It is now the time for a G1 or G2 meeting, not a another G7 or G20. In other words, this is the era of O(bama) X(ijinping).It is the United States of America that is playing a critical role in recovering the global economy, which is mired in the financial crisis,by pouring $3.7 trillion under the name of QE1, 2, 3, and 4.
And it is China that conducts the world's most aggressive business activities such as economic assistance, infrastructure investment, and raw material purchase in Southeast Asia, the Middle East, Africa, and even Latin America, an area which was originally the U.S.'s playground,with its whopping $4 trillion cash despite the global recession.
Yet, some big changes in their economic strategies have recently been detected as the U.S. and China meet during Obama's second term and with Xijinping's forming a new administration. The paradigm transition is moving away from the 30 year-long 'consumer America' and 'producer China'model.The U.S. is starting to 'Re-shore', striving for a renaissance of its manufacturing industry by using its price-competitive shale gas while China plans to move from producer to a consumer, through its new urbanization project of moving 1 billion rural dwellers to cities by 2020. That is the new paradigm since the recent financial crisis; 'consumer China' and'producer America.'
The U.S. has enjoyed the status of the world's No.1 without any big challenges for quite a long time since the collapse of the Soviet Union affected by the U.S.-lead Word Trade Organization (WTO). Yet, the situation has changed a lot since 2001 when China joined the WTO; As China has started to dominate the manufacturing industry, a lot of money gone not to America but China. To recover its competitiveness particularly in Asia, the U.S. has carried out its ambitious regional free trade agreements, Trans-Pacific Partnership (TPP),and Transatlantic Trade and Investment Partnership (TTIP), with several Asian countries as side from China under the slogan 'Pivot to Asia.' Its actions, however, are not louder than words due to its fiscal deficits and defense budget cuts.
Korea, meanwhile, needs to strike a balance between the U.S. and China. This is because its defense and diplomacy rely on the U.S. but economy with China. The new transition, therefore, causes confusion as it has sold consumer durables to the U.S. and intermediary goods to China so far.
The reality is that Korea needs to have a new strategy to deal with the new change as it is not able to stand alone without them. It, however, is worrisome that Korea still does not focus enough on China. In the past, from the period of United Silla up until the 1850s Chinese was Korea's most influential foreign language, however, recently not many business people spend time to learn it despite the fact that it is one of Korea's biggest trading partners. Plus, Korea has treated China as not that big of a deal,focusing on the large volume of exports to it over the past 20 years. Yet, it needs to keep in mind such historical facts that China also regretted that it looked down on Great Britain as just a small island in Europe, England on the United States, and Japan on China.
Korea should not view China just as a political partner. It should remember that the change in China's economic structure is highly likely to affect Korea a great deal, particularly, its manufacturing industry.China will become a major player armed with its 1.36 billion population, not just a subcontractor anymore. It is becoming particularly strong in fields of, for example, automobile and cell phone development which Korea has dominated so far. To overcome the not-so-distant future, Korea should develop new weapons by increasing competitiveness in the finance and service sectors in particular, not just emphasizing on manufacturing. This means it should come up with a whole new economic strategy against China while making efforts to boost its domestic consumption. Samsung Electronics has been a good example of earning profits in its business with China. It takes only one and a half hours to get China from Seoul by plane, which is the same with arriving in Daegu and other southern region of Korea by express train. Korea needs to create new strategies and invest a lot in policies, diplomacy, promotion,and research to successfully deal with such close neighbor.
While China has the market with the biggest potential for Korea to aggressively enter, the country does not still have even one government-funded institute about China's economy, culture, etc. Korea will be able to rise once again by getting both support from the U.S. and economic benefits from China. When it takes China as serious as the U.S., Korea will finally be ready to go one step further.
