【By Observer Net, Wang Yi】"In the past, when we wrote internal reports, we would always list how many years of technological gap there were between various industries and China. But now, it's hard to write such reports anymore," said Kim Deok-woo (translated name), head of the Northeast Asia Trade Division of the Ministry of Industry, Trade and Energy of South Korea, at a forum on December 16.

The Korean newspaper "Hanmin Ilbo" reported that day, pointing out that this statement shows that with the rapid development of China's manufacturing and high-end industries, the market landscape has become completely different from before.

The report stated that the Korea Institute for International Economic Policy (KIET), a government-funded think tank, held a forum titled "New Directions for South Korea's Industrial Strategy and Cooperation with China" on December 16 in Seoul, aiming to discuss South Korea's strategy to cope with the challenge from China, as China's industrial competitiveness is now catching up or even surpassing South Korea's.

According to the report, participants including Kim Deok-woo generally believe that in both traditional heavy industries such as steel, petrochemicals, and shipbuilding, as well as future industries such as autonomous driving electric vehicles, batteries, artificial intelligence (AI), robotics, and renewable energy, China is comprehensively surpassing South Korea, and South Korea's industrial strategy urgently needs adjustment.

In his keynote speech on the same day, Park Man-soo, senior researcher at the Korea Institute for Finance and Banking, pointed out that the Chinese government is "committed to developing manufacturing," and directly stated that "South Korea's 'fast-track' economic development model is facing a crisis."

He analyzed that China has learned from the U.S. experience, where the latter had massively relocated manufacturing factories overseas, leading to reduced employment and political and social instability. Now, China is fully developing its own manufacturing industry and is taking a dominant position in the global industry.

Park emphasized that in emerging industries and markets, China has achieved full self-sufficiency in the entire process from R&D, commercialization, large-scale production to sales, "leaving almost no chance for latecomer countries to catch up." This means that in future industries such as electric vehicles, batteries, and renewable energy, China controls the complete value chain, making it difficult for latecomer countries like South Korea to enter the market.

Cho Jang, an automotive industry expert and senior research fellow at the Institute of Industry, said that feedback from Hyundai Motor's subsidiaries in China is "we don't know how to compete." The sales performance of electric vehicles developed by Hyundai in China this year has also been unsatisfactory.

According to a report by the Korea Herald on December 16, a recent report released by the Korean Chamber of Commerce and Industry (KCCI) predicted that by 2025, Chinese battery manufacturers will occupy more than 77% of the global market share, and their share in non-Chinese markets will rise to 46.5%, surpassing South Korean companies (38.7%) for the first time.

Professor Yin Jong-hak of the National University of Korea lamented that when China officially launched the "Made in China 2025" strategy in 2015, it coincided with the efforts of developed countries like the United States and Germany to revitalize manufacturing. "At that time, China was very anxious." "After more than a decade of industrial upgrading and science and technology development strategies, South Korea has been caught up by China, and the situation is quite unexpected."

Korean media pointed out that "Made in China 2025" is a national-led long-term industrial policy initiated by the Chinese government, aimed at building a strong manufacturing country, focusing on ten key strategic industries, including semiconductors, AI, robotics, and electric vehicles.

Hong Jang-sik, director of the Global Research Institute at the Korea Trade Promotion Organization (KOTRA), recalled that in 2015, during the negotiations for the Republic of Korea-China Free Trade Agreement (FTA), Korean electronics companies mentioned a "huge gap" between Korea and China, thinking "it was not a problem and did not need to be concerned about."

But Hong warned that the real "scary" aspect of China is the construction of a complete industrial ecosystem and the internalization of the value chain. "We do not know how long the current position of South Korea's semiconductor industry can be maintained."

On December 16, the Korea Institute for International Economic Policy held a forum titled "New Directions for South Korea's Industrial Strategy and Cooperation with China." Hanmin Ilbo

In fact, in February this year, the Korea Institute of Science and Technology Evaluation and Planning (KISTEP) released a survey report stating that by 2024, China has surpassed South Korea in all key areas of semiconductor technology.

The institute conducted a survey among 39 experts in relevant fields in South Korea, and according to the survey results, as of last year, South Korea's fundamental strength in all semiconductor areas lagged behind China. If the level of the world's topmost technology is set at 100%, South Korea scored 90.9% in high integration and low impedance storage chip technology, lower than China's 94.1%. In the field of high-performance, low-power AI chips, South Korea (84.1%) also fell short of China (88.3%). In other areas such as power semiconductors and next-generation high-performance sensing technologies, China was also leading.

Additionally, another survey result showed that South Korea lags behind China in basic, source code, and design areas. From a commercialization perspective, South Korea only leads China in high integration, low impedance storage chips, and advanced packaging technologies.

Yonhap News Agency reported that the results have raised concerns among relevant parties in South Korea. The report stated that the outlook for South Korea's semiconductor market is not bright. The rise of Japan and China, U.S. sanctions, and growth in the Southeast Asian market have brought uncertainty to the industry.

South Korea's Deputy Prime Minister and Minister of Economy and Finance, Goo Young-hwan, also expressed concern at a press conference last month, saying, "As a person in charge of the economy, when I heard that China is also making efforts to catch up in the semiconductor industry, which we used to dominate, I was shocked, even a bit scared." He said that China is rapidly narrowing the technological gap, which worries him about South Korea's economy.

Lee Woo-geun, a professor at Sungkyunkwan University who recently taught at Tsinghua University's School of Integrated Circuit, also pointed out, "We have been too focused on semiconductors and AI lately." He suggested that South Korea should strengthen basic scientific research, like the United States and China, and refer to the model of the U.S. Defense Advanced Research Projects Agency (DARPA). DARPA, established in 1958, is an agency under the U.S. Department of Defense that specializes in developing cutting-edge technology for military use, known as the "bellwether of disruptive technology research for the U.S. military."

Kim Jong-chul, director of the Office for Trade Cooperation at the Ministry of Industry, Trade and Energy of South Korea, reflected that South Korea has paid insufficient attention to China over the past five years, leading to the current situation. He pointed out, "There was even a time when it was said that you couldn't report on China business to company chairmen and CEOs (because business and communication with China decreased), but now we must re-engage in related discussions."

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Original: toutiao.com/article/7584432319701615144/

Statement: The article represents the views of the author.