependence on external energy sources while maintaining high economic growth. In addition, India, and South Asia as a whole, is facing an urgent energy transition needs due to severe air pollution and vulnerability to climate change, which will require large investments. In this context, India has a high potential for the development of renewable energy such as solar and wind power. From the perspective of partner countries like the U S, bilateral cooperation on clean energy and climate change is a key area where they can derive benefits from India’s immediate needs. It is also important in terms of supporting India build a foundation for stable growth while mitigating foreign and security strategic risks by reducing India’s external energy dependence.

The digital sector is a promising area for collaboration with India, given the U.S.-China conflict and India’s growing market. From telecommunications equipment to artificial intelligence, quantum computing, and legal systems such as digital trade norms, the U.S.-China conflict is at its peak, and the Indian government has recently put the brakes on Chinese investment in India. In addition, India has a growing digital economy and excellent innovation capabilities, including in artificial intelligence. Moreover, India faces problems in terms of the quality and security of its overall digital infrastructure, so there is a high potential for external cooperation, including development cooperation. However, there is still a major constraint in India, which seems to be that the institutional foundation is not yet been fully formed. Currently, the legal system that regulates platform markets such as e-commerce and personal information protection laws is being established in India.

India participates in major (sub)multilateral organisations such as Quad, IPEF (Indo-Pacific Economic Framework), SCRI(Supply Chain Resilience Initiative), MSP(Minerals Security Partnership), ISA(International Solar Alliance), CDRI(Coalition for Disaster Resilient Infrastructure), etc. In addition, India also participates in the SCO (Shanghai Cooperation Organization), the BRICS, and other partnerships involving China and Russia, and plays a leading role in South Asian regional partnerships such as BIMSTEC(Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation). India seems to be a selective and partial contributor, focusing on getting the best out of cooperation in its own interests. However, in its own leading initiatives, such as on clean energy and climate change, it is seeking to strengthen its position as a developing country leader and thus pave the way for a move to the G3.

South Korea should strategically strengthen its cooperation with India to avoid being left behind in the reshaping of the international economic order. Cooperation with India in high tech, supply chain, and digital fields is increasingly necessary; with the reorganisation of global supply chains, India will play a significant role in enhancing Korea’s economic security. Strengthening economic cooperation with India will help reduce Korea’s economic dependence on China and increase its strategic autonomy from China.

It is also important to expand contacts with India based on various economic cooperation platforms. South Korea and India have opportunities for cooperation in the Indo-Pacific Economic Framework (IPEF), among others. Both countries should further strengthen and expand bilateral cooperation in areas such as supply chain and clean energy in the IPEF. Above all, Korea should actively seek opportunities to participate in the various high-tech cooperation and global connectivity infrastructure cooperation centering on India, and should not hesitate to promote an economic and security cooperation network involving India and other partner countries if necessary.

Reciprocal diversification of Korea’s economic partnership with India, with a focus on manufacturing, is an important task. India is rapidly becoming a partner for supply chain de-risking, which is very different from the past trend and should be considered by Korea. The biggest challenge for the Indian economy right now is to develop its manufacturing sector, and Korea is a key partner. The industries in which Korea has a competitive edge, such as shipbuilding, automobiles, electronics, semiconductors, and next-generation telecommunications, are almost identical to the sectors that India is strategically promoting. In addition, exploring various areas of cooperation beyond manufacturing is crucial to advancing bilateral economic cooperation. India has a variety of challenges other than fostering manufacturing, and has many demands for external cooperation. Moreover, from Korea’s perspective, India has strong competitiveness in areas such as ICT, aerospace, and artificial intelligence, and can help Korea advance its economy in the face of US-China competition.

The authors suggest the following key agenda for Korea-India bilateral cooperation. First, concluding negotiations to improve the Korea-India CEPA is important for revitalising the two countries’ flagship economic cooperation platform. The Korea-India CEPA has played a key role in strengthening bilateral economic ties and even diplomatic relations. However, the effectiveness of the Korea-India CEPA in increasing bilateral trade and investment is not satisfactory. Bilateral merchandise trade has grown at an average annual rate of 4.1 percent since 2010, when the Korea-India CEPA took effect, with Korea’s exports to India growing at an average annual rate of 4.3 percent and India’s exports to Korea at 3.8 per cent. Compared to trade, India’s investment in South Korea has been even slower, with India being South Korea’s 20th largest investment destination, with cumulative investment totaling $5.74 billion over the period 2010-22. This is particularly true when compared to Korea’s two largest emerging markets and production bases, China and Vietnam.

The key to reaching a deal to improve the Korea-India CEPA will be to reduce non-tariff barriers such as TBT and SPS, improve customs procedures, and further reduce tariffs. In addition, it will be important to identify cooperative initiatives that can decrease bilateral trade imbalances. For example, the Korea-India Joint Initiative should be launched to support trade and investment activities of companies from both countries, and a Korea-India Cooperation Fund should be introduced to provide financial support for identifying bilateral cooperation projects, research, and business matchmaking projects.

Second, cooperation on value chain resilience is an area where India’s external cooperation is flourishing in the face of US-China competition and will be at the core of Korea-India economic cooperation. Semiconductors, electronics, automotives (including electric vehicles), batteries, aerospace, and defense are all areas with high potential for bilateral cooperation. To this end, the two governments should consider establishing a high-level (ministerial) India-South Korea trade policy dialogue channel, or a high-tech partnership. It would be effective to support the entry of Korean manufacturing companies into India through the creation of industrial parks. The key to success of them is to ensure the possibility of collaboration between leading companies and their partners, while ensuring sufficient government-to-government dialogue with the Indian union and state governments.

Third, Given India’s strong commitment to and needs for climate change mitigation and energy transition, the high growth potential of Indian market, and the need for carbon reduction and energy security in Korea’s energy transition, cooperation with India on climate change mitigation and energy is of great importance. Currently, there is a lack of regular dialogue between the two countries in the energy sector. As a priority, launching the Korea-India Energy Dialogue and the Korea-India Climate Change Cooperation Agreement is required. The Korean government is promoting EDCF(Economic Development Cooperation Fund) Framework Agreement with India, and it is necessary to set climate change and energy as the focus areas.

Fourth, India’s role and potential in the digital sector has come under the spotlight in the context of the US-China competition. Priority for cooperation in the digital sector would be artificial intelligence, cybersecurity, and the digitalization of public services. A separate channel for cooperation in the digital sector (possibly called the Korea-India Digital Partnership) should be established to identify bilateral cooperation needs and discuss institutional trends such as trade norms, or it should be reflected in the above-mentioned channel for high-level trade policy dialogue between Korea and India.

Fifth, South Korea has designated India as a priority ODA partner in 2022 and is in the process of signing the EDCF Framework Agreement. Cooperation in infrastructure development is one of the most underdeveloped areas of Korea-India cooperation. As mentioned before, energy and climate change, along with infrastructure, are areas where India’s immediate needs are concentrated. Moreover, Korea’s experience in developing from the poorest to the advanced countries is highly regarded and constitutes a major part of the Korea’s image in India. In this sense, Korea’s KSP(Knowledge Sharing Program) projects will be effective in delivering Korea’s development experience to India in various fields.

Sixth, improving mutual understanding between Korea and India is a critical task. The average Indian’s knowledge and understanding of Korea is not high, and this affects bilateral relations. Korea’s Indo-Pacific Strategy’s mission to “promote mutual understanding and exchange” should be a key focus in deepening ties with India. The Korean Cultural Centre in Delhi should be expanded to other major cities such as Chennai, and given the popularity of K-pop and K-drama in India, support for local exhibition and marketing projects involving Korean products should be strengthened. In the case of K-beauty, which is gaining popularity in India, synergies can be achieved by linking it with other Hallyu products. In addition, people-to-people exchanges, including students, between the two countries should be expanded. As interest in Korea is growing in India due to the popularity of the Hallyu and the official adoption of Korean as a second language, people-to-people exchanges at this moment will be crucial for strengthening the future relationship between the two countries.

Seventh, South Korea should seek to cooperate with India in (sub)multilateral organisations. India is likely to be more willing to cooperate internationally on issues such as supply chains, climate change and energy, etc. and there are many areas where South Korea can align itself with India’s position. South Korea should also consider participating in the India-led ISA and CDRI. Working with India on agendas to assist developing countries would be an effective way to improve bilateral relations. 

This study began with the idea that the international community’s discourse on China may not be produced, distributed, and utilized separately in each country, but may be formed within a huge global network. So this study tried to examine what the content of the discourse on China is; who produces it; how it is being distributed and utilized in the international community. And it also tries to examine the political dynamics under which the international community’s discourse on China is produced.

This study first selected the issues of the 2019–2020 Hong Kong protests, the Belt and Road Initiative (BRI), and the COVID-19 pandemic and conducted a case analysis of the international community’s discourse on China, focusing on these issues. As a result, many interesting facts were discovered. In particular, it was found that political images of the BRI seemed to have a stronger influence than direct experience toward it in shaping the international community’s discourse on the BRI.

Through the analysis of three cases, it was possible to identify countries, regions, and organizations that play an important role in shaping the international community’s discourse on China. Among countries or regions, the United States and the United Kingdom appeared to be the most prominent actors in shaping the international community’s discourse on China. In addition, Japan and Taiwan, which are China’s neighbors and have a tense relationship with China in establishing order in the Asian region at the same time, also emerged as important actors. Accordingly, this study analyzed in more depth the mechanisms of how the discourse on China is being formed within the relevant countries and regions, targeting the US, EU (UK), Taiwan, and Japan. At the same time, it also analyzes the formation of the discourse on China in Korea, along with ASEAN, which is becoming increasingly important geopolitically, as can be seen from the U.S. “Free and Open Indo-Pacific” (FOIP) Strategy and China’s BRI.

First of all, it is not an exaggeration to say that the current perception of China in Korea is the worst. perceptions of China are poor in both progressive and conservative camps, and anti-China public opinion is overwhelming in all age groups. In particular, anti-China sentiment among young people is so strong that it is a unique phenomenon in the world.

However, there is an important feature in Korea’s perception of China that is consistent with the U.S. perception of China. Looking at the overall structure and flow of the Korean perception of China, there is a strong factor that does not change, a phenomenon that is closely related to the U.S. perception of China. It is no coincidence that the perception of China has structurally deteriorated in Korean society since the U.S.-China strategic competition began in earnest.

Second, the discourse on China in the U.S. is so numerous and vast in type and quantity that it is almost impossible to figure out what content is being produced, distributed, and used by whom. Nevertheless, it was possible to capture the general outline by using Laswell’s SMCRE (Sender, Message, Channel, Receiver, Effect) model, a communication model.

First, it is analyzed that the main actors or producers of discourse (S) are current and former government officials, influential politicians in the National Assembly, and influential think tanks. And a variety of discourses on China are being produced by these people, and the most notable change recently is the rapid spread of ‘anti-China’ (M) discourse. The main reasons for their opposition to China include human rights violationsabuse, authoritarianism, coercive diplomacy, expansionism, and propaganda.

Meanwhile, the channels through which these discourses on China are disseminated are very diverse, including books, articles, reports, news, hearings, speeches, dramas, movies, and documentaries (C). In particular, specialized books related to China are produced and distributed in large quantities, it can be interpreted as U.S. society’s considerable knowledge production capacity being used to shape anti-China discourse. And the context of U.S. society’s discourse on China can be summarized as “China’s growth and the resulting sense of crisis.” As China rapidly grows economically and expands its international influence, the Liberal International Order (LIO) established by the U.S. will be shaken, and there is a sense of crisis that it may lose vested rights of U.S.. Therefore, from the U.S. point of view, it is necessary to reveal the true nature of China, strengthen vigilance against China, and unite the international community with the liberal democracy camp (E). Those who will be made to agree to this include not only domestic Americans but also the entire international community (R). One of the important featurescharacteristics is that the U.S. government is involved in each element of the SMCRE as a major player in shaping the discourse on China in U.S. society.

Meanwhile, the discourse on China in European society can be examined through the relationship between Europe and China. Until 2010, Europe and China maintained a relationship of mutual growth through learning and teaching from each other. At that time, it was emphasized that Europe viewed China as a large, underdeveloped country and an important trading partner. However, around 2010, when the U.S. began to seriously control China, Europe’s perception and strategy toward China also changed, and this also influenced the formation of discourse on China in European society. Against this background, Europe adjusted its strategy to keep China in check while maintaining the principle of cooperation with China. However, compared with the U.S., the discourse on China in Europe does not have many discourse producers who are extremely opposed to China, the messages ont China are diverse, and the perception of China is different for each EU member country.

In the ASEAN region’s discourse on China, China’s construction of artificial islands in the South China Sea and various measures to secure energy resources have created a crucial opportunity for ASEAN countries to form a hostile security discourse against China. However, ASEAN countries cannot simply discuss China as a ‘security threat’ and ‘expansionist’ because of the South China Sea dispute. This is because their economies and infrastructure are heavily dependent on China. For ASEAN countries, where trade with China and infrastructure investment from China are essential for economic growth, China cannot help but be discussed as a major ‘economic cooperation partner and opportunity’, which makes the formation of discourse on China in ASEAN countries multi-layered and complex. Meanwhile, the discourse of ‘debt trap’ an ‘neocolonialism’ have formed and spread in relation to China’s economic diplomacy, including the BRI, as Sri Lanka failed to repay its BRI-related debts in 2017.

Meanwhile, the discourse on China in Thailand is more dynamic and interesting. The family discourse such as ‘Thailand and China are brothers’ has the longest history and is most frequently used in the Thailand’s discourse on China. And in the economic field, China has been mainly discussed as a ‘partner’ and ‘opportunity’ for the Thai economy, and the formation and circulation of this discourse began in earnest with the rise of the BRI in 2014. However, the mainstream pro-China discourse that have portrayed China as a brother and economic partner has faced great resistance due to the formation and rise of a counter-discourse that has begun in earnest since 2019. It can be said that China’s expansion into the South China Sea that began in 2014, the Mekong River dispute with China that began in 2019, the controversy over the Chinese ‘water vaccine’ amid the spread of COVID-19 in 2020, and the anti-government democratization protests from 2020 to 2021 are the backdrop. Through this series of events, China began to be discussed in Thai society as an ‘unreliable selfish hegemonic state’ and an ‘authoritarian dictatorship’ rather than as a ‘brother and family’ or an ‘economic partner and opportunity’. What is especially noteworthy is that anti-government forces in Thailand, pro-democracy forces in Hong Kong, and pro-independence forces in Taiwan, who share anti-China sentiments, are working together to lead anti-China public opinion, forming the so-called ‘Milk Tea Alliance’. 

At present, public opinion toward China in Taiwan is largely divided into a pro-China line that values cooperation with mainland China and an anti-China line that is suspicious of or opposed to mainland China. The Democratic Progressive Party (民主進步黨) leads the anti-China line, emphasizing Taiwan’s independent identity. On the other hand, the Kuomintang (中國國民黨) is seen as the leading pro-China force, inheriting the ‘92 consensus’ and emphasizing cooperation with mainland China. The Taiwanese people’s perception of China, which has an important influence on the formation of discourse, is revealed through their stance on independence and unification and their perception of identity. At present, Taiwanese people believe that it is better to maintain the current ambiguous situation rather than extreme independence or unification. In addition the large-scale anti-China protests in Hong Kong in 2019 have had a significant impact on strengthening the anti-China sentiment among Taiwanese people, according to the analysis.

Meanwhile, it is assessed that the discourse on China in Japan has basically followed a similar trajectory to the change in Sino-Japanese relations. In particular, since the mid-2000s, the two countries have entered a period of strategic confrontation, and as the rapid growth of China’s economy contrasts with Japan’s economic situation which is described as the ‘lost 30 years’, Japanese society’s sense of loss has turned into a sense of caustion toward China. And this has had a negative impact on the formation of Japanese society’s discourse on China. In addition, the dispute between the two countries over the Senkaku Islands (Diaoyu Islands) in 2010 and 2012 had a decisive impact on the qualitative changes in the discourse on China in Japan.

It is interesting to note that the discourse on China in the two regions is closely linked. Japan and Taiwan have established a friendly and highly trusting relationship in all aspects of society, and are engaged in active exchanges and cooperation at various levels, including political, economic, academic, and cultural circles. And in the process of these exchanges, it seems that information and perceptions about China are being shared and a common discourse on China is being formed.

The results of the analysis give us the following implications.

First, the international community’s discourse on China reflects changes in the international order. The discourse on China reflects changes in China itself, but it also reflects changes in the international order surrounding China. Therefore, we need to accept the discourse on China with a more cautious and critical attitude, considering that it may reflect changes in the current international order. There is a need to look more seriously at the context of who shape the international community’s discourse on China why and how.

Second, we need to soberly evaluate and utilize the discourse on China produced and disseminated by the global media in a cool manner. We need to consume media coverage of the international community related to China while being aware that it may reflect the logic of national interests. Otherwise, our perception and attitude toward China may be influenced by the ‘national interests’ of other countries, which may be hidden behind the authority of the ‘influential global media’.

Third, many reports and research activities produced by leading U.S. think tanks have had a significant impact on the international community’s discourse on China. As the strategic competition between the U.S. and China intensifies, research on China is becoming more active in the U.S., while in Korea, the environment for research on China is deteriorating as Korea-China relations become somewhat estranged. Research on China is necessary not only to strengthen cooperation with China, but also to effectively respond to China’s rise.