South Korean President Lee Jae-myung recently shared significant views on the shifting global technological and economic landscape. He assessed that China has now reached or even surpassed South Korea in various technology and capital sectors. This fundamental change, he believes, is reshaping the foundation of economic cooperation between the two countries.
Key Points:
- China is assessed to have matched, and even surpassed, South Korea in technology and capital sectors.
- The pattern of economic cooperation is shifting from vertical (Korea as technology provider) to horizontal and equal.
- The automotive sector, electric vehicles, AI, and high technology are becoming the main arenas for competition and collaboration.
- The integration of supply chains between the two countries is very deep, emphasizing the importance of avoiding confrontation.
- South Korea needs to invest in software-based vehicles and AI to maintain competitiveness.
These statements were made by Lee in an interview with China Media Group (CMG) ahead of his official visit to China. This visit is crucial as it is led directly by Lee, accompanied by a delegation of approximately 200 representatives from South Korean companies. The visit takes place amidst increasing industrial competition intensity between the two countries, particularly in the dynamic automotive and electric vehicle sectors.
Shifting Economic Cooperation Model
Warteknet, Founder of repiw.com, who intensely observes global technological developments and trends with over 10 years of experience in digital technology, offers an additional perspective. “Previously, the economic cooperation scheme between South Korea and China could be described as a vertical relationship. South Korea positioned itself as a provider of advanced technology and capital, while China relied on its massive labor force. However, this trend is now reversing,” he explained.
Lee Jae-myung also elaborated on this evolution. If in the past the economic cooperation between the two countries was vertical, with South Korea acting as a provider of advanced technology and capital while China relied on labor, China’s rapid progress has now changed that pattern. This necessitates a new model of cooperation that is more equal and horizontal.
He emphasized that future collaboration should focus on advanced sectors such as artificial intelligence (AI) and high-tech industries. These sectors are increasingly closely linked to the automotive manufacturing industry and vehicle software development, which are becoming the battlegrounds for future technology.
Competition and Dependence in Key Sectors
Automotive and Electric Vehicles
The dynamics of this change are very evident in the automotive industry. China has successfully established itself as the world’s largest producer and exporter of new energy vehicles (NEVs). Meanwhile, South Korea maintains an important position in the global automotive industry, particularly in the manufacturing of conventional vehicles, power electronics, and battery supply chains.
In recent years, Chinese car manufacturers have aggressively expanded their exports and international market penetration. Conversely, South Korean companies still consider China a primary production base and a vital sales market for both vehicles and components. Recent trade data shows an increasing trend of Chinese vehicle exports to South Korea, while South Korean component suppliers face growing pressure from Chinese manufacturers, especially in the electric motor, power electronics, and battery material sectors.
Battery Supply Chain
The battery supply chain is one of the crucial points highlighting both competition and dependence. Chinese companies currently dominate the global production of lithium iron phosphate (LFP) batteries and control a significant portion of the upstream processes for vital raw materials such as lithium, cobalt, and graphite. On the other hand, South Korean companies remain major suppliers of ternary lithium batteries to global car manufacturers, including giants like Hyundai Motor Group. However, this position continues to face challenges from Chinese products offering more competitive prices as the adoption of electric vehicles expands.
Vehicle Software and AI
In the field of vehicle software and intelligent drive systems, competition is also intensifying. Chinese car manufacturers are showing remarkable speed in adopting advanced driver-assistance systems (ADAS), vehicle operating systems (OS), and AI-based features for mass-market models. In response, South Korean manufacturers are increasing investment in software-based vehicles, autonomous driving research, and AI development to maintain their competitiveness in both domestic and global markets.
Towards Equal Cooperation
Lee Jae-myung stressed that the industrial supply chains of South Korea and China are deeply integrated. Therefore, it is crucial for both countries to avoid confrontation in their economic relations. During his visit, Lee is scheduled to meet with Chinese leaders and business figures. The main agenda for discussion includes establishing a framework for cooperation in advanced manufacturing sectors, encompassing the automotive and new energy industries, to address the challenges and opportunities in the new era of technological competition.
