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Financial Review The Change in US and China's Manufacturing Strategies and Implications for Korea
Recently, the US and China have each reevaluated the security, economic, social roles of their manufacturing and have begun to foster domestic manufacturing. Accordingly, the global economy is faced with rising protectionism, blockization, and overcapacity. The US government currently deems that the offshoring of manufacturing during the globalization era has left the US economic security vulnerable, and also undermined the economic interests of the middle class and working people. So now, the US is trying to promote domestic manufacturing once again. In terms of China, it is fostering domestic manufacturing for a different reason?recognizing that various US containment against China could make it difficult for Chinese manufacturing to take advantage of the markets, technologies, and capital that global value chain offers. Amid such situation, global concerns over tariff wars, supply chain fragmentation, and overcapacity are growing. As for the Korean manufacturing, it is confronted with uncertainty in the export environment and difficulties in making decisions to expand long-term capital investment. Therefore, in the short term, Korea should cleverly make use of countervailing benefits depending on the form of US tariffs and ensure that the structure of eventual tariff burden is favorable to the Korean companies. In the long term, the Korean government should support the manufacturing firms to seize the right timing of investment through stabilizing interest rates and exchange rates, improving systems to restore business confidence, and implementing policies that support a certain selection of technologies and industries.
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