[7th EAI Academy] VI. South Korea's Response Strategies in the Era of Economic Security

YouTube Link: https://www.youtube.com/watch?v=KVfokMYhRy4

Video Script

It is a great pleasure to have the opportunity today to share my thoughts and engage in a discussion with you on the topic of South Korea's response strategies in the era of economic security. This topic may not be entirely unfamiliar to you, as it is frequently discussed in the media. Nevertheless, it is both a contemporary issue and a prominent topic that has long been addressed in the field of international relations. From this perspective, I can say that economic security is a prime area where theory and reality interact. I hope you will consider it from this viewpoint. Have you had a chance to read the pre-circulated materials?

Historical Origins and 21st Century Characteristics of Economic Security Discussions

Assuming you have read them, I hope they have been of some help in understanding how South Korea's economic security strategy has evolved historically and what its key characteristics are. I will delve into this in more detail in the latter part of the lecture, focusing on South Korea's response strategies. First, there is considerable discussion surrounding economic security, and it can be said that a wide-ranging, almost encyclopedic, discussion is underway. Tracing the intellectual origins of economic security in international political theory reveals that it also has quite ancient roots. In the East, the concept of a 'rich country and a strong military' (부국강병) is based on a distinctly economic security-oriented mindset.

Moving to the West, we also find very old intellectual origins. In the process of forming modern nation-states in Europe, expanding national wealth, laying the foundation for prosperity, and maintaining and expanding that prosperity through the maintenance and expansion of military power can be seen as a prime example of the interaction between security and economy. What is noteworthy here is why economic security, despite its ancient intellectual roots, has only recently gained theoretical prominence. One reason is its deep connection to the Cold War competition between the United States and the Soviet Union. During the Cold War, the competition between nations, particularly between the US and the USSR, was largely centered on the military domain.

With the end of the Cold War, the role of military power as a means of coordinating relations between states, as it was in the past, became limited. For instance, the proliferation of nuclear weapons made it difficult to resolve conflicts or disputes between nations through all-out military warfare. Consequently, practical issues arose regarding how to manage and shape relations between states to one's advantage. In the post-Cold War era, discussions emerged about whether economic means could be utilized. If we were to characterize the Cold War period, it could be called an era of geopolitics, but the post-Cold War era is also referred to as an era of geoeconomics. At that time, the focus on geoeconomics and viewing interstate relations from a geoeconomic perspective represented a significant shift in perception.

However, at that time, there was a tendency to establish a vertical or hierarchical relationship between military and economy, or between security and economy. In other words, the economy was viewed as a means to achieve military objectives or to protect national security. In this sense, there was a tendency towards a unidirectional linkage, where the military was positioned above national objectives, and the economy was considered a tool to guarantee the higher objective of military power (national survival). This trend became prevalent from the early post-Cold War period.

However, economic security in the 21st century is somewhat different. There is a bidirectional relationship or linkage between security and economy. It is no longer a matter of hierarchy; at an equal level, military means may be used for economic prosperity, and economic means may be used for military security objectives. Ultimately, at this juncture in the 21st century, the task for nations is to closely link and integrate economy and security.

Increasing Uncertainty and the Spread of National Prioritization

In this regard, economic security, while long discussed in international political theory, is undergoing a transformation in the 21st century, with new perspectives emerging. You have likely encountered these changes yourselves, perhaps without even realizing it. I have briefly touched upon these points. Another keyword I wish to highlight is the increase in uncertainty. Reflecting on the past few years, various uncertainties have emerged.

The difference from past uncertainties is that while uncertainty has always existed, it tended to be confined to specific domains or issues. However, recently, these uncertainties are not confined to one area but tend to arise simultaneously across multiple domains. A direct example is the focus on climate change response.

This leads to various problems caused by climate change. Frequent natural disasters are one such issue, and climate change is also linked to other problems like pandemics. The COVID-19 pandemic is an example, and there are reports of COVID cases rising again recently. There are discussions about reintroducing mask mandates for the next two weeks, and some of you are wearing masks now. It is not over yet. Furthermore, geopolitical conflicts are occurring in various regions, such as the Russia-Ukraine war, the Israel-Hamas conflict, and on a larger scale, the US-China strategic competition, all unfolding simultaneously. This signifies an increase in uncertainty. While there are similarities to the past, there is a qualitative difference in that these events are unfolding simultaneously across multiple domains. I sometimes refer to this as an era of uncertainty.

This uncertainty is unlike anything we have encountered before. However, this brings about a problem. Beyond simply an increase in uncertainty, there are systemic effects. What might these be? How do we behave when uncertainty increases at the individual level? Are you living in overly comfortable circumstances?

We discussed COVID earlier. When uncertainty like COVID increased, how did we change? Although we know this is a problem that must be solved through solidarity and collective response, at the national level, measures like lockdowns are implemented with the rationale of 'taking care of our own country first.' What happens at the individual level? While there are aspects that benefit others, the thought of 'me first' arises. The motivation for wearing a mask includes altruistic reasons, but also selfish ones. As uncertainty increases, people tend to look after themselves. At the national level, this is called 'my country first' or protectionism. The rise of 'my country first' in many countries, including traditional developed and democratic nations, is not unrelated to this increase in uncertainty. Specifically, it manifests as protectionist policies.

The spread of protectionism is the reality of international relations and the current state of the world that we are witnessing. Once again, a shift has begun, drawing attention to economic security. This graph illustrates the uncertainties I have discussed so far in index form. The left side shows how economic uncertainty has increased over the past two decades. While there are fluctuations over time, it generally shows an upward trend. The right side represents geopolitical risk. Although the time frame is slightly longer and the shape is somewhat different, when looking at the same period, there is a tendency for similar directional movements since the 2000s. However, there was a period in the early 2000s when geopolitical risk surged on the right side. What was that? It was the immediate aftermath of the 9/11 attacks, which caused a sharp increase in geopolitical uncertainty. Looking at the period around 2020 on the right, geopolitical risk is generally at a significantly elevated level compared to before.

Moreover, this has been ongoing for a considerable period and will continue to be so. We are living in an era where not only economic uncertainties but also geopolitical risks are increasing simultaneously.

If one says this, one might think, 'I didn't know that, I haven't felt that.' Both risks are increasing simultaneously. These manifest as nationalism, protectionism, or exclusive and closed policies, as previously mentioned. Many of the policies we observe in reality are of this nature. Now that I have provided a general overview of economic security, I will elaborate further on why we should be interested in this topic and how we should understand it.

The Specifics of U.S.-China Relations and Weaponized Interdependence

Economic security in the 21st century is inextricably linked to the unique nature of U.S.-China relations. You have heard extensively about U.S.-China relations, and you will continue to hear about them today and tomorrow. What I wish to focus on are the two keywords: existential threat and interdependence. These will be very clear and intuitively understandable. The United States and China have entered into a strategic competition, and more broadly, they are likely to become powers vying for hegemony. From this perspective, they are nations posing an existential threat to each other. This is termed 'existential threat' in English. However, why can we say U.S.-China relations are unique? Typically, nations competing for hegemony or aspiring to do so do not exhibit high levels of interdependence. A close example is the U.S. and the Soviet Union. While not identical to current U.S.-China relations, the U.S. and the Soviet Union were powers engaged in fierce hegemonic competition, at least in the military security domain.

During that period, the U.S. and the Soviet Union had only very low levels of economic interdependence. It is natural for nations that pose threats to each other to behave this way. Is it not the same in personal relationships? This characteristic is also evident in interstate relations. However, looking at U.S.-China relations, at the point they entered strategic competition, the U.S. and China had a very high level of interdependence. Typically, existential threat and interdependence do not coexist. The U.S. and China, having both these elements, entered strategic competition, thus forming a very complex relationship that necessitates an understanding of economic security. In the past, U.S.-Soviet relations were primarily confined to military security competition, and thus could be understood from that perspective.

Therefore, military and economy could be viewed separately. Even now, there is a strong belief in some quarters that security and economy should be separated. However, our reality is that these two are intertwined and complex. Since reality has already become this way, we need to analyze why such phenomena are occurring. There is a metaphorical expression that easily conveys the uniqueness of U.S.-China relations. Compared to U.S.-Soviet relations, the Soviet Union during the Cold War was described as being surrounded by an 'Iron Curtain' by the Western bloc. This metaphorical expression signifies a clear boundary between the Soviet-led communist bloc and the U.S.-led democratic bloc, with very low levels of communication, interaction, and exchange between them.

In contrast, U.S.-China relations, since China's reform and opening-up in 1978, have been described by the metaphor 'bamboo curtain.' While there is a distinction, imagine the image of a bamboo forest. There are divisions, but air and water can pass through, and various things can flow between them. This is analogous to current U.S.-China relations. There are differences and boundaries, but there is interdependence, and various exchanges occur between them. Coordinating such a relationship is extremely difficult. If there were simply high levels of interdependence, they would get along, or they would not be interdependent at all. But attempting to manage both simultaneously leads to very difficult, complex relationships, and dilemma-like phenomena that are theoretically hard to explain.

Another is weaponized interdependence. Many of you have probably heard this before. Are you familiar with it? How do you understand it? I will refrain from asking questions as much as possible. It is like this. If you have time and are interested in this field, I encourage you to read about it. The term 'weaponized interdependence' has been used very broadly recently, often without reading the original source. Therefore, it is one of the terms that is frequently misused in this field. If used incorrectly, it can be understood as follows.

In reality, there are many such cases. It involves exploiting the asymmetry of interdependence between countries. In other words, the degree to which Country A depends on Country B differs from the degree to which Country B depends on Country A. This asymmetry is then exploited to pressure the other country, which is referred to as weaponized interdependence. If you have understood it this way so far, that is incorrect. Weaponized interdependence presupposes that the relationship between countries is highly networked.

As mentioned earlier, various networks of interdependence exist. When analyzing the economy, there are trade, production, finance, and investment. In the field of technology, too, various countries are interdependent in diverse ways. As a result of this interdependence, relationships between countries form networks, and the formation of networks brings about further changes. Through these changes, we can witness the following phenomena.

Within the network, nodes are divided into central and peripheral ones. The central nodes are called hubs, and there are also peripheral marginal nodes. Weaponized interdependence means that a country located at the hub gains the ability to block access to specific nodes for other countries. In English, this is called 'ESS denial.' Since a hub in a network is connected to most or all other nodes, it possesses the ability to block other countries from directly connecting with each other. Furthermore, within the value chain of specific advanced technologies, pressure can be applied to other countries by blocking access to certain parts of the value chain. This is precisely why the United States

The Securitization of Advanced Technology Competition: Future Competitiveness and Expanding Battlefields

can pressure China in the semiconductor sector. This is because the United States occupies the most crucial position within the semiconductor value chain. Therefore, weaponized interdependence is a widely used but also frequently misused term. If you have time, it would be beneficial to read about it and organize your thoughts. In Chinese, it is called 'choke point,' and in English, it is also 'choke point.' It implies strangling the opponent's throat, meaning 'access denial.' China has also started using this term, and explanations are often given within China about how the U.S. is applying such pressure. For example, there is the term 'choke point technology,' which refers to using certain technologies to pressure China. This is because the asymmetry between the U.S. and China within the network still exists. If the U.S. is closer to the center, China is still further from the center than the U.S. This is also the case in other areas. Now, let me discuss the competition in advanced technologies. Why are the U.S. and China competing and in conflict over advanced technologies from an economic security perspective? There can be various reasons, but I will explain them in three categories. The first is 'future competitiveness.' As you might intuitively guess, future competitiveness implies that the U.S. and China are currently engaged in strategic competition.

This is merely 'the beginning of the beginning' in English. Therefore, the strategic competition between the U.S. and China will continue for a very long time. This is because it is unlikely to be resolved through war. The direction of hegemony is unlikely to be decided by one or two wars, so the landscape will unfold over a very long period. In that sense, future competitiveness means that as the competition will be long-term, the current competition is very important, but we must also be able to compete 30 or 50 years from now. Therefore, while it is necessary to possess current competitiveness, it is also very important to preemptively secure future competitiveness for sustainable competition. This is not something that can be resolved by pouring all current capabilities into it. Securing future competitiveness

is a complex battle that requires fighting while also preserving and building the capacity to do so. If it were a decisive battle, we could pour all our resources into it now, but that is not the case. What is the best means to secure future competitiveness? It is advanced technology. That is why advanced technology has become so important, and it is at the center of the U.S.-China strategic competition. It is difficult to predict when this competition will end. The second is 'expansion of the battlefield.' Traditionally, warfare occurred on land, sea, and air. However, modern warfare is no longer confined to land, sea, and air; the battlefield has expanded to cyberspace and space. Simply put,

the expansion of the battlefield is not merely geographical and physical; this expansion of the battlefield brings about military changes. Ultimately, in English, it requires engaging in 'multi-domain warfare.' Wars of the past were decided on land, but now we must engage in multi-domain warfare. What determines victory or defeat in multi-domain warfare is how well the various domains are connected. Building this well is important.

The Proliferation of Dual-Use Technologies and Changing Roles of Private Companies

What is needed for this? It is advanced technology. It may no longer be a war fought by sheer numbers. It may no longer be a war fought by the weight of artillery shells. How to connect and integrate these diverse domains is becoming the core of modern warfare. Advanced technology as a means to achieve this is becoming crucial not only for building future competitiveness but also as a means to fight well, or rather, to prevent war. The connection of these two leads to the third point: 'diffusion of dual-use technologies.' Dual-use technologies are sometimes referred to as dual-purpose technologies and are known in English as 'dual-use.' You have likely heard of this. This is becoming increasingly widespread. While technological diffusion is not a new phenomenon today, let's consider why the diffusion of dual-use technologies is becoming an issue again at this particular juncture. Dual-use technology means that the same technology can be used for both military and commercial purposes. That is the meaning of dual-use. However, in the past, once a technology was developed, it took a considerable amount of time for it to be used for military purposes before transitioning to commercial technology. Conversely, it also took a considerable amount of time for commercially developed technology to be utilized militarily. The former is called 'spin-off,' meaning the transition of military technology to commercial technology. The latter is called 'spin-on.' What is a representative example of spin-off? It is the internet that you are currently using. The internet was developed by ARPA, a research institute of the U.S. Department of Defense, and was fundamentally developed as an intranet within the U.S. Department of Defense. It was developed in the 1960s, and it took over 30 years for it to become a civilian technology for the internet we use. After the 1990s, the public began to use the internet. Most of you were likely born after this period, so it might feel as if the internet has always existed. People like me experienced the introduction of the internet. Therefore,

people like me might seem like cavemen to you. Born in the pre-internet era. However, the spin-off and spin-on processes have now been dramatically compressed. Technologies developed for military purposes are showing rapid adoption for commercial use, and vice versa. In some cases, a technology is launched and immediately used for both purposes. Therefore, advanced technologies have become crucial not only because they hold significant meaning in economic and industrial competition but also because they have an enormous impact on the military balance. These changes, which necessitate attention to advanced technologies, are occurring, particularly with the U.S. and China at their center. Thus, we need to pay close attention to these developments. The most striking example is the deployment of Chinese civilian drones in the Russia-Ukraine war. This is likely included in the pre-reading materials. I am currently very focused on drones, and the article you read is almost complete in its transformation into a thesis. Therefore, I am planning to write another article related to drones. Drones are a vivid example of advanced technologies serving as a means to link economic security, as I have been discussing. This is not a distant story; it is happening right before our eyes, even though it involves Russia and Ukraine. These spin-offs and dual-use technologies are what we are witnessing. This is a drone shot down early in the war, which garnered media attention at the beginning of the conflict due to the presence of many Chinese components. However, as the war progressed, we realized that such occurrences have become commonplace.

This was different from Russia's original war plan and expected outcome. They thought it could be ended quickly. Of course, there was a difference in military power, but militarily, they expected that by destroying Ukraine's core communication networks early on, the Ukrainian military would be incapacitated. Earlier, I mentioned that connectivity is crucial for multi-domain warfare, and communication is one such means. If this is destroyed, the Ukrainian military would be like a body without senses; even with powerful weapons, they would be unable to use them. Indeed, Russia made significant efforts and achieved some success in destroying Ukraine's core communication networks early in the war. The objective was achieved, but the outcome was not. Despite the destruction of the core communication networks, alternative means emerged, allowing for rapid restoration of communication. What were these? Satellite communication. Specifically, satellite communication services provided by SpaceX. You might find this strange, right? A communication method that replaces Russia's core communication networks, a communication method necessary for waging war, is provided by a private company like SpaceX. There are no boundaries for dual-use technologies. The distinction between commercial and military use is virtually nonexistent. The same technology is simply being used on the battlefield.

Under normal circumstances, military satellites would be launched, military communication systems would be established, and military operations would be conducted through communication between ground and space. A separate military satellite communication system would need to be in place. However, this is happening without it. What is even more astonishing is the method of receiving SpaceX's satellite signals. Unlike the core communication network, signals can be received without laying cables underground. The picture on the left illustrates this. Looking at the diagram on the right, the areas circled in light blue show the points where Ukraine is currently advancing to recapture Russian-occupied territories. However, SpaceX, or Elon Musk, has made a public announcement regarding the satellite communication information provided to the Ukrainian military. Given the current situation where Russia occupies some Ukrainian territories, information related to Russia pushing further into Ukrainian territory will be provided. However, information necessary for Ukraine to push into Russian territory from the current state will not be provided.

This is a revolutionary change. Such decisions were originally made by states. Therefore, this is a major issue in the U.S. as well, and it is a vivid example of how the economy and security are being interconnected and linked. Do you understand? Now, I need to briefly explain the U.S. perception of this. On the right, you can see a report from Harvard University's Belfer Center published in 2021. As the title suggests, it deals with the advanced technology competition between the U.S. and China. The U.S. perception is that China's technological rise, particularly in advanced technologies, is rapidly closing the technological gap with the U.S. The conclusion of this report is that as a result of this rapid narrowing, China has already reached a comparable level to the U.S. in a significant number of technologies, and in some technologies, it has already surpassed the U.S. It contains a warning. If China continues its technological rise at this pace, the movement to deviate from the current world order, designed primarily by the U.S., will accelerate. Yes, you can probably guess the rest of the story. There are debates in the U.S. triggered by this report. The problem is that the U.S. is not adequately prepared or equipped to respond to this kind of pursuit from China. Whether this assessment and analysis are close to reality requires separate discussion. The extent to which the analytical findings that China has reached a comparable level to the U.S. in many advanced technologies and has already surpassed the U.S. in some is objective and systematic also requires separate evaluation. However, the report claims so, and such content has begun to be widely shared within other policy circles. The U.S. is saying, 'We are not well-prepared. China is catching up so quickly, and we are not ready to respond.' The term that theoretically conceptualizes this is 'creative insecurity.' This refers to the anxiety arising from China's pursuit, the anxiety about whether the status of a hegemon can be maintained.

The U.S. Strategy to Maintain Technological Hegemony and 'Creative Insecurity'

What, then, is 'creative' in this context? The U.S. has indeed led the world in many aspects for decades. Technological innovation is one of them. Silicon Valley is a prime example of the U.S.'s advanced technology leadership. However, on the other hand, there have been continuous criticisms that the U.S. faces structural problems in sustaining its own technological innovation. Despite these criticisms, these problems have not been adequately addressed. Ultimately, for the U.S. to win the advanced technology competition with China, there is no other way than to reorganize the technological innovation ecosystem and reawaken creativity. However, in normal times, even with constant pointing out of these problems, they are not easily fixed. Therefore, the key issue is

How is this problem being raised? It's posed as: 'China is catching up. Will you stand by idly, or will you continue as before?' This implies that a new approach is needed now, and that we must pursue a change in the U.S. technological innovation ecosystem through new approaches. This is the conclusion. Do you understand? The point is that in normal times, such changes do not happen easily. Of course, the U.S. still leads in technology in some aspects, but on the other hand, there are still structural problems that are not being fixed. Therefore, the discourse of 'creative insecurity' is forming within the U.S. It's about anxiety.

The source of anxiety is China's rapid pursuit. It is pursuing at an alarming pace. And what is more, it is doing so through unfair means. So, should we let it be? This is the question. Therefore, one side gains strength by advocating for containing China, while on the other hand, the voice calling for the U.S. to innovate itself is growing louder. This is again illustrated in the report titled 'Great Rivalry.' As you can see, it projects the changes in market share of major countries in the semiconductor market from 1990 to 2030. According to this projection, by 2030, China's global market share will be 24%, while the U.S. market share, which was over 37%, will decline to below 10%. What is the premise here? It is if the U.S. does nothing. Conversely, what does it imply?

Normally, military satellites are launched, military communication systems are established, and military operations are conducted through communication between ground and space. Therefore, a separate military satellite communication system needs to be in place. However, what is even more astonishing is how SpaceX's satellite signals are received. The picture on the left shows signals being received without the need for underground cables, unlike the terrestrial communication network.

The diagram on the right shows areas indicated in light blue. These are the points where Ukraine is currently advancing to recapture Russian-occupied territories. SpaceX, or Elon Musk, has made a public announcement regarding the satellite communication information provided to the Ukrainian military. Given the current status quo, where Russia occupies some Ukrainian territories, information related to Russia pushing further into Ukrainian territory will be provided.

However, information necessary for Ukraine to push into Russian territory under the current status quo will not be provided. As mentioned earlier, the same technology is used for both civilian and military purposes, but now a private company is making crucial decisions related to war. This can be considered a revolutionary change. Such decisions are inherently made by states, and this is a vivid example of how the economy and security are being interconnected in the U.S.

On the right is a 2021 report from Harvard University's Belfer Center, which addresses the advanced technology competition between the U.S. and China. The report analyzes that China's technological rise, particularly in advanced technology fields, is rapidly closing the technological gap with the U.S. In conclusion, it states that China has already reached a comparable level to the U.S. in a significant number of technologies and has already surpassed it in some. The report contains a warning message: if this trend continues, the movement to deviate from the current world order, centered around the U.S., will accelerate. As you can guess, the subsequent story is that this report sparked debates within the U.S.

The problem is that the U.S. is not adequately prepared or equipped to respond to this pursuit from China. Whether this analysis is close to reality requires separate discussion. The objectivity and systematic nature of the analysis that China has reached a comparable level to the U.S. in advanced technologies and has surpassed it in some areas require separate evaluation. However, the report's claims and such analyses have begun to be widely shared within U.S. policy circles. That is, despite China's rapid pursuit and surpassing the U.S. in some areas, the U.S. is not prepared to respond. The term that theoretically conceptualizes this is 'creative insecurity.' It signifies that anxiety about maintaining the status of a hegemon is strongly forming due to China's pursuit.

What, then, is 'creative' here? For decades, the U.S. has led the world in many aspects, including technological innovation. Silicon Valley is a prime example. However, on the other hand, there have been continuous criticisms that the U.S. faces structural problems in sustaining its own technological innovation. Despite these criticisms, these problems have not been adequately addressed. Ultimately, for the U.S. to win the advanced technology competition with China, it must reorganize its technological innovation ecosystem and reawaken its creativity. This is the only way. However, in normal times, even with constant pointing out of these problems, they are not easily fixed. This is ultimately the problem.

How should this be framed? Should China be allowed to catch up without any response, or should we continue as before? This implies a need for a new approach, and the conclusion is that the U.S. innovation ecosystem for advanced technologies must be transformed through new strategies. This is because it does not work well in normal times. While the U.S. still leads in technology, structural problems persist and are not being effectively addressed. In this context, the discourse of 'creative insecurity' is emerging in the U.S. It is a cause for concern.

The root of this insecurity is that China is catching up too quickly and through unfair means. So, should we let it be? On one hand, voices calling for containing China are gaining traction, while on the other, voices urging the U.S. to innovate are growing louder. According to the 'Great Rivalry' report, projections for the market share of major countries in the semiconductor market from 1990 to 2030 indicate that China will hold 24% by 2030, while the U.S. market share, which exceeded 37%, will fall below 10%. This prediction is based on the premise that the U.S. takes no action.

Conversely, this suggests that action is necessary, and in a different way than before. On one hand, China must be contained, and on the other, the U.S. domestic innovation ecosystem must be rapidly transformed. If this is achieved, these projections may not materialize. The semiconductor sector is already a familiar battleground, and the front has now expanded to AI. The next arena for advanced technology competition is widely expected to be quantum computing, and the U.S. and China's competitive edge in quantum computing was already reversed in 2013.

Despite this, will we continue to do nothing or adhere to existing methods? Is there not a need for extraordinary measures? This is precisely what 'creative insecurity' entails. According to a report assessing U.S.-China technological competitiveness published by an Australian think tank, China already surpasses the U.S. in many key technology sectors. Out of 44 analyzed technology areas, China leads in 37, with a distinct competitive advantage in areas where the risk of technological monopoly by a single country is high.

This signifies a state of risk and insecurity. While this report, published in Australia, may appear objective, it was supported by the U.S. Department of State. This situation is closely linked to 'creative insecurity,' and while China's advancements are surprising, the U.S. strategy towards China is characterized by a shift from a purely defensive posture to a more offensive one. Ultimately, this advanced technology competition is entering a phase of securitization.

The U.S. 'Small Hyphens' Strategy and Changes in International Cooperation

Economic security refers to the interaction between economy and security; it is no longer possible to separate them. However, securitizing all issues is dangerous. Therefore, an appropriate level of securitization is crucial, and excessive expansion can lead to 'over-securitization.' It is important to guard against over-securitization and to form domestic consensus on how to proceed with securitization at an appropriate level. From the Trump administration to the Biden administration, the U.S. approach to securitization has evolved as follows:

It is the 'small hyphens' strategy. While the U.S. cannot do nothing regarding China, it must differentiate itself from the Trump approach. Therefore, the scope of securitization is narrowly defined. Confronting China in all areas and severing relations is not a realistic option. Given the high level of interdependence already established, it is impossible to sever all ties in a short period. However, since inaction is also not an option, barriers are erected and strengthened in critical areas. This is the American approach to economic and advanced technology security. Examining this closely reveals five characteristics. The first is 'vulnerability security.' This may sound counterintuitive.

The reason for this counterintuitive aspect stems from uncertainty. In normal times, individuals, corporations, and nations are advised to do what they do best even better. Leading Korean companies, for instance, believe that excelling to an unparalleled degree through strategies like 'Super Strategy' or 'Quantum Leap' allows them to falter in other areas.

However, the current era is different. While excelling at what one does best remains important, the primary objective is to address weaknesses. This is necessary in an era of uncertainty. The second objective is to strive to do even better what one already does well. The specific method involves transforming the technology innovation ecosystem. The third objective concerns how to contain China within the context of U.S.-China relations, by securing as many choke points as possible. The U.S. can achieve this independently or in cooperation with other nations. The fourth objective acknowledges the reality of interdependence, which cannot be ignored. While pursuing the first, second, and third objectives, the U.S. also seeks to maintain or expand access to the Chinese and U.S. markets. This is the American approach to economic and technological security. To achieve all four of these effectively, international cooperation is essential, which is the fifth objective.

In the Biden administration's policy examples, vulnerability security is addressed through reshoring. The goal is to expand domestic production capacity, particularly in advanced manufacturing, which has weakened. This addresses vulnerabilities. While prioritizing U.S. companies, it is recognized that U.S. companies alone are insufficient, leading to the invitation of companies like Samsung Electronics, TSMC, and SK Hynix. This is achieved through international cooperation. However, the recipients of this international cooperation cannot be arbitrary.

It involves cooperation with 'U.S. Technology Partners.' This represents a shift in international cooperation in the era of economic security. While international cooperation during the Cold War involved forming blocs, it now entails selecting countries that contribute to achieving objectives. Cooperation is no longer pursued for its own sake. In this context, relations between nations in the era of economic security are becoming more detached, even among allies. Due to time constraints, I will provide a brief overview. Let's examine how these changes manifest in reality.

The Materialization of Advanced Technology Competition: 5G, Vaccines, AI, Quantum

These changes do not represent a shift from zero to one, but rather bring about partial or significant changes in reality. The advanced technology competition between the U.S. and China began with 5G. The map on the left shows countries that decided not to adopt Huawei equipment in the first half of 2020, generally depicted in light blue.

These include countries like the U.S., Australia, and Japan. The map on the right reflects the situation in 2020, during the COVID-19 pandemic, when the Trump administration began to seriously raise national security concerns regarding Huawei equipment and emphasize cooperation with allies and partners. The brown-colored regions indicate an increase in countries that decided not to adopt Huawei equipment. This is the extent of the changes that occur when technology is securitized. While not all countries worldwide are affected, changes are observed primarily among allies and partners.

Please find the color representing South Korea. This 2021 data illustrates where Chinese vaccines were distributed and supplied. This was during the peak of COVID-19 when vaccines were being distributed. Vaccine distribution is fundamentally an issue of human health and life, necessitating a humanitarian approach based on strong international consensus. A humanitarian approach transcends borders, religions, and genders.

While this has been the prevailing belief, vaccine distribution reveals a different reality. Western bloc countries distribute vaccines developed in the West. Security considerations are influencing even issues that should be guided by humanitarianism and a sense of community. National borders and geopolitical factors are becoming increasingly important. This relates to the choke points mentioned earlier; when the semiconductor value chain is represented as a network, it becomes clear that the U.S. is at its center. The U.S. has acquired the capability to restrict access for other countries. Regarding AI competition, while various points have been raised, there are discussions suggesting that the U.S. still holds an advantage, or that China is catching up, or has even achieved parity in some areas.

AI technology has recently transformed into a money game. The ability to mobilize capital is crucial. AI technology is also a competition of models for capital procurement, which translates into a competition between national models. The US model, based on Silicon Valley-style venture capital and private capital procurement, and the Chinese model, which relies on state capital investment, show stark differences.

It is necessary to examine which country can achieve more sustainable technological innovation. Starting around 2018-2019, joint research between the U.S. and China in the AI field has been declining. Open-source-based technological innovation and research are gradually decreasing, and a shift towards closed systems is occurring. This is not unrelated to U.S.-China competition. The graph on the left shows the decline in joint research between the U.S. and China since 2018-2019. The graph on the right indicates that while the U.S. and China have collaborated extensively to date, the intensity of this collaboration is gradually diminishing.

Changes in Korea's Trade Patterns and the Risk of Technological Decoupling

So, who are the U.S.'s partners? South Korea does not appear to be a top-tier partner yet. To move forward, this must be incorporated into South Korea's national strategy. In terms of research personnel development, China possesses an overwhelmingly large number of undergraduate researchers. While many pursue master's and doctoral degrees abroad, they return to China after their postdoctoral studies. This becomes a conduit for technology leakage, China's technological catch-up, and its technological rise. From the U.S. perspective, how can this be blocked? It is becoming a matter of security. South Korea's response strategy can be simply summarized as follows:

This illustrates the changes in trade patterns over the past six years, coinciding with the full-scale strategic competition between the U.S. and China. The graph on the left shows the U.S. trade pattern: trade with countries geographically and geopolitically closer has expanded, while trade with distant or geopolitically distant countries has decreased. China falls into the latter category, while Mexico, South Korea, and others fall into the former. The graph on the right shows China's trade pattern: similar to the U.S., it expands trade with geographically proximate countries, but also expands trade with geographically distant countries. Why is this the case?

Specifically, with which countries has trade decreased? Trade has decreased with countries that are geographically close but geopolitically distant. These include South Korea and Japan.

As a consequence of these effects, trade has occurred with distant countries. This represents the changes over the past six years. It is necessary to consider how South Korea should understand and incorporate these trend-based changes when formulating its foreign policy strategy and to develop strategies accordingly. This projection extends to 2030. Generally, the green line indicates rapid growth in trade between countries, the yellow line indicates moderate growth, and the red line indicates stagnation or decline. This is not unrelated to the relationships between countries as you perceive them. Are economy and security separate? With whom is trade increasing, decreasing, or stagnating between countries? Trade between Russia and Ukraine, currently at war, and between Europe and Russia is expected to decrease. What about trade between Europe and China?

Risk Management in an Era of Uncertainty and Korea's Response Strategies

It is expected to increase moderately. Meanwhile, trade between the U.S. and Europe is expanding rapidly. If there is a region where major global powers—the U.S., China, the EU, and Japan—all seek to expand trade, where would that be? It is the Southeast Asian region. This has geopolitical implications. How should this be understood? Is there a consensus within South Korea regarding this? If so, a national strategy must be formulated accordingly. Do we perceive the world of 2030 in this manner, or does South Korea perceive it differently? If differently, we need to consider the basis for that perception. Given the extensive discussion on advanced technologies today, I will now address technological decoupling. If the U.S. and China were to thực hiện a technological separation, a decoupling in advanced technologies, there could be various scenarios, but according to some of these scenarios, South Korea could suffer the most significant damage.

This means that South Korea could suffer greater damage than other countries, even potentially more than China. South Korea finds itself in a unique situation. It is necessary to consider whether there is a shared understanding of the overall patterns discussed earlier, and secondly, whether South Korea's unique circumstances have been identified and a national strategy formulated accordingly. In an era of uncertainty, tendencies such as the aforementioned national prioritization emerge.

In an era of uncertainty, our focus should be on risk management rather than profit maximization. This may seem abstract, but I will elaborate further during the Q&A session if time permits. Such strategic responses are necessary. If these responses are implemented, they will constitute an appropriate approach for the era of economic security. I will conclude my lecture here.

Thank you for your long and dedicated attention.

Lee Seung-ju, Director of the Center for Trade, Technology, and Transformation at the East Asia Institute (EAI) and Professor at Chung-Ang University.