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  • 중국의 중장기 통상전략과 한중 협력 방안
    China’s Medium- to Long-term Trade Strategy and Korea-China Cooperation Plans

    Korea and China celebrated their 30th anniversary of diplomatic relations in 2022, commemorating the remarkable economic results through economic exchanges based on complementary industrial structures. However, in recent years, ec..

    Seungshin Lee et al. Date 2022.12.30

    Economic cooperation, Trade policy China
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    Korea and China celebrated their 30th anniversary of diplomatic relations in 2022, commemorating the remarkable economic results through economic exchanges based on complementary industrial structures. However, in recent years, economic exchanges have entered a phase of contraction due to various factors such as geopolitical challenges, the influence of U.S.-China competition, and the shrinking industrial competitiveness gap between Korea and China. Now, Korea needs to make efforts to secure stable economic cooperation engines while readjusting its existing economic cooperation structure with China. In particular, it is necessary to create a foundation for cooperation between the two countries on the new trade issues such as supply chain reorganization, digital trade, climate change response, development and health cooperation covered in this report. When analyzing China’s mid- to long-term trade strategy on new trade issues, it is divided into areas where China and Korea are expected to form a competitive structure and areas that require cooperation. 

    Regarding the reorganization of the supply chain, the possibility that China will expand its own supply capacity for basic resources and intermediate goods, while limiting exports to promote its domestic circulation strategy and economic security, is a significant challenge factor in Korea-China economic relations. In particular, demands for supply chain strategies to reduce dependence on China and diversify sources are increasing due to uncertainties in China’s supply chain. Measures are being taken to fortify supply chains of major resources such as semiconductors, batteries, and rare earths, while restrictions are being made placed on Korean companies’ entry into the Chinese market in the form of electric vehicle battery subsidies. In response to this reorganization of supply chains, we propose establishing a comprehensive national supply chain strategy to prepare Korea’s economy for intensifying competition in tech sectors between the U.S. and China, and internalization of China’s supply chain. In the short term, it is necessary to prepare countermeasures focusing on supply chain stability and resilience through supply chain risk checks for Korea’s major industries. In the mid- to long-term, it is necessary to prepare countermeasures for a long-term vision that focuses on digitalization and “greenization” supply chains, along with diversification of production bases (China+1 or China+N). The second direction of response is the establishment of a multi-layered cooperation platform for supply chain stability. To this end, efforts are needed to actively participate in East Asian cooperation platforms such as the RCEP, CPTPP, IPEF, DEPA, and the U.S.-East Asia Semiconductor Supply Chain Resilience Working Group to stabilize Korean companies’ supply chains and reflect Korean companies’ policy demands. While promoting cooperation focused on technology and talent training cooperation with the U.S., such as the U.S.-East Asia Semiconductor Resilience Working Group, it is necessary to establish a cooperative channel to stabilize the supply chain when considering how closely linked it remains to China. As for the direction of cooperation with China related to the restructuring of the supply chain, the first proposal of this study is to establish a stable supply chain channel between Korea and China. It is necessary to establish a channel related to supply chain recovery and stabilization in which the Korean and Chinese governments and private sectors jointly participate, focusing on unexpected supply chain disruption and post-resilience, so that the channel can be activated in time to solve supply chain problems in case of supply chain disruption. The second direction of cooperation is to promote cooperation related to global supply chain governance. The Industrial Network Recovery and Security International Cooperation Initiative proposed by the Chinese government to establish governance related to global supply chain stability is yet to gain much influence in global supply chains, but the Chinese government seems willing to cooperate internationally in digitalization and greening efforts. After all, since digitalization and greening of supply chains are linked to digital norms such as data movement, localization of computing facilities, and prohibition of source code demands, it is necessary to promote cooperation with the Chinese government on new and common norms. As the last direction of cooperation, it is necessary to explore the possibility of supply chain cooperation such as technology and overseas mining development projects with China.

    As our response to digital trade, we propose establishing a trade strategy that reflects the characteristics of China’s trade agreements. The characteristics of China’s digital trade norms include the composition of the provisions of the agreement, which are different for each target country, and the ambiguity of the terms of the agreement. The fact that the terms of the agreement are structured differently, depending on the various interests of the countries involved in the trade agreement, means that there may be ample room for negotiation depending on the circumstances of the two countries when concluding or revising a trade agreement with China in the future. Ambiguity due to unclear stipulations on the terms of the trade agreement is an issue to keep in mind when concluding follow-up negotiations with China, so careful coordination and confirmation of the text will be necessary at the negotiating stage. On the other hand, Korea still lacks response to the introduction of the concept of digital trade regulation under the U.S.-led competitive neutrality principle, which China recognizes as a new challenge, so it is necessary to improve domestic regulations and clarify its position in the international community with countries under similar economic and related industrial development conditions. In addition, the establishment of a Chinese-style digital trade norm model should be addressed in line with the development of global trade norms.

    As a digital trade cooperation plan between Korea and China, another direction to explore is the promotion of cross-border cooperation in e-commerce. The revitalization of commodity trading through a digital platform that can lower trade transaction costs is expected to be a promising alternative route to the Korea-China commodity trade, which has been shrinking in recent years. Korea and China need to move away from the industrial cooperation model promoted in the form of the traditional division of labor in manufacturing and seek new opportunities for economic cooperation in the field of digital trade. Now, exports to China should move away from commodity-oriented trade and expand the target and scope of cooperation by expanding trade through digital products and online platforms. In light of current circumstances, exports to China should move away from commodity- oriented trade and expand the objects and scope of cooperation by expanding trade through digital products trade and online platforms. To this end, it is necessary to utilize China’s digital market, which is a major export destination for Korean digital contents, and to prepare countermeasures to minimize the institutional impact of strengthening digital regulations in China. China is a market that accounts for about 81% of Korea’s total e-commerce exports, and considering future market potential, it is necessary to come up with countermeasures to minimize the institutional impact of strengthening digital regulations in China. Korea and China are undergoing follow-up negotiations on the Korea-China FTA, which includes the first e-commerce chapter among China’s trade agreements, and are very active in cooperating with global digital trade norms such as the RCEP entry into force and DEPA entry procedures. These efforts by the two countries can be seen as an inevitable effort to adapt to the era of digital transformation and achieve stable economic development. Applying for DEPA membership, South Korea and China need to establish channels and cooperation platforms to communicate changes in digital-related policies and laws of the two countries. Through dialogue channels with China, Korea should strengthen transparency regarding mutual domestic laws and policies, including regulations on data and e-commerce, and strive to improve regulations that hinder digital cooperation between the two countries.

    In response to climate change, both Korea and China have declared carbon neutrality and are promoting step-by-step policies. The de-carbonization strategy can be an opportunity for cooperation discussions as an issue that both Korea and China must jointly respond to at the same time as a risk factor affecting the supply chain. Both countries are using the realization of carbon neutrality as an opportunity to transform industrial structure and upgrade industrial value chains, not just from an environmental protection perspective. As a result, there may be further competition in new energy vehicles, such as hydrogen vehicles and electric vehicles, related to carbon neutrality and alternative energy sources such as solar and wind power, and there is good potential to strengthen technological cooperation and mutual investment cooperation in new fields. To enable agile response to climate change, we present the following three response directions. First, Korea should prepare for China’s transition to a green and low-carbon-centered industrial structure. Efforts to find new business opportunities in green production facilities, renewable energy, carbon capture technology, and energy management systems are needed to prepare a public trade strategy centered on eco-friendly green consumer goods in response to China’s eco-friendly industrial restructuring. The second direction of response is to respond to discussions on trade norms related to climate change led by the United States and the EU. The discussion of international trade norms related to climate change may act as a trade pressure factor for Korea in conjunction with the U.S.-China trade conflict. In preparation for this, Korea must establish a strategic position on the development of related discussions, and should review joint response measures with China as a cooperative agenda. In addition, it is necessary to respond to trade risks related to renewable energy supply chains. To this end, it is necessary to conduct due diligence on corporate supply chains and diversify supply chains to reduce dependence on China such as solar and electric vehicle batteries. As a direction of cooperation related to climate change response, it is necessary to maintain the existing dialogue on climate and environment issues. Discussions on cooperation in the environmental sector between Korea and China have continued even during the COVID-19 pandemic and U.S.-China strategic competition, such as continuing joint research to reduce fine dust between Korea and China, launching a carbon-neutral consultative body, and initiating policy and technology exchanges. In response, we propose to resume the Joint Committee on Climate Change Cooperation between Korea and China.

    The direction of cooperation with China in the field of development and health cooperation is, above all, a joint response to the COVID-19 crisis. To this end, it is necessary to continuously promote cooperation between Korea and China to respond to COVID-19. Meanwhile, China is already promoting health and digital cooperation in Southeast Asia through the Health Silk Road and Digital Silk Road strategies. In terms of diversification of cooperation fields for joint entry into the market of third countries between Korea and China, it is also necessary to consider cooperation measures linking development and health cooperation issues. Joint entry into third country markets is a cooperative issue that has been steadily discussed between Korea and China, but has not produced many tangible results. Therefore, it is necessary to expand the scope of cooperation in third country markets. In addition to infrastructure cooperation discussed in the existing cooperation field, new cooperation issues include preventing infectious diseases, supplying vaccines, supporting digital infrastructure construction in developing countries, and developing a remote education cooperation model considering the pandemic. In addition, cooperation in establishing a new infectious disease response cooperation system that may occur in the future can be considered. The establishment of a cooperative system between the two countries could include cooperation in various areas such as sharing information on infectious diseases, developing joint education and training programs, expanding communication channels between health experts, and mutual support systems for quarantine supplies.
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  • 러시아-우크라이나 전쟁과 중동부유럽 주요국의 지정학적 위기 대응 전략: 에너지 이슈..
    Russia-Ukraine War and Major Central Eastern European States’ Geopolitical Crisis Responses: Focusing on Energy Issues

    Russia’s invasion of Ukraine in February 2022 caused a security crisis threatening Ukraine’s very existence. This security crisis caused severe security issues in Ukraine’s surrounding region, Central Eastern Europe, and challe..

    Moosung Lee et al. Date 2022.12.30

    economic security, Energy industry Russia Eurasia
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    Russia’s invasion of Ukraine in February 2022 caused a security crisis threatening Ukraine’s very existence. This security crisis caused severe security issues in Ukraine’s surrounding region, Central Eastern Europe, and challenged Europe’s security architecture. Additionally, Central Eastern European States have experienced energy security issues due to their heavy reliance on Russian oil and natural gas. Central Eastern European states are showing their caution and devising countermeasures according to their practical interests. However, each state has their different historical contexts and practical interests depending on their individual establishments of relationships with Russia. This study particularly investigates the political, economic and policy implications of these Central Eastern European states amid the escalation of this geopolitical crisis and the conundrums caused by energy security issues in the Central Eastern European States.

    The overall structure of this study is as follows. First, the backdrop upon which the study was conducted and its significance were presented. Second, the theoretical framework of the study was established by reviewing previous empirical studies. Third, the context of the Russia-Ukraine war was provided by tracking the development of bilateral relations and eventually examining the leading causes of this war. Fourth, the regional responses were investigated by examining developments in Central Eastern Europe (Visegrad Four, Romania and Bulgaria), Western Europe and the EU. In this process, this study thoroughly analyzed and compared how these states have responded to possible crises like security and energy issues. Finally, the conclusion of this study summarizes the main points and, additionally, draws geo-economic and geo-political implications and future prospects for Korea.

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  • 방글라데시 기후변화 영향 분석 및 시사점
    Climate Change and its Impact on Bangladesh

    Climate change poses one of the greatest threats to humanity and nature, with Bangladesh recognized as one of the most vulnerable countries due to its geographic location. The lives of Bangladeshi residents are directly or indirec..

    Yoon Jae Ro et al. Date 2022.12.30

    economic security, Economic cooperation India and South Asia
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    Climate change poses one of the greatest threats to humanity and nature, with Bangladesh recognized as one of the most vulnerable countries due to its geographic location. The lives of Bangladeshi residents are directly or indirectly affected by frequent heat waves, droughts, and floods caused by climate change. Various statistics and studies show that Bangladesh’s vulnerability to climate change is not only affected by long-term changes such as a rise in global temperature and precipitation patterns but also by mid- to short-term changes such as sea-level rise and an increase in natural disasters.

    Bangladesh is considered one of the most vulnerable countries to flooding and rising sea levels, as it has the world’s largest delta area and more than 70% of its total land area is less than one meter above sea level. Extreme climate change and flooding are causing a decline in agricultural production in Bangladesh’s major agricultural areas, making it increasingly difficult to secure sufficient supplies of drinking water. Additionally, urban slumming due to excessive migration to inland cities by coastal residents who have lost their livelihoods is emerging as a new social problem.

    The Bangladesh government has presented various policy directions to address this situation. It has included climate change response strategies in its long-term economic development policies, such as Delta 2100 and PP2041. Development policies such as 8FYP and ADP focus on flood response capabilities and water resource management. Bangladesh has also established various national plans and initiatives related to climate change mitigation and adaptation to actively respond to the impacts of climate change that threaten the population.

    Furthermore, Bangladesh, as the chair of the Climate Vulnerable Countries Forum, is a leading voice in the international community for climate-vulnerable countries. In 2010, Bangladesh became the first least-developed country to establish a trust fund for the Climate Vulnerable Countries Forum, encouraging the international community to provide financial support for climate-vulnerable countries.

    Bangladesh was the world’s second-largest recipient of climate change ODA aid in 2020, but there is still room to improve Korea’s support for the nation. Bangladesh is a core partner country for Korea in ODA activities and presents good prospects for expanding the size of cooperation in the future. With relatively limited resources available, Korea needs to plan and implement projects that meet the needs of the recipient country and Korea’s fields of expertise as efficiently as possible. It will also be necessary to derive cooperation measures in each field in the direction of supporting Bangladesh’s efforts to respond to climate change.
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  • 김정은 시대 북한의 대외관계 10년: 평가와 전망
    10 Years of North Korea’s External Relations in the Kim Jong-un Era: Evaluation and Prospects

    The purpose of this research is to investigate the characteristics of North Korea’s foreign policy that it pursued by dividing Chairman Kim Jeong-un’s reign into three segments, Ascension to Power (2011 Dec-2012), First Regime (..

    Jangho Choi et al. Date 2022.12.30

    Economic relations, North Korean economy North Korea
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    The purpose of this research is to investigate the characteristics of North Korea’s foreign policy that it pursued by dividing Chairman Kim Jeong-un’s reign into three segments, Ascension to Power (2011 Dec-2012), First Regime (2013-2017) and Second Regime (2018-2021), and based on these findings, predict the direction of North Korea’s changing economy. For this, we reviewed the changes in North Korea’s surrounding foreign landscape its policy responses, foreign trade, bilateral relations (China, Russia, the United States, Japan) and multilateral relations (UN Agencies, Multilateral Councils). 

    In chapter two, we introduced the changes that North Korea faced during the ten years of Chairman Kim Jeong-un’s regime with the surrounding foreign landscape and its domestic policy responses. During the First Regime, we reviewed (1) the May 24th Measures and the strained inter-Korean relations causing North Korea’s economy to be increasingly dependent on China (2) Deterioration of North Korea-China relations after Jang Song-thaek's execution, (3) China’s tightening of anthracite (hard coal) environmental regulations, (4) UN Security Council’s tougher sanctions on North Korea, (5) implementation of economic reforms such as North Korean-style economic management for domestic economic policy, (6) designation of Special Economic Zone to stimulate foreign trade and foreign investment, (7) real estate development to build high-rise apartments and amusement facilities, (8) declaration of completing the simultaneous economic and nuclear development after North Korea’s nuclear test.

    During the Second Regime, we discussed the changes in both domestic and foreign landscape, in addition to North Korea’s policies, (9) UN Security Council’s fully-fledged implementation of sanctions on North Korea, (10) support from the international community for the Korean peninsula to show mood of conciliation, (11) The Hanoi Summit ending in failure (12) borders closed due to COVID-19, for domestic policy, (13) negotiations on the denuclearization of North Korea and 2019 Koreas–United States DMZ Summit, (14) attempts to transition to a “normal country” and join the international community, (15) failure of the five year economic plan (2016-2020), (16) emphasis on self-reliance and self-sufficiency. 

    Throughout Chairman Kim’s regime, the foreign landscape deteriorated. Development of a nuclear arsenal dealt a decisive blow to its foreign relations and eventually grinded to a halt with the spread of COVID-19 in 2020. In response, North Korea has attempted to normalize its cooperative relations with China and Russia while tightening its grip on its society and economy.

    In chapter three, we outlined the trends of trade in Kim Jong-un’s regime, evaluating and comparing the direction and the impact of North Korea’s trade policy for each segment. Although expansion of trade slowed during the First Regime it still maintained strong levels. Trade however, significantly shrank due to the sanctions against North Korea and the COVID-19 pandemic. During the First Regime, North Korea sought the expansion and development of its international economy by deregulating and decentralizing trade, increase exports of processed goods, diversification, and localization. In order to achieve this, North Korea implemented policies that brought limited results such as increasing exports of textile goods, expanding trading areas with China, and import substitution for limited items. However, in the international economy of the Second Regime, North Korea’s trade regressed to its augmenting role of establishing an independent national economy, being greatly reduced in its size, variety of items and the sectors of trade. If this trend of harming trade interests continues, it will most definitely harm the North Korean economy. 

    In chapter four, we examined the political and economic relations with its neighboring stakeholders surrounding the Korean Peninsula with changes to the foreign landscape, such as China, the United States, Russia, and Japan. From a political viewpoint, Chairman Kim’s regime of ten years did less harm than good to North Korea’s foreign relations. Relations between China and North Korea improved, Summits of Heads of State between Chairman Kim and Korea, US, China, and Russia were utilized as a propaganda to show North Korea as a nuclear power to the international community. This in turn became an opportunity to bring together a counterweight against America in the midst of increasing tensions between US-China Strategic Competition and the Indo-Pacific Strategy. From an economic viewpoint, economic cooperation with China and Russia which limited the number of countries, regions and industries was not enough for the North Korean economy to improve. The causes of the limitations of economic cooperation were due to the state capacity focused on completing nuclear armament, international isolation due to sanctions, border closures due to COVID-19, and the high risk of investment in North Korea. In the future, we expect North Korea to strengthen its strategic cooperation with China in all sectors based on establishing a “New Era of North Korea-China Relations” in order to fulfill the requirements of the five-year economic plan by 2025. In addition, we expect North Korea to maintain good neighborly relations with Russia and continue to have minimal exchanges in areas that can act to their advantage. North Korea-US relations will depend on US-China relations while North Korea-Japan relations would depend on North Korea-US relations. This is because the denuclearization of the Korean Peninsula, US-China Conflict, and Russia’s invasion of Ukraine caused the deteriorated America’s relations between North Korea, China and Russia while President Biden’s main agenda of the Indo-Pacific Strategy of the US strengthened alliance of the ROK-US-Japan, naturally forming a conflict structure between North Korea-China-Russia and ROK-US-Japan. 

    In Chapter Five, we focused on multilateral cooperation and aid to North Korea. While it is true that North Korea and the international community both respectively have a certain desire for multilateral cooperation, we evaluate that due to the disagreements stemming from differing perspectives, correspondence, and issues, there were no notable results. For North Korea, there is a demand for multilateral cooperation in terms in terms of revitalizing trade and investment, economic development, and financing. Although multilateral cooperation for North Korea brings membership of International Financial Institutions a necessary step and preemptively requires North Korea’s regime change, if we look into North Korea’s demands, we can see that there is a distinctive gap in what North Korea desires and what the international community requires. While North Korea has requested development cooperation aid, the international community has remained responding with humanitarian aid. This unbalance has shifted further with North Korea’s successive nuclear tests and tougher sanctions against North Korea. While North Korea’s multilateral cooperation policy in the Kim Jong-un regime stems from the differences between domestic and foreign political situation, there are still significant barriers due to exogenous factors, such as COVID-19, which has, with or without North Korea’s intentions has become an inhibiting factor. The UN sanctions and COVID-19 has physically prevented any projects that North Korea has or could receive from being implemented, and the reality is that is difficult for any multilateral cooperation projects to be carried out regardless of the intentions of North Korea or the international community. In order to revitalize the international community's support for North Korea, North Korea needs to show a more assertive attitude toward multilateral cooperation, and we judge that this same attitude had led to its active participation on the UN SDGs in 2016. If a compromise can reached between the international community and North Korea's demands (requirements) while implementing the UN SDGs, we expect this to provide an opportunity for North Korea's multilateral cooperation to become more active in the future.

    Chapter six summarizes the discussions from chapter two to five and draw predictions on Chairman Kim Jeong-un Third Regime on (1) changes with North Korea’s economic policy, (2) tectonic shifts in the foreign landscape, (3) transition to living with COVID-19, and (4) North Korea’s attitude to membership in international organizations. 

    We reviewed three possible scenarios that showed the direction of changes with North Korea’s economic policy. The first scenario was if the UN sanctions and North Korea’s COVID-19 restrictions showed little to no changes to the present. The second scenario was the sanctions remaining the same, but North Korea transition to living with COVID-19. The third scenario was the sanctions being lifted with transition to living with COVID-19. Of the three, the first is the most feasible scenario. 

    With tectonic shifts in the foreign landscape, we reviewed deepening US-China conflicts and the Russo-Ukrainian War. We predicted deepening US-China conflicts would lead China to create a new multilateral Councils and North Korea partaking in it, China increasing its aid to North Korea and deepening their relations, the Russo-Ukrainian War prolonging with labor and supply shortages surfacing and North Korea expanding cooperation with war supplies and laborers, Russia’s aid to North Korea, (such as science and technology).

    With predictions of COVID-19 measures, we discussed that it would be inevitable for North Korea to transition into living with COVID-19. In addition to the zero-COVID policy, we also reviewed North Korea's focus on agriculture and quarantine policies. In order for North Korea to transition to living with COVID-19, China’s zero-COVID policies need to transition as well to a living with COVID-19 with North Korea also requiring COVID vaccinations. 

    Finally, we predicted North Korea’s attitude to membership in international organizations. We selected disclosing economic statistics, denuclearization, and resolution of human rights to be obstacles to North Korea’s membership to international organizations, but would probably not surface if the organization was led by China. However, we also expressed that even if North Korea does join a Chinese-led organization, it will still have to face these issues, and North Korea would have to display more transparency as China had in its initial economic reforms and opening. In the end, if North Korea does not guarantee a certain amount of minimal transparency, it would be difficult for North Korea to obtain membership. 

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  • 국제사회의 ODA 사업평가 품질관리 현황과 시사점
    Quality Assessment in Development Evaluations: Current Practices and Implications

    The importance of quality management in development evaluations has become increasingly recognized, particularly in the context of efforts to improve development effectiveness. International organizations and donor agencies have e..

    Eunsuk Lee and Chami Park Date 2022.12.30

    ODA
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    The importance of quality management in development evaluations has become increasingly recognized, particularly in the context of efforts to improve development effectiveness. International organizations and donor agencies have established evaluation systems and processes to ensure quality of evaluations. In Korea, evaluation was made mandatory for ODA implementing agencies in 2014, resulting in a surge in the number of agencies conducting evaluations as well as evaluation reports they produce. However, there remains limited awareness among many institutions regarding the issue of quality in evaluations, with the lack of a system to assess the quality of evaluation reports, causing a particular concern.

    This study aims to explore the evaluation quality management systems and practices in place at international organizations and development agencies. The goal is to provide implications and recommendations for establishing quality standards for evaluation and introducing a quality management system to enhance the evaluation quality of Korea’s ODA. The study focuses on the quality assessment systems and methods leading up to the evaluation report, which is the final outcome of the evaluation process. 

    Chapter 2 highlights the current management practices for evaluation quality at multilateral organizations, with a particular emphasis on the United Nations funds and programs. The chapter analyzes the cases of UNICEF and UNFPA in detail. Initially introduced to enhance the quality of decentralized evaluations at regional and country office levels, the quality management system has since evolved into a broader axis of evaluation management. Both UNICEF and UNFPA have implemented organization-wide evaluation quality management systems (GEROS and EQAA, respectively) and regularly conduct quality assurance and assessment of the entire evaluation process and reports based on relevant quality standards. Their integrated quality assessment includes central evaluations carried out by the evaluation departments of the organization headquarters. Similarly, other UN agencies have adopted comparable quality assessment systems, engaging external evaluators for the task.

    Chapter 3 examines the evaluation quality management practices of major bilateral donors and analyzes the quality assessment system in use at Norad and KOICA. In bilateral donor agencies, quality assessment is often conducted as part of internal evaluation management, unlike the standardized approach adopted by many UN agencies. Most bilateral donors, including Norad, undertake internal quality reviews or external meta-evaluations. KOICA has established the Independent Evaluation Panel to perform regular quality assessment which involves both internal and external reviews.

    The key characteristics of evaluation quality management identified from the four case studies can be summarized as follows: first, quality management is integrated into institutional evaluation systems based on widely adopted evaluation principles in development cooperation, such as the evaluation norms of the United Nations Evaluation Group or the evaluation quality standards of the OECD DAC; second, quality assessments are conducted on a rolling basis by external experts to ensure objectivity, using detailed checklists as a guide; and third, these assessments serve multiple purposes, including assessing the usability of evaluation results, accumulating evaluation data, and identifying best practices. To optimize the utilization of evaluation quality assessment system, it is essential to secure procedural legitimacy and consistency across the quality standards among those who conduct the assessment.

    To ensure the long-term effectiveness of evaluations undertaken by Korea’s ODA implementing agencies, it is crucial to develop guidelines for managing their overall evaluation quality based on an assessment of evaluation procedures as well as organizational and human capacity. A comprehensive analysis of the merits and challenges of quality assurance systems being used by other donors would yield insights into how evaluation quality management could be institutionalized in Korean agencies. Additionally, a follow-up research is required to identify the role of the Committee for International Development Cooperation in managing the quality of evaluations conducted by ODA implementing agencies and supporting them in improving evaluation quality management practices.

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  • 중앙아시아의 중장기 통상전략과 한·중앙아시아 협력 방안
    Central Asia’s Medium- to Long-term Trade Strategies and Korea-Central Asia Cooperation Plans

    The objective of this research is to derive the future directions of cooperation between Korea and Central Asia amid rising global uncertainty in the face of competition and confrontation between significant powers with no resolut..

    Minhyeon Jeong et al. Date 2022.12.30

    ODA
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    The objective of this research is to derive the future directions of cooperation between Korea and Central Asia amid rising global uncertainty in the face of competition and confrontation between significant powers with no resolution in sight, and as the strategic value of economic security increases. We are facing a period of fragmentation of the global value chain. Korea’s economy, which has scarce natural resources and relatively abundant high-quality human capital, has long relied on expanding markets through trade and increasing efficiency through resource allocation through the international division of labor as the foundation of economic growth. Therefore, in the current era of increasing global economic uncertainty obscuring even near-future prospects, it is an urgent time to establish a new external cooperation system more appropriate for the times. Especially in the situation where the sanctions on the Russian economy are expected to be prolonged, the geographic value of Central Asia, which connects Russia and Europe, has become more prominent. In addition, considering the rich natural resources and relatively young population structure of Central Asia, expanding cooperation with Central Asia has even more significant implications. In this study, based on the developmental level of each individual country, we classified the five Central Asian countries into three middle-income countries (Kazakhstan, Uzbekistan, Turkmenistan) and two low-income countries (Kyrgyzstan, Tajikistan) based on the commonalities and differences revealed in the structural characteristics of each country’s economy. This classification enables us to more systematically understand the growth issues that Central Asia’s middle- and low-income countries need to resolve for sustained growth, and to provide macro-level answers for the direction of cooperation between Korea and these countries.

    In chapter 2 of this report, long-term growth challenges for each of the Central Asian countries are identified. Firstly, challenges blocking the growth of Kazakhstan, Uzbekistan, and Turkmenistan, which are middle-income countries in Central Asia, are summarized as diversification and advancement of industrial structure. Despite high growth, the development of medium- and high-value-added manufacturing industries that play an essential role in productivity improvement is being delayed. The delay in industrial structure transformation to medium-and high- value-added industries hinders the essential qualitative growth for the long-term growth of middle-income countries in Central Asia, which could lead to chronic growth delay akin to the so-called “middle-income trap.” On the other hand, the growth challenges of Kyrgyzstan and Tajikistan, low-income countries in Central Asia, can be summarized as expanding industrial infrastructure through physical capital accumulation. It is necessary to expand physical capital to form industrial infrastructure quickly. Through this, it becomes possible to embed labor in labor- intensive export goods such as food and clothing instead of directly exporting labor to neighboring countries and selling them overseas. In order to do this, it is necessary to establish a domestic industrial infrastructure suitable for the country’s stage of economic development by utilizing relatively abundant labor compared to neighboring countries.

    Chapters 3 to 5 outline the directions for cooperation in digital, climate change, and health and medical fields. The directions were derived mainly from material cooperation related to physical capital, and human resources cooperation related to human capital. According to the empirical data examined, there were significant differences in the demand for cooperation between Central Asian low- and middle-income countries in all the three fields mentioned above. This is because the overall cooperation environment, including digital industry technology, infrastructure, and system laws and regulations; energy and power infrastructure; and health and medical infrastructure and technology, varies depending on each country’s economic development level. The direction of cooperation with Central Asian middle-income countries can be summarized as requiring state-of-the-art technology, infrastructure, and industrial cooperation in all the three areas mentioned above, along with higher-level professional and engineering exchange and transfer of managerial skills in terms of human exchange. On the other hand, cooperation related to urgent primary infrastructure expansion is primarily needed for low-income countries regarding material exchange, which has been shown to be effective for growth.
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  • 인도의 신·재생에너지 시장 및 정책 분석과 한-인도 협력 방안
    Analysis of India’s New and Renewable Energy Market and Policies and Implications for Korea-India Cooperation

    The importance of new and renewable energy has been a prominent issue since the Paris climate agreement in 2015. The Paris Agreement aims to keep the average temperature rise below 2°C compared to before industrialization, and to..

    Hyoungmin Han et al. Date 2022.12.30

    Economic cooperation, Energy industry India and South Asia
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    The importance of new and renewable energy has been a prominent issue since the Paris climate agreement in 2015. The Paris Agreement aims to keep the average temperature rise below 2°C compared to before industrialization, and to limit the future temperature rise to 1.5°C or less. The main responses to the Paris climate agreement are centered on the active use of eco-friendly energy such as new and renewable energy and policies to support the ecosystem of low-carbon industries. Responding to the global green movement, the Korean government declared carbon neutrality in 2020 and announced policy plans to create a low-carbon ecosystem. However, the small size of the domestic renewable energy market is making it difficult to mass-produce renewable power generation plants. Also, as the international community’s transition to a low-carbon ecosystem is rapidly taking place, Korea needs to actively meet its Nationally Determined Contributions (NDCs) through various overseas cooperation projects if it is to achieve carbon neutrality by 2050. Therefore, it is clear that energy cooperation with developing countries will be needed to explore new markets and secure NDCs through overseas expansion.

    Considering India’s recent expansion of the renewable energy market and its active policy supports, India is likely to grow into a major partner for Korea in the renewable energy sector. India is currently active in expanding new and renewable energy to solve its domestic air pollution issue, and the demand for renewable energy is expected to grow in the long term. Currently, India’s renewable energy market is a major market on the global level. Specifically, the volume of India’s renewable energy production is second in the world, right after China.

    Therefore, in light of the growing importance of renewable energy and NDC needs, research on India’s renewable energy market is necessary. This study aims to produce a report on India’s renewable energy market and policy implications for Korea-India cooperation in renewable energy sector through analysis of India’s energy and renewable energy market, renewable energy policies and systems, and firm-level cases.

    First, this study analyzes the current status of the Indian energy and renewable energy market and the structure of power production using various quantitative data. The supply of Indian energy is composed of domestic production, such as coal and renewable energy, and imports, such as crude oil and coal. In particular, due to India’s rapid economic growth and increased domestic demand, imports are increasing faster than domestic production. This means that the supply of new and renewable energy is increasing in terms of energy supply in India, but the use of non-renewable thermal energy is increasing due to the imbalance between energy demand and supply in India. India’s final energy consumption is changing from direct consumption of new and renewable energy to secondary energy consumption such as oil and power. India’s final energy consumption is mainly focused on the industry, which is relatively larger than housing and home demand. Specifically, the final energy demand in the industry is in coal, and the final energy demand in housing and home lies more in electricity and crude oil than renewable energy. The decrease in direct consumption of new and renewable energy in final energy is based on the current energy situation in India, where it is difficult to produce enough renewable energy and large amounts of renewable energy are converted to power. Meanwhile, Indian electricity is mainly produced using coal, but production using renewable energy sources has recently expanded. In particular, Maharashtra, Gujarat, and Tamil Nadu, where electricity production is active, are actively utilizing renewable energy sources along with coal. In particular, India’s electricity consumption based on renewable energy in the industry, home, and residential sectors is rapidly increasing.

    The current status of power generation using renewable energy in India is as follows. Renewable energy generation in India mainly focuses on wind power, solar energy, and bioenergy (Burgas). In other words, renewable energy such as waste or new energy such as hydrogen energy are not the major energy source for power generation. Also, the proportion of solar energy sources is rapidly increasing with the help of expansion of India’s renewable energy generation facilities. Most of India’s renewable energy generation facilities are owned by private agents. India’s renewable energy generation facilities and power generation are active in southern and western India, such as Karnataka, Tamil Nadu, and Maharashtra.

    Next, let’s look at India’s renewable energy policies and regulatory systems. The size of the Indian federal government’s clean energy budget is very large even in international terms, confirming the Indian government’s willingness to switch to new and renewable energy. The starting point of India’s current new and renewable energy policy can be said to be the National Action Plan on Climate Change. The National Solar Mission is a representative new and renewable energy-related policy that has been effective so far through upward adjustment of the target. The National Policy on Biofuels is a key policy for the spread of biofuels, and the National Offshore Wind Energy Policy, which began in 2015, is being promoted with the aim of developing and spreading wind power around exclusive economic zones (EEZs). The Hydrogen Energy Mission is a policy introduced in 2020 and is an area that the Indian government is paying new attention to. Electric vehicles are also an area actively fostered by the Indian government. In addition, the Indian government promotes renewable energy generation through the Tariff Policy, introducing mechanisms for renewable energy generation certification and issuing certificates to implement the Renewable Purchase Obligation (RPO) in 2010, while providing incentives to power generation operators. In addition, the renewable energy auction system is also being activated.

    The recent laws and systems related to energy, new and renewable energy in India are characterized by the overall marketization. The amended Electricity Bill of 2021, announced in 2021, includes the abolition of the government license system for power distribution operators and the free entry of companies. It also includes fines for distribution companies that do not comply with the RPO and transferring the authority to set renewable energy purchase obligation levels from the state to the federal government to more systematically respond to climate change.

    Recently, the Indian government has provided direct and indirect incentives to producers of green hydrogen and ammonia through the Hydrogen Energy Mission, expanding the room for production activities. In addition, companies are actively entering the Indian electric vehicle market due to the long-term growth prospects of the Indian market, such as an increase in the middle-class population, the possibility of expanding the low-cost electric vehicle market due to battery price cuts, and confidence in the Indian government’s policy will to expand the use of electric vehicles.

    India’s Ministry of Power oversees energy legal systems and policies, while the Ministry of New and Renewable Energy is in charge of overall implementation, including the development and spread of new and renewable energy. Currently, the Minister of New and Renewable Energy also serves as the Minister of Electricity, so the importance of new and renewable energy in energy policy can be confirmed. In addition to the federal level, individual states operate agencies in charge of new and renewable energy under the Ministry of New and Renewable Energy, and State Electricity Regulatory Commissions (SERCs) establish state-level regulatory systems and consult with the union government and the other states. The Indian state government’s new and renewable energy policies are aligned with the federal government’s policies, and many of the state’s policies are being promoted in connection with the federal government’s policies or projects of new and renewable energy policy.

    India’s trade and investment policy related to the new and renewable energy industries shows a clear trend of protectionism and the tendency to foster domestic industries. In the case of solar cells and modules, which have the largest import volume in the new and renewable energy sectors, the import tariff rate has been raised from 0% to 40% and 25%, respectively. Companies do not appear to benefit from the Production-Linked Incentive (PLI) for high-efficiency solar PV module and ACC battery storage unless they can make large-scale facility investments and meet local procurement conditions, etc. Moreover, PLI does not function effectively as a preemptive source of funds for production facilities because the benefits are provided after the suggested plans are finished. As of September 2022, the selected beneficiaries of the PLI are all companies of Indian origin planning to make large-scale investments.

    In addition, this study examined the current status of cooperation between the Indian government and Japan, the United States, the EU (Germany), China, and Korea, together with the major achievements up to date and cases of market entry. Japan, the United States, and the EU (Germany) have recognized India as a strategic partner for energy security and launched a government-level energy dialogue with India to discuss agenda on the development of new and renewable energy in early 2000. The background of the energy dialogue is that the Indian government has begun to consider energy security as a key foreign economic policy of the country since 2000, leading to an increase in the demand for energy technology, policies, and management with major countries. 
    Meanwhile, major countries are exploring opportunities to enter the market while expanding cooperation with India on renewable energy. Japan, the United States, and the EU (Germany) have signed clean energy partnerships at the government level recently and are discussing areas such as low-carbon power generation, overseas reduction projects, hydrogen energy, and electric vehicles from a long-term perspective. In addition, renewable energy companies in Japan, the United States, and the EU (Germany) are expanding their entry into the Indian renewable energy market. Most of the these are large companies, with the solar and wind (offshore) power sectors accounting for a large portion.

    The main areas of entry were equity investment, establishment of joint ventures with local companies, and order contracts. In recent years, many manufacturing plants have been established in India to target domestic market and use their factories as an export base to third countries. On the other hand, India is highly dependent on China as a major supply chain of the global solar market. 
    Despite recent setbacks to the two countries’ political relations due to border issues, they are cooperating in the renewable energy sector. On the other hand, it was found that Korea had no regular energy-related channels with India at the government level, though cooperation in renewable energy has been discussed at the summit level. In 2015, the two countries set clean energy as a major issue of cooperation and decided to promote exchanges between ministries and agencies. In 2018, they signed a memorandum of cooperation to expand renewable energy projects. In addition, Korea decided to select green energy as an ODA strategy for India in 2022 to support India’s greenhouse gas reduction and actively participate in climate change. In April of the same year, a public-private meeting on decarbonization in the Indian-Pacific Economic Frameworks (IPEF) was held to consider joint response measures.

    This study also investigated how market players such as multinational companies in India and Korean local companies evaluate the Indian renewable energy market and their demands on the policy side through in-depth interviews and survey. From the interviews, we found that most companies consider the Indian renewable sector as holding sufficient market potential. Multinational companies pointed out high demand in Indian renewable energy consumption and the government’s supportive policy as major factors for international players to enter the Indian market. Also, most companies responded that the Indian renewable energy market has significant growth potential in the near future, as recent projects from the Indian Solar Energy Corporation (SECI), which exclusively implements central public sector undertakings, are scaling up in terms of the amount of power generation and financing for these projects. 

    On the other hand, some barriers to the Indian renewable market were identified. Firstly, multinational companies emphasized that newcomers should consider whether they have an advantage in market price on their products since the Indian renewable market has been competitive due to Indian and Chinese companies already dominating market. Secondly, companies identified the negative financial situation of Indian state transmission companies, so called DISCOMs, and the states’ policy discontinuity as factors hindering small and medium companies from entering the Indian market. Lastly, some companies have experienced land-related disputes with the local community as renewable energy projects generally require large sites.

    According to the survey results for domestic renewable energy companies, the proportion of small and medium-sized enterprises (SMEs) participating in the survey was very high. By energy source, the proportion of solar power and solar thermal was overwhelmingly high, followed by wind power and biomass. 

    Among the government’s renewable energy overseas expansion support policies, companies mainly utilized the “Overseas Feasibility Study Support System.” When examining the propensity of renewable companies to advance into overseas markets, ‘Lack of institutional support for overseas expansion’ was highlighted among the exogenous factors preventing companies from advancing into overseas markets. In addition, companies are giving priority to the US, India and Vietnam as countries for future expansion both in the short-term and mid-to-long term perspectives.

    Meanwhile, according to evaluations of the Indian market, there were opportunity factors such as ‘seeking market exploitation’, ‘discovering strategic cooperation partner’, and ‘market preoccupation’, whereas ‘raising funds for overseas business’ and ‘insufficient market information’ were found to impede entry into the Indian market. In particular, Korean companies pointed out local policy and system issues, such as the complexity of Indian laws or institutional inertia.

    Through in-depth interviews with multinational companies and surveys on Korean renewable energy companies, it was found that Korean companies such as solar parts and equipment purveyors positively considered the Indian market in terms of ‘seeking market exploitation’ and ‘market preoccupation’. However, given the high market share of Indian and Chinese companies due to their low prices of products and services, the government’s support system should be better equipped to help Korean companies gain price competitiveness. In addition, a cooperative system to strengthen the network for ‘finding strategic cooperation partners with major local companies in India’ is also required.

    Through the various analyses conducted above, we find that Korea-India renewable energy cooperation is necessary. Considering India’s fast-growing renewable energy market, demand, and overseas cooperation with global countries, India’s renewable energy sector can be a potential area of cooperation for Korea. In addition, India has plenty of Clean Development Systems (CDMs) which could be helpful to secure Korea’s overseas NDC reduction. Also, demand for new and renewable energy derivatives products such as electric vehicles, batteries, hydrogen, and secondary batteries in India is increasing, making it possible to conduct various cooperation projects related to new and renewable energy with Korea.

    However, there are various obstacles for Korea-India cooperation. Specifically, we could not find any regular cooperation channels between Korea and India in the energy sector, while India’s domestic trade and investment policies for renewable energy market are quite domestically oriented. Also, it is difficult for foreign companies to benefit from the Indian government’s incentives related to renewable energy as the project sizes are relatively large. Price competition in the Indian renewable energy market is also intensifying so that Korean firms, which are mostly SMEs, find it hard to place competitive bids to the project. In addition, the policy support of local governments in India is highly volatile, and financial accessibility is also a problem. To strengthen Korea-India renewable energy cooperation, this study proposes the policy tasks of conducting Korea-India energy dialogue; establishment of Korea-India climate change cooperation agreement; initiation of Korea-India renewable energy pilot projects; and the strengthening of competitiveness for Korean companies.

    First, in order to expand the scope of Korea-India renewable energy cooperation, it is necessary to establish a window for discussion between the governments. Through the 2015 and 2018 summits, Korea and India upgraded their level of cooperation, but it is difficult to say that cooperation in new and renewable energy has gained significant momentum. This is because there is no regular energy-related dialogue between Korea and India. Therefore, in order to upgrade Korea-India renewable energy cooperation, it is necessary to establish a Korea-India energy dialogue and operate this channel regularly. In particular, the dialogue can be helpful to discuss future NDC projects and to strengthen energy technology through industrial cooperation in both countries’ public and private sectors. In addition, the Korea-India energy dialogue can be a window to discuss energy security issues in the two countries.

    Also, it is necessary to establish a Korea-India climate development cooperation agreement to secure Korea’s overseas NDC reduction goals with India. In order for the Korea-India cooperation project to be recognized as an internationally transferred reduction outcome (ITMO) stipulated in the Paris Agreement, discussions on its contribution to the NDC of the participating parties and the long-term low-carbon development strategy of the participating parties are essential. In particular, considering the case of the Maharashtra Gas Complex Power Plant in India, it is necessary to specify and include the pre- and post-support from India’s central and state to the climate change agreement.

    In addition, our study proposes a Korea-India joint renewable energy pilot project. India’s renewable energy market has proven difficult for Korean companies to enter due to the profitability and size of the projects in India. Therefore, we suggest that the pilot project be mainly run by Korean public developers with sufficient overseas business experience. We expect that this pilot project is likely to help improve competitiveness and productivity of Korean firms. Specifically, areas of the project are solar and wind power generation and hydrogen ammonia production, and potential project regions can be Cartanaka, Andhra Pradesh, Rajasthan, Gujarat, Maharashtra and Tamil Nadu.

    Finally, our study proposes expanding social financial utilization and improving the domestic financial support system to increase the competitiveness of domestic renewable energy companies. Many firms mainly access funds from the company itself, investment in financial institutions, and project financing from private financial institutions. We suggest green bonds as an alternative source to expand overseas business. A green bond is a special purpose bond issued by multilateral organizations, local governments, private companies, and financial institutions to carry out eco-friendly projects, which can raise large amounts of funds in the long run. Meanwhile, domestic financial support for renewable energy companies is limited to domestic businesses. Therefore, our study emphasizes that the financial support system, which is applied only to domestic businesses in related institutions, should be expanded to overseas business fields in order to solve the financing issues experienced by domestic renewable energy firms.
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  • 중국 도시의 녹색전환 정책과 시사점
    Green Transition Policy and Implications of Chinese Cities

    As a strategy to promote green transition, Chinese cities are increasing their proportion of renewable energy consumption by diversifying and scaling small solar power, wind power, biomass, and geothermal power, and striving to su..

    Wonseok Choi et al. Date 2022.12.30

    Economic reform, Industrial policy China
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    As a strategy to promote green transition, Chinese cities are increasing their proportion of renewable energy consumption by diversifying and scaling small solar power, wind power, biomass, and geothermal power, and striving to supply eco-friendly energy by activating green electricity transactions between regions. In addition, policies to reduce pollution and carbon emissions and establish a green manufacturing system are being promoted with a focus on cities where industrial complexes are situated. The green transition in China’s transportation sector also takes on the character of an industrial policy that utilizes urban green transition to foster industries, such as fostering the new energy automobile industry centering on large cities where automobiles and public transportation are concentrated. In this respect, this study classified the green conversion policy of Chinese cities into policies in the energy, industry, and transportation sectors, and identified the policy implementation system and characteristics of each field. In addition, based on the characteristics of major policies and implementation cases in each field, policy implications and cooperation measures necessary for Korea to pursue a green transition in the future were identified, as well as matters to keep in mind.

    Chapter 2 of this report deals with the background and strategies for promoting green transformation in Chinese cities. Since the 1980s, after the reform and opening up, China’s urbanization has progressed rapidly, with coastal cities being the center of industrialization, and these cities serving as hubs for international trade. However, the indiscriminate expansion of Chinese cities is evaluated as an unsustainable model, and the Chinese government is pursuing a green conversion policy of cities to reduce environmental pollution and to grow the economy centered on high value-added manufacturing and services. The green transition promotion strategy of Chinese cities aims to set low-carbon transition targets for each city and build an eco-friendly energy system. At the same time, it promotes green conversion of industrial complexes located in cities, and promotes investment and consumption in the private sector through policies that lead the supply of new energy vehicles in public institutions and public transportation. In this regard, China is expected to strategically induce the demand for technologies and products needed for green transformation throughout urban areas, convert them into new engines of economic growth, and maintain industrial competitiveness and global market leadership through green transformation of the manufacturing industry. In addition, it is expected to establish a renewable energy generation system centered on cities to pursue social stability through energy stability and household income increase, and to strongly promote green transformation of cities as a means to respond to international pressure on carbon reduction.

    Chapter 3 looked at China’s green transformation of the city’s energy sector from the perspectives of expanding production of non-fossil energy, establishing a low-carbon energy supply system, and low-carbon and high-efficiency fossil energy production. In the 14th Five-Year Plan period (2021-2025), China’s key to “expanding production of non-fossil energy” is to expand wind and solar power and nuclear power projects in coastal areas. In the field of wind and solar power generation, it plans to encourage the use of production sites first, expand large-scale wind and solar power generation projects and clean energy production bases. In Chinese cities, the promotion of rooftop-distributed photovoltaic power generation, among renewable energy sources, is evaluated to be capable of intensive development, reduce power peak load, and induce residents to consume green energy. In addition, since wind and solar power are greatly affected by the climate, nuclear power generation projects with low carbon emissions and stable power supply will be operated in pilot cities and expanded to other regions according to the results. In particular, during the 14th Five-Year Plan period, the development of the latest technologies such as small modular reactors (SMR) and the comprehensive use of nuclear power are emphasized. In addition, in order to lay the groundwork for increasing the utilization of renewable energy, the Chinese government plans to promote the maintenance of the transportation power grid system, the strengthening of inter-regional power grid connectivity, building smart distribution networks for decentralized renewable energy power, as well as to encourage the construction of smart energy systems and small power grids. In particular, it aims to stabilize energy supply and expand new and renewable energy supply by promoting “small independent power grid + distributed energy source” projects in cities along with existing large renewable energy plants. Green conversion in China’s fossil energy sector is exiting coal mines or coal-fired power plants as before, but rather than rapidly removing fossil energy for stable power supply, it focuses on low carbonization and high efficiency of power generation.

    Chapter 4 classifies and analyzes policies to reduce pollution and carbon emissions, increase energy use efficiency, improve resource use level, and achieve improvements in green manufacturing systems in the urban industrial sector. First of all, in order to reduce pollution and carbon emissions, China intends to control the total amount of emissions with the goal of reducing emission intensity (pollutants 10%, carbon 18%). Major policies include reducing pollutant emissions in production processes and innovating related technologies, reducing emissions according to product life cycles, low carbonization of low-cost CCUS and industrial energy sources, strengthening production capacity control and evaluation of high-emission industries, fostering specialized institutions related to emission calculation systems and emission management information systems, and tax and financial support. Increasing energy utilization efficiency in the industrial sector is a major means of reducing carbon emissions in China, as the sector accounts for about 65% of total energy consumption. Accordingly, China plans to reduce the energy consumption per value added of industrial enterprises (annual sales of 20 million yuan or more) by 13.5% by 2025 compared to 2020. It also aims to improve the energy efficiency of major energy-intensive industries such as steel, petrochemical, non-ferrous metals, and building materials. To this end, the 14th Five-Year Plan will focus on the development and application of energy consumption reduction technology,introductionofhigh-efficiencyenergy-saving general-purpose facilities throughout the industry, and energy saving measures at data centers and base stations. In particular, the Chinese government presents the power efficiency of new large and large data centers as a detailed goal in line with the digital transformation trend of the industry, and emphasizes policies to include energy savings in data centers in key projects. To improve the level of resource utilization, China plans to increase the level of comprehensive use of manufacturing resources over the next five years by enhancing the comprehensive utilization rate of industrial solid waste and expanding recycling and re-manufacturing of major renewable resources. It plans to increase the recovery rate of waste non-ferrous metals and establish a management system for waste-powered batteries as a way to secure strategic metal resources such as copper, aluminum, cobalt, and lithium. In addition, the Chinese government plans to expand the use of large-scale industrial solid waste in areas such as building material production, infrastructure construction, and charging underground mining areas, and build 40 pilot bases for comprehensive use of large-scale industrial solid waste. Finally, China wants to further develop its green manufacturing system. As a policy goal, the government plans to distribute 10,000 green products and build and develop green low-carbon factories, supply chains, and industrial terminals to promote green transformation of SMEs to raise the level of clean production.

    In particular, it plans to focus on establishing a green standard system and a green manufacturing public service platform, strengthening the role of leading companies in driving small and medium-sized enterprises, and strengthening green manufacturing-related market functions. China continues to expand financial support for pilot projects (products, factories, industrial complexes, supply chain management companies) selected on the green manufacturing list, and is pushing for internationalization of standards and certification of green factories, supply chains, and products. During the 14th Five-Year Plan period, the central government’s green manufacturing system improvement and development policy is focusing on strengthening public platform functions that will promote organic linkage and green transformation among green manufacturing pilot units. Accordingly, each region in China is also emphasizing qualitative improvement, such as strengthening and improving evaluation and standards systems, and seeking to expand the role of public service platforms. It is also worth noting that some regions are simultaneously presenting specific goals of green manufacturing pilot units by key field/industry, reflecting the industrial structure of the region and the characteristics of low carbonization by industry.

    Chapter 5 analyzes China’s policies to reduce emissions, expand the supply of new energy vehicles, and strengthen green transportationtechnologies,whicharefocusedinthe transportation sector, through central and local policies and pilot cities.Toreduceemissions,Chinaispushingaheadwith regulations on internal combustion locomotives at the level of advanced countries by raising its emission standards beyond European standards and requiring related government agencies to transmit exhaust information during actual internal combustion locomotives in real-time. It is also promoting a ‘dual credit’ policy as a means of controlling the supply of internal combustion locomotives in China. The dual credit policy is operated by ‘CAFC credit’ obtained by automobile manufacturers meeting the fuel consumption standards of internal combustion locomotives, and NEV credit obtained by supplying a certain percentage of new energy vehicles according to the number of internal combustion locomotives produced. This dual credit system has a strong administrative regulation, such as banning automakers from producing internal combustion locomotives when they fail to meet the NEV credit level designated by the Chinese government for a year. In this regard, the dual credit policy acts as a management burden for existing internal combustion locomotive companies, but acts as an opportunity for new companies that produce only new energy vehicles as a means of fostering the new energy automobile industry in China. Above all, large Chinese cities are promoting the purchase of new energy vehicles through various support policies such as subsidies along with restrictions on the use of internal combustion locomotives. As such, policies are being comprehensively promoted through consideration of how to reduce internal combustion locomotives as well as fostering new energy vehicles. In order to expand the supply of new energy transportation vehicles, China focused on mandatory conversion of electric vehicles in the public sector, subsidies for new energy vehicles, and charging infrastructure. The Chinese government has gradually reduced the size of purchase subsidies by increasing the standard for electric mileage of new energy cars and suspending payments to companies with annual sales of less than 10,000 units, but is extending current subsidy policies to boost sluggish consumption due to COVID-19. In particular, major cities such as Tianjin, Suzhou, and Shenzhen were selected as pilot cities for the supply of new energy vehicles, and are in the top ranks in terms of the number of new energy vehicles owned. In the future, many pilot policies necessary for green conversion in the transportation sector are expected to be implemented. The development of green transportation technology is mainly focused on accelerating the expansion of new energy and clean energy transportation equipment, energy saving, accelerating the use of key environmental technologies, and completing the green transportation standard system. In particular, various integrated transportation services are being promoted in large cities such as Beijing and Shenzhen, and Guangdong Province is also promoting pilot operations in the area of power market construction using V2G technology and development of hydrogen battery automobile technology.

    Finally, Chapter 6 summarizes the policy implications, areas of Korea-China cooperation, and risk factors that the green transformation promotion plan of Chinese cities can present to Korea based on the issues discussed in Chapters 3 to 5. In the energy sector, Korea also needs to lay an institutional foundation for the use of new nuclear technologies such as small reactors as well as renewable energy. In addition, it is necessary to seek CCUS cooperation measures in the field of Korea-China thermal power generation and to cooperate in the field of maintaining and operating mutual dialogue channels on nuclear safety. As a risk factor, it is necessary to prepare for the risk of importing solar power-related materials to China that may occur while focusing on decentralized solar power generation using rooftops in Chinese cities. In addition, Korea also needs to strengthen cooperation and government financial support analyzed as the main characteristics of China’s green transformation policy in the industrial sector, foster green transformation-related service industries for SMEs, and strengthen support to improve energy utilization. In addition, it is necessary to expand cooperation in standards/certification related to green manufacturing, cooperation with China’s industrial green transition-focused areas, and cooperation in emission reduction technologies such as steel/cement. On the other hand, from the standpoint of Korea, where the manufacturing supply chain with China is closely connected, it is necessary to prepare for the risks of enhancing China’s green manufacturing capacity. Finally, in the transportation sector, Korea also needs to gradually promote roadmaps and related policies to reduce internal combustion locomotives, and suggested seeking cooperation in Tianjin, Suzhou, Shionjeon, and Guangdong in green transportation technologies such as hydrogen and V2G. Suggested measures also include response to changes in the business environment due to stricter regulations on internal combustion engines in China, the importance of securing technology gaps to strengthen the competitiveness of Chinese electric vehicles, and the supply risk of major materials (lithium, elements, etc.) due to green conversion efforts in China.

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  • 중국의 녹색금융 발전전략과 주요내용
    China’s Green Finance Strategy: the Policy and the Market

    China is a leading nation in the area of green finance, deeply recognizing that carbon neutrality should be accompanied with green finance to boost development of the green industry and actively working to develop green financial ..

    Jiyoung Moon and Hyojin Lee Date 2022.12.30

    Financial policy, Capital market China
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    China is a leading nation in the area of green finance, deeply recognizing that carbon neutrality should be accompanied with green finance to boost development of the green industry and actively working to develop green financial markets. In 2016, China published the “Guidelines for Establishing the Green Financial System,” which provides core guidelines for establishing the domestic green financial market. These guidelines define the concept of green finance in China, namely as providing financial service to support projects such as for environmental protection, renewable energy development, and green infrastructure construction for response to climate change and efficient use of resources in economic activities. Viewing green finance as an important strategic policy tool for China to achieve its carbon neutrality goal, this research explores China‘s green finance strategy in terms of policy establishment and market formation, the tools for supporting domestic green industry development, and global cooperation, while also aiming to provide suggestions for Korea-China cooperation in the green finance field.

    Chapter 2 studies China’s policy establishment and market status in terms of green loan and bond markets, which are the main components of China’s green finance market. China’s green loan market is largely operated by state-owned banks and some large commercial banks as major players. These provide loans for domestic green projects to boost China’s green economy development. The support provided by these banks has increased the size of China’s green loan market to over 15.9 trillion RMB, making it the largest market in the world in 2021. China’s green bond market, as well, is one of the largest in the world. Its size recorded 1.56 trillion RMB in 2021, and according to the Climate Bond Initiative it is the second largest green bond market in the world after the United States. In China’s green bond market, local governments and corporations act as major suppliers of green bonds. According to the issuance type and purpose of use, China’s green bonds can be classified into various categories including finance bonds, intermediate bills, commercial bills, corporate bonds, and enterprise bonds. Also, there are various management guidelines according to the bond type and entity ownership. These guidelines have different requirements about supervisory authority, requirements of information disclosure, and necessity for evaluation, and are adopted based on the issuing entity. One of the characteristics identified in this study is that China’s green bond market is largely led by state-owned companies. This may because of the government’s differentiated management structure for state-owned companies and local governments, which benefits them more than non-state-owned companies by providing relatively lenient requirements when issuing green bonds. 

    Chapter 3 analyzes China's green finance utilization strategies in terms of supporting green industry development, attracting foreign green investment, and expanding foreign cooperation channels. First, China uses green finance to support green development, especially focusing on clean energy development, renewable vehicles, and green architecture. Various supportive measures are provided, including credit evaluation standards to expand green project financing, encouraging green architecture through local government financial support, and green loans and subsidies to increase the consumption of renewable energy vehicles. Second, in order to boost domestic green economy development, China also implements financial policy support measures to attract foreign investment in green industries. The main method is to enlist emerging green industries in the “Catalogue of Industries for Encouraging Foreign Investment,” which includes areas such as renewable energy; hydrogen power generation; green transportation; carbon capture, utilization, storage (CCUS); environmental protection; and resource circulation. These emerging industries are significant for green economy development but still require massive capital support to solve technology bottlenecks. Therefore, the Chinese government has opened its green economy market to foreign investment not only to promote emerging industries but also to find solutions to technical bottlenecks hindering expansion of the market. Third, China intends to solidify its role as a rule-maker by vitalizing international discussions on green finance on multilateral cooperation platforms. Since 2016, China has continued to expand green finance cooperation on both multilateral and bilateral cooperation platforms with the EU, UK, France, and Germany, among others. These actions convey an image to the global community that China is one of the leading nations in the global discussion on green finance. Also, it provides opportunities for China to expand its influence on the establishment of green finance global standards. 

    Regarding China’s green finance strategy, our study assesses that Korea could leverage various opportunities to cooperate with China in the field of green finance by: 1) expanding Korea-China investment in the green industry, 2) actively participating in international green finance cooperative organizations, and 3) strengthening institutional cooperation between Korea and China in the green finance field. 

    First, Korea and China could cooperate in green industry investment. As both countries have a manufacturing-based economic development structure, they share similar needs for green economy transformation, such as developing renewable energy and green vehicles. Korea could consider investing in cooperation with China in these industries, especially for those areas where China encourages foreign investments such as wind power, solar power, hydrogen energy, and renewable cars. By doing so, Korea could retain its share in related Chinese markets, and could also utilize Chinese market as a test bed to commercialize green technologies. 

    Second, Korea needs to join multilateral cooperation platforms to actively participate in the global discussion on green finance. According to China’s strategy to utilize international cooperation platforms, we analyze that China is participating in these platforms not only to lead the global discussion on green finance and strengthen its global leadership, but also to secure its position as a rule-maker in this field. However, while Korea has joined some of these platforms, the current level of participation is insufficient to assume a leading position on global green finance discussion. Therefore, Korea would benefit from joining multilateral platforms such as the Global Green Finance Leadership Program (GFLP) and International Platforms on Sustainable Finance (IPSF) in order to expand its global leadership and assume a leading position in the establishment of green finance standards in the international community. 

    Third, it is necessary for Korea to cooperate with other countries to establish an international green financial system, regarding which China could be the starting point. In 2021, China announced the Common Ground Taxonomy (CGT) with the EU, a joint classification system for green bond issuance which draws on the EU Taxonomy. This was a significant development because it signifies cooperation with a nation leading development of the green taxonomy in the international community, the EU, thus confirming China as a rule maker of green finance international standards. In this regard, Korea must make efforts to promote institutional advancements in the green finance market. Korea’s announcing its green classification system, the “K-Taxonomy,” in 2020, could be an opportunity to pursue institutional cooperation with China on the Green Bond Taxonomy with China, and further on with the EU. 

    Finally, in order to realize the aforementioned green financial cooperation between Korea and China, it is necessary to establish a cooperative body that can coordinate this during the renegotiation process of the Korea-China FTA. The cooperative body could enable Korea to hold regular discussions on supplementary and improvement plans for green finance cooperation with China. 
    As carbon neutrality and the development of green industries are significant missions for both Korea and China in this era of great green transition, we hope this study can add further momentum to cooperative relations between Korea-China in the field of green finance.

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  • 아세안 신흥안보 협력 강화를 위한 모델 구축에 관한 연구
    A Study on Establishing a Model for Strengthening ‘Emerging Security’ Cooperation with ASEAN

    South Korea needs a paradigm shift in its traditional diplomatic and security strategies to secure its strategic autonomy in new strategic areas - such as the Indo-Pacific region, cyber domain, emerging technologies, and space - a..

    Il Seok Oh et al. Date 2022.12.30

    economic security, International security
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    Summary
    South Korea needs a paradigm shift in its traditional diplomatic and security strategies to secure its strategic autonomy in new strategic areas - such as the Indo-Pacific region, cyber domain, emerging technologies, and space - and to guarantee its survival and prosperity while enhancing its national value. To achieve this strategic goal, South Korea, with its advanced ICT technologies and economic capabilities, should strengthen cooperation with ASEAN to ensure the autonomy of its diplomatic and security strategies and develop the flexibility to demonstrate its geopolitical value in new areas.

    South Korea should also shift its perception of ASEAN countries as mere destinations of economic interest and strive to enhance its emerging security cooperation with ASEAN to secure its diplomatic and security autonomy and establish a strategic area. In other words, the government should incorporate a flexible and transformative stance in performing its role as ASEANS’s emerging security cooperation partner to guarantee regional peace, ensure social safety and protect people's lives from the threats of climate change, infectious diseases, food shortages, cyber attacks, adverse effects of emerging technologies, and resource/energy shortages.

    Globalization and industrialization brought about new risk factors, which through quantitative and qualitative transformations, can develop into critical issues threatening national security. Emerging security refers to the security-wise response to such critical issues. According to the features, speed of proliferation, and responding actors of emerging security threats, it is possible to derive management models for environmental security, health security, cyber security, and resource (energy/food) security.

    New security threats emerge at the initial development stage of a sector. However, through a quantitative and qualitative accumulation process, such threats may increase beyond a critical point and expand to unconnected sectors. The repetition of such a phenomenon can create a dynamic that generates geopolitical issues and conflicts. Thus, it is crucial to establish a response model for each phase and actor to prevent new threats from escalating into macro-level geopolitical security threats. In other words, ASEAN-Korea emerging security cooperation should focus on each stage of the emerging security threat cycle: initial development-criticality-proliferation.

    In order to build a model to strengthen the emerging security cooperation between South Korea and ASEAN, it is necessary to consider the governance structure and securitization process of the ASEAN member states in response to emerging security threats, along with each member’s stance on the global bipolar order. The contents of emerging security cooperation should reflect each stage of the securitization process (initial development–criticality-proliferation). Environmental security, health security, cyber security, and resource security are sectors that receive humanitarian assistance and administrative cooperation. However, cooperation with diplomatic, security, and military means must also be guaranteed to strengthen emerging security cooperation. The possible provision of humanitarian assistance and administrative cooperation in the initial development stage of securitization raises the need to consider diplomatic, security and military cooperation in the criticality and proliferation stages.
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