The Korea-Japan economic war has become the front line of the US-China hegemony competition.
Will Korea fall or overtake?

In the era of multipolarity and derisking, Japan began a new round of external expansion.
Japan, striving to regain Asian hegemony, is shaking things up, while South Korea, striving to surpass Japan, has moved beyond its pursuit. What will become of the two economies? Will trilateral cooperation among South Korea, the US, and Japan truly benefit or harm the Korean economy? What choice should South Korea make in the South Korea-Japan economic war, which has become a proxy war for the US-China hegemony rivalry?

This book shows the major trends of the rapidly changing international situation and delves into the true intentions of the United States, China, and Japan.
It also contains a special prescription for the Korean economy, proposed by Kim Hyun-chul, a leading Japanese economic expert and Dean of Seoul National University's Graduate School of International Studies, regarding the choices that the Korean economy, which has already become the world's 10th largest economy and 7th largest trading nation, should make and what is holding back economic growth.
From the perspective of geoeconomics and political economy, it also provides an easy-to-understand explanation of the strategies that advanced countries leading the global economy are pursuing to protect their own interests.
This book contains essential information for managers and investors curious about the US-China hegemony and the Korea-Japan economic war scenario.

At the beginning of the summit, President Xi Jinping first brought up Japan.
Bringing up Japan first at a summit with South Korea was highly unusual in itself, but the intensity of the remark surprised many.
But for me, a Japan expert, this was a new discovery.
The fact that China brought up the Japan issue even at the summit with South Korea, given its ongoing confrontation with Japan, foreshadowed that Sino-Japanese relations would deteriorate and become even more strained in the future. (…) While the course of history is influenced by various factors, the South Korea-China summit at the end of 2017 marked a major historical turning point.
The following year, President Trump launched a trade war by imposing high tariffs on goods imported from China.
And in the same year, the name of the Hawaii-based 'Pacific Command' was changed to 'Indo-Pacific Command', further blatantly increasing military confrontation.
--- p.13, from “Prologue _ Japan’s New External Expansion and the Future of the Korean Economy”

In particular, because the Tokyo Olympics have long been held up by the Abe administration as a symbol of Japan's revival, the Japanese government has been lukewarm in discovering confirmed cases of COVID-19 or sharing the situation.
However, a pandemic also broke out in Japan, which imposed a blanket ban on foreign visitors and issued emergency measures restricting the operation of stores.
This was a direct hit to the declining Japanese economy.
In the second quarter of 2020, the economic growth rate recorded 7.8%, renewing the largest decline since the war.
Prime Minister Abe abruptly resigned, citing chronic illness as an excuse, but the success of his economic policy, Abenomics, also came to a dismal end after being hit hard by the coronavirus.
During the so-called "lost 20 years" following the bubble burst, Japan's real economic growth rate was 0.8%.
And the real economic growth rate during the Abenomics period was 0.9%.
Although it was outwardly impressive, the result fell far short of the 2% economic growth rate he had targeted.
--- p.41, from “Why is Abenomics only half-baked?”

So, what is the fundamental cause of Japan's prolonged economic stagnation? And what prescription was the right one? Various studies have been conducted on this issue, and among them, two causes that offer insight are as follows.
One is that while the long-term recession began with the emergence and collapse of a bubble, the biggest change was population decline, particularly the decline in the working-age population.
The so-called 'population cliff' and long-term stagnation occurred together.
This was a reason Japan had not thought about for a while.
Around the same time, the European economy also fell into a prolonged recession, but the demographic shock took a long time to manifest itself.
Moreover, Europe has mitigated the impact of population decline to some extent through inter-country migration and immigration due to economic integration.
But Japan was the first developed country to experience a population shock at such a rapid pace.
As the low birth rate and aging population rapidly progressed, the working-age population rapidly decreased, which had a huge impact on the economy.
--- p.65, from “A Wrong Economic Prescription That Has Caused Side Effects Everywhere”

I remember being shocked when I saw on the news in 2020, during the coronavirus pandemic, that the Japanese government was counting the number of severely ill patients nationwide by fax.
However, in the case of Japan, an analog-advanced country, fax was a very convenient means of communication for all citizens until the 1990s, so the benefits of the new technology called the Internet were not very noticeable.
In particular, what fueled this sentiment was the Japanese government's miscalculation of building a nationwide Internet network using ISDN coaxial cables, as explained above.
Because our country built its internet network using ADSL optical cables, citizens experienced high-speed internet and felt that it was fast and convenient.
However, in the case of Japan, the Internet was laid with coaxial cables at a speed not much different from the speed of sending a fax, so there was no significant difference from the user's perspective. (...) Digital technology has the characteristic of being quickly distributed and then having a rapid increase in users before the investment is easily recovered.
The choice to build an internet network with optical cables, like in Korea, was a reckless choice from an analog perspective.
Connecting not only the main network but also each household with optical cables could have been a foolish choice, not to mention reckless.
However, in the realm of digital technology, this recklessness and boldness actually turned out to be the right choice, and Japan's rational choice ended up being the wrong one.
--- p.120, from “Excessive caution holds back the spread of the Internet in Japan”

Phrases like “lack of leadership” and “management without strategy” were the most important key terms used to criticize Japanese companies during the economic downturn.
When sales and profits decline, companies turn to their CEOs to step up and demonstrate leadership to overcome the crisis.
The manager must lead the organization in a coordinated manner with a sound strategy.
However, during the long-term recession, Japanese companies did not show this kind of behavior, and many people criticized Japanese management for lacking leadership and strategy.
Japanese corporate CEOs are quite different from Korean managers.
In Korea, managers are like emperors who wield all power, so it is called 'emperor management', but in Japan, managers are like feudal lords (called lords in Japan) who exist but do not reign, so it is called 'lord management'.
--- p.135, 「Emperor Management vs.
From “Master’s Management”

The 'Thucydides Trap' refers to the phenomenon of extreme structural tensions occurring when a newly rising power threatens to usurp the position of an existing ruling power.
Allison explains that the Peloponnesian War (431–404 BC), as described by the Greek historian Thucydides, was the result of structural tensions between the rapidly rising power of Athens and Sparta, which sought to contain it.
He argued that the 'Thucydides Trap' had occurred a total of 16 times around the world over the past 500 years, and that 12 of them had led to war.
From this perspective, China has already followed the United States to its limits and declared the "great revival of the Chinese nation (Chinese Dream)" within it, so America's containment is a set procedure.
Of course, this war could be avoided if China scales back its ambitions, but if not, a trade war, cyber war, and localized conflicts at sea are inevitable, he argued.
The book caused a stir in the United States because it partly justified the inevitable nature of Trump's diplomatic actions.
In particular, his argument was introduced and received attention in Korea because it reflected the perspective of the American mainstream.
--- p.173, from “The Thucydides Trap and Trump’s Planned War”

The countermeasure to this was the Korean people's refusal to travel to Japan.
(…) The Liberal Democratic Party had a stronger support base in local small and medium-sized cities than in large cities.
Local small and medium-sized cities were hit hard by the long-term economic downturn and were also the main targets of 'local extinction.'
If we can attract foreign tourists to this area, it will not only greatly help revitalize the local economy, but it will also be a good way to maintain the Liberal Democratic Party's support base.
Therefore, the Liberal Democratic Party created a local revitalization headquarters and strongly implemented a policy to promote local tourism.
As a result of such policies, tourism in small and medium-sized cities in Japan became active, and the people who went there were mainly Koreans.
Wise Koreans have taken note of this point.
Local tourism was Japan's weak point.
Japan considered Korea's semiconductor industry a weak point and attempted to attack it, so Korea retaliated by refusing to allow tourism to its provinces.
This worked better than expected.
As Korean tourists stopped coming, LDP lawmakers in small and medium-sized cities in the provinces took a hit, and they gradually began to turn critical of the Abe administration.
This became a key turning point for the regime change.
--- p.206, from “Korea and Japan Targeting Each Other’s Vulnerable Points”

In Japanese organizations, even if the leader is somewhat incompetent, the members follow the leader's instructions.
So somehow the organization turns around.
However, in Korean organizations, if the leader is incompetent, the members immediately rebel, so the organization itself does not function.
Moreover, even in a smoothly running organization, Korean members will eventually challenge the Little Emperor.
If the little emperor demonstrates leadership and achieves good results, there is no problem, but if not, there will inevitably be members within the organization who will challenge him by asking, “Who are you?” and demand the little emperor’s replacement.
Hearing this story, I felt like my long-standing homework was solved.
The spirit of Korean capitalism is a spirit of challenge represented by 'Who are you?'
These emperors, each brimming with a spirit of challenge, pioneered new worlds in their own spheres, and thanks to their achievements, Korea as a whole has grown.

--- p.321, from “The Spirit of Korean Capitalism, “Who Are You?”

There is no government that wins over its people.
In particular, the United States, a cutting-edge capitalist country, cannot afford to be defeated by companies that prioritize the power of capital.
The United States is a country where the government changes through elections every four years.
In such a system, corporate political donations are a key factor in influencing the outcome of presidential elections.
Knowing this, the U.S. Treasury Department and the White House National Security Advisor took action first, and the president followed suit.
The result was the Hiroshima G7 Joint Declaration in May 2023.
But even if decoupling is changed to derisking in five years, the hegemonic power, the United States, will not be able to easily put away its sword once it has drawn it.
For some time, the United States, China, and other countries will continue to grope in the dark about derisking.
Furthermore, Japan, which had been actively pursuing the Indo-Pacific strategy, realized that it could not continue to play the role of a shock force as it watched the changing United States.
In particular, as the power of the new mainstream, including Abe, gradually wanes, the policy toward China is also being revised.
But in the meantime, conflicts between countries and factions intensified, and the world economy suffered a major shock.
It was the result of Japan's clumsy approach.

--- p.336, from “Epilogue _ Back on the Path of Growth and Inclusion”