[People Met Through Books] "In the Era of US-China Hegemony War, Korea Must Be on Korea's Side"

Hong Seong-guk, Democratic Party Lawmaker, Releases "Contraction Society 2.0"
Power Struggle Enters Temporary Lull
Semiconductor and Battery Technologies Are Core to the War
Korea Must Choose Strategic Ambiguity

Economic growth and population increase were once common sense. However, as rapid aging leads to a demographic cliff and a low-growth trend solidifies, we are gradually realizing that the previously assumed ‘expansion society’ is not an inevitable outcome. Hong Sung-guk, a member of the Democratic Party of Korea who has studied the future of the global economy and Korea for over 20 years, predicted that humanity will experience an unprecedented ‘contraction society’ due to climate and safety crises, aging and population decline, and advances in science and technology after stepping down from his role as a CEO to live as a researcher. The result of his work was the 2019 concept of the ‘contraction society,’ which circulated among intellectuals. The natural order of an expansion society is breaking down, and a new major transformation into a contraction society, which humanity has never experienced before, is unfolding before us. Having diagnosed the causes, explained the patterns, and forecasted the future of the contraction society, he felt the need to update his outlook on the world after unprecedented events such as COVID-19 and the US-China hegemonic rivalry. This conviction to understand the changing world and prepare for the future led to the creation of ‘Contraction Society 2.0: Closed World and Survival Game.’ His perspective, once that of a field-oriented futurist, has now broadened and deepened beyond that of an analyst through his experience as a practical politician. Ultimately, the answer he sought through the contraction society is one: survival.

Interview_Hong Seong-guk, Member of the Democratic Party of Korea. Photo by Kim Hyun-min kimhyun81@

- Predicting the contraction society, you foresaw the rise of populism and an era of every person fending for themselves. What kind of response is necessary?

▲ The social leadership must first have an accurate understanding of reality. I have often said that we need to change our glasses easily, meaning we must internalize the changes of this transformed world. However, this change is not unique to Korea but a global phenomenon. If Korea understands and responds quickly, it can create opportunities. Above all, we must avoid treating these changes as someone else’s problem. There is a phenomenon where people get immersed in a theater but forget everything once they leave ? so-called ‘theatricalization.’ We must not just watch the major transformation of the contraction society as a spectator. Japan has already entered a contraction society and adapted by consuming less. For example, when beef consumption declined, they switched to imported beef, then pork, and eventually to vegetarianism. People talk about ‘herbivore men,’ and Japan has become a herbivore men society. Reducing spending due to lack of income makes sense individually, but if everyone does this, growth becomes impossible. This is called a composition error, and we are facing such a situation. If everyone lives by cutting consumption, growth cannot happen. Japan experienced this, and we are heading in the same direction.

- Compared to the 2019 contraction society, ‘Contraction Society 2.0’ mentions hegemonic rivalry more frequently. How do you foresee its developments?

▲ When we think of hegemonic rivalry, we recall the Cold War era, but the real world is interdependent. If you and I fight and I die, you also die. Ultimately, we are connected. During the Cold War, the Soviet Union could survive without trade, but now neither the US nor China can cut ties completely. Even the US cannot function without China. The Chinese government banned public officials from using iPhones, which will have significant repercussions. Apple did not raise prices for its new product release, likely influenced by China. But the important point is that Apple iPhones are made in China, so China is also affected. This is different from the hegemonic rivalry we imagine.

- Your book contains many sections on ‘hegemonic rivalry.’ What do you expect will unfold?

▲ I believe the US presidential election next year will be a momentum for the hegemonic rivalry. Until November next year, there will likely be a lull. There is talk of de-risking (removing China-related risks), but intense conflict is unlikely for now. US inflation remains high, and after severe clashes, a lull has set in. Taiwan’s presidential election is next year, with the pro-independence Democratic Progressive Party (DPP) doing well. To change this trend, China must avoid provoking the Taiwanese. Regarding the US election, whether former President Donald Trump, current President Joe Biden, or a third candidate wins will influence the direction, but it will be difficult to establish a clear direction in the meantime.

- What about the longer term?

▲ The hegemonic rivalry is largely a war over finance and science and technology. The core of science and technology is semiconductors and batteries. Semiconductors are important because they are linked to artificial intelligence (AI). The US is trying to build advanced semiconductor factories domestically to establish a semiconductor ecosystem, which is expected to be fully operational around 2027?2028. If the US can handle both design and production, China will no longer be a threat. However, if China catches up technologically, the situation could change. Regarding batteries, raw materials come from China. Although there are reports of lithium deposits in the US, environmental concerns make exploitation difficult. Until 2030, neither side is likely to gain full dominance.

- How should Korea respond?

▲ Korea and Taiwan are building semiconductor factories in the US. But can Korea build top-tier factories there? Korea plans semiconductor clusters in Yongin and Icheon, but cutting-edge 2-nanometer or smaller factories should be built in Korea. Korea’s semiconductors and batteries are needed by both the US and China. Like Taiwan, Korea must become a hedgehog in memory and next-generation semiconductor technology. That will be Korea’s security. Regarding diplomacy, we must maintain strategic ambiguity. Japan appears to follow the US but sends large economic delegations to China and engages in economic exchanges. They support the US publicly but do everything behind the scenes. Moreover, top US CEOs like Bill Gates and Elon Musk have all visited China. In contrast, we rarely hear of Korean businesspeople visiting China. Such one-sidedness is a serious problem. Ideology should not swing left or right; it must focus on survival. Korea must be on Korea’s side.

- How do you see the outcome of the hegemonic rivalry?

▲ Many think the US has already won, but this is just a preliminary battle. It will be a long-term conflict. We will have to wait until 2030 to see. Moreover, the outcome may not be clear-cut because of interdependence. Korea is considered vulnerable because it lies at the intersection of the two powers’ conflict. In the science and technology war, the front lines are semiconductors and batteries, where Korea has world-class companies overlapping. The US has benefited from the dollar’s status as the global reserve currency, but the internationalization of the yuan is accelerating. The Middle East’s close ties with China are also notable.

- You mentioned plans to publish another book on Korea’s situation. When will that be released?

▲ I am considering after next year’s general election. If I start immediately after the election, I expect to finish in 2?3 months. The Korean economy is expected to worsen by then, and looking through the ‘Contraction Society 2.0’ lens, Korea will become very clear.

- How do you usually study?

▲ I usually arrive at the office around 7:30 a.m. and spend about an hour searching for information. I monitor about six newspapers on my screen and paste necessary materials into PowerPoint or similar. The accumulated data is enormous. I categorize it by topic every time. Having worked in finance, I also read related reports on macroeconomics. I never have idle time. I frequently check for new books by recognized authors. I don’t just read books; I underline with a highlighter. Some books have few underlines, but others get so marked that they become tattered. I always carry a highlighter in my suit pocket. Underlining is not the end; I retype the notes. For truly excellent books, like Professor Yuval Harari’s Sapiens, I set aside time to reread them during holidays like Chuseok.

Hong Sung-guk

Born in 1963 in Seomyeon, Yeongi-gun, Chungnam Province. He holds a bachelor's degree in Political Science and Diplomacy from Sogang University and a master's degree in Public Administration from Dongguk University Graduate School of Public Administration. He joined Daewoo Securities as a new employee in 1988 and worked as head of the Research Center, among other roles, establishing himself as an analyst. In 2014, he became the first CEO from the public recruitment track. He voluntarily resigned in 2016 to focus on writing and lecturing. In February 2020, he was recruited as a talent by the Democratic Party of Korea and was elected as a member of the National Assembly for Sejong City Gap in the 21st general election. As a leading economic expert within the Democratic Party, he served on the Political Affairs Committee in the first half of the 21st National Assembly and on the Planning and Finance Committee in the latter half. Currently, he serves as the Democratic Party’s floor spokesperson for economic affairs and secretary of the Livelihood Economic Crisis Countermeasures Committee. Known as a field-oriented futurist, he has published books analyzing economic, political, and social changes and forecasting the future roughly every 3?4 years. His works include ‘Contraction Society 2.0: Closed World and Survival Game,’ ‘Contraction Society,’ ‘The World Becomes Japan,’ and ‘After the Global Crisis,’ among others.