[Biden's First Year in Office] Reaffirming 'America First' Economic Policy... Strengthening Checks on China

Strengthening Protectionism for Industrial Promotion and Job Creation

[Sejong=Asia Economy Reporter Kwon Haeyoung] The economic policy stance of U.S. President Joe Biden does not deviate from the framework of "America First" pursued by the previous Trump administration. It is evaluated that under the slogan of "Build Back Better," protectionism to foster domestic industries and create jobs has been further strengthened.

A clear example of the U.S. prioritizing its own interests during the first year of the Biden administration is semiconductors. In April last year, President Biden urgently convened a video conference with global semiconductor companies including Samsung Electronics, urging them to invest domestically. Holding up a silicon wafer, a semiconductor material, he emphasized, "This wafer is infrastructure," and "We must build the infrastructure of the future." In September of the same year, the U.S. Department of Commerce requested semiconductor supply chain information from global semiconductor companies including Samsung Electronics and SK Hynix, as well as demand companies such as Hyundai Motor.

In response to the U.S.'s explicit demands for local investment and business information, Korean companies announced large-scale investments. The four major domestic groups?Samsung, Hyundai Motor, SK, and LG?revealed plans in May last year to invest a total of 44 trillion won in semiconductors, electric vehicle batteries, and the bio sector in the U.S. This was a "generous gift package" to the Biden administration, which pursues "America First."

In contrast to the expansion of Korean companies' investments in the U.S., the scale of U.S. companies' investments in Korea is decreasing. According to the Ministry of Trade, Industry and Energy, the scale of U.S. direct investment in Korea was $5.31 billion last year, down 0.9% from the previous year, continuing the decline following 2020 (-22.5%). In particular, the decrease rate in manufacturing direct investment reached 51.7%. On the other hand, Korea's direct investment in the U.S. increased by 14.2% to $63.67 billion in 2020 compared to the previous year.

A greater burden is that Korea's position is increasingly pressured between the U.S. and China. As the U.S. restructures the global supply chain excluding China, the damage to domestic companies is becoming a reality. Hynix planned to import extreme ultraviolet (EUV) lithography equipment from the Dutch company ASML to modernize its plant in Wuxi, China, but the plan has been halted due to opposition from the U.S. government.

Requests for allies to join in building a new "anti-China front" are also becoming a reality. President Biden announced the Indo-Pacific Economic Framework (IPEF) at the East Asia Summit in October last year, and the Korean government is actively considering participation.

Experts urge the Korean government to respond more delicately to the Biden administration's economic and trade policy stance targeting China. Professor Jeong In-gyo of Inha University's Department of International Trade said, "It is expected that pressure on China will increase through the Trade and Technology Council (TTC) with the European Union (EU) and the Indo-Pacific Economic Framework with Asia," adding, "The Biden administration will not change."