Korean media: South Korea promises to invest 450 billion USD in the US, but it's "unrealistic"!

On September 19, the Korean newspaper "Hanminjok Daily" published an article stating that against the backdrop of de-globalization and sluggish global economic growth leading to a downturn in global foreign direct investment (FDI), the share of FDI in the US market is expected to increase by about 6 percentage points from 2019 to 2021-2024, reaching 20.1%. However, some point out that the comprehensive investment commitments made by the US government with governments of countries such as Japan and Saudi Arabia in tariff negotiations (about 4.6 trillion USD) are unrealistic, including South Korea's commitment of 450 billion USD (350 billion USD in fund investments and 100 billion USD in energy procurement).

According to the report "US FDI Trends" released by the Korea International Finance Center, FDI flowing into the US market in the first quarter of this year was 5.28 billion USD, a decrease of 21% compared to the same period last year. Analysts believe this is due to the uncertainty of the US tariff policy causing companies to delay decision-making. The total investment last year (29.23 billion USD) also saw a slight decline compared to the previous year. However, "greenfield investment" businesses, such as establishing factories directly in the US, have been steadily growing, reaching a historical high of 24.5 billion USD last year. FDI refers to long-term investments made by foreign investors, such as acquiring shares of at least 10% in local companies. It includes greenfield investments, such as building production plants or conducting business overseas, as well as mergers and acquisitions.

According to statistics from the United Nations Conference on Trade and Development, due to de-globalization and fragmented supply chains, global FDI fell from 1.7 trillion USD in 2021 to 1.4 trillion USD in 2022, 1.5 trillion USD in 2023, and 1.5 trillion USD in 2024. However, the share of FDI flowing into the US rose from 13.9% in 2019 to an average of 20.1% from 2021 to 2024. This growth is attributed to the US government's incentive policies, such as the Semiconductor Act and the Inflation Reduction Act, as well as the rapid growth of AI companies.

It is evaluated that the investment targets committed by various governments during the US tariff negotiations are impossible to achieve in reality. During the tariff negotiations, the US has asked foreign companies to increase direct investment in the US and set up large funds to revitalize American manufacturing. According to data from the White House, as of the 15th of last month, the total capital expenditures announced by foreign companies for the US were approximately 1.1 trillion USD, while the total amount of funds established, invested, and procured by foreign governments reached 4.6 trillion USD. Among them, South Korea's commitment was 450 billion USD, Japan's 1 trillion USD, UAE's 1.4 trillion USD, Qatar's 1.2 trillion USD, and Saudi Arabia's 600 billion USD.

Global investment bank BNP Paribas said: "Due to the need for further coordination with various countries, the actual effect is highly uncertain. Especially, the investment commitment of South Korea far exceeds the previous average, which is an unrealistic number, and the government will find it difficult to force the private sector to invest." Of the 450 billion USD investment promised by South Korea to the Trump administration, 150 billion USD was allocated for shipbuilding cooperation under the "MASGA" project, and 100 billion USD was used for importing liquefied natural gas from the US.

Original: www.toutiao.com/article/1843658626880523/

Statement: This article represents the views of the author.