As the United States prepares to inaugurate Joe Biden as its 46th president, South Korea’s business community on Wednesday took swift steps to align itself with the new Democratic US government that will take charge of the world’s largest economy for at least the next four years.
Given that Biden’s policy direction largely centers on reviving multilateralism and boosting green and digital growth -- in tune with President Moon Jae-in’s Korean New Deal package -- local industries are hopeful that they will be able to create synergy in the upcoming years.
Some reiterated the significance of the Korea-US alliance and the need for bilateral cooperation, apparently reflecting concerns that the US may cling to protectionism to safeguard its domestic economy in the post-coronavirus era and continue to feud with China. These are seen as factors that could potentially weigh down Asia’s fourth-largest economy.
Taking the lead was Huh Chang-soo, the chairman of the Federation of Korean Industries and of South Korea’s eighth-largest conglomerate, GS Group, who sent out a congratulatory letter to Biden on Tuesday.
“The inauguration of President Biden will mark a new day not only for the US citizens but for people across the world,” Huh was quoted as writing.
“President Biden’s efforts to rebuild international order will provide the opportunity to overcome the COVID-19 pandemic crisis.”
Speaking for Korean industries, Huh underlined the long-standing Korea-US alliance and called on the new US government to repair the incumbent trade framework -- alluding to the regression of multilateralism under President Donald Trump.
“Some 1,200 Korean and US companies are making investments in each other’s country, creating jobs and advancing innovation,” he wrote.
“I hope that (the new US administration) takes actions to improve the unilateral trade policies and systems that impede on investments, so as to put free multilateral trade order and market economy back on track.”
Chairman Huh had also sent a letter to ethnic Korean members of the US Congress, asking for their help in enhancing Korea-US economic relations and in the revision of the Trade Expansion Act.
The FKI is set to hold a seminar within the first quarter to look into the US’ economic policies and its anticipated actions toward North Korea, according to officials.
“We are currently working on the schedules of the high-profile US government officials who will be speaking at the seminar,” an official said.
Market eyes also turned to Sohn Kyung-shik, chairman of the Korea Enterprises Federation and chief of CJ Group. Sohn is said to have close ties with Biden, ever since making a visit to the White House as member of a Korean economic delegation in 2013, when Biden was vice president in the Barack Obama administration.
Sohn had sent out a congratulatory speech through the Korean Embassy in the US, immediately after Biden clinched his election victory in November.
Harim Chairman Kim Hong-kuk, who is closely acquainted with Biden, was invited to the inauguration but decided to attend the event online, officials said.
Overall, business organizations and think tanks here are optimistic toward the Biden administration and its economic direction, so-called Bidenomics.
“Bidenomics will boost the US’ economic growth pace and expand the global trade volume, consequently delivering a positive impact to the Korean economy,” said the Hyundai Economic Research Institute in its recent report.
The private think tank speculated that the inauguration of the new US chief will add another 0.1-0.4 percentage point growth to Asia’s fourth-largest economy this year and 0.6-2.2 percentage points to its exports.
Earlier this month, Biden unveiled a fiscal proposal worth $1.9 trillion to jump-start the economy amid the COVID-19 pandemic fallout and to help minority communities, signaling a fiscal stimulus framework.
Some, however, warned that fluctuations in global oil prices and exchange rates might counter the positive factors.
“The reduced level of uncertainties on the trade front will be an opportunity for Korea’s trade-reliant economy, but global oil prices and exchange rates will act as separate variables,” said an official from the Korea Chamber of Commerce and Industry, reminding the Moon administration to keep a close watch on the US’ macro policies and indexes.
The majority outlook is that global oil prices will remain on an uptrend, at least for a while, as the Biden administration expands eco-friendly energy investments and regulates shale oil development.
With the weakening of the greenback, the Korean won is expected to remain strong, consequently affecting the country’s exports.
By Bae Hyun-jung (email@example.com