한국경제인협회는 최근 미·중 기술 패권 경쟁에 따른 글로벌 공급망 재편 및 주요국의 산업정책으로 인해 세계시장에서 우리 기업들의 입지가 줄어드는 점은 성장잠재력 하락 추세에 비추어 매우 우려되는 상황이라고 전했다. 특히 경쟁국들이 민관 협력을 크게 강화하는 반면 우리의 산업경쟁력은 상대적으로 약화되는 상황을 문제라 인식해 ‘주요국 첨단산업별 대표기업 지원정책 비교’를 통해 한국의 정책 지원이 미국, 중국 및 일본에 비해 부족한 실정임을 밝혔다.
▲Data: Korea Economic Association
US-China-Japan economic security support worth tens of trillions
Direct support is important for the global supply chain dimension
Unlike the United States, China, and Japan, which are providing tens of trillions of won in support to cutting-edge industries such as semiconductors for economic security, Korea is stingy with subsidies to cutting-edge industries, and it has been argued that it is urgent to devise measures to strengthen national support for the semiconductor, secondary battery, and display industries, which are national cutting-edge strategic industries.
The Korea Economic Association reported on the 7th that the recent reorganization of the global supply chain due to the US-China technology hegemony competition and the industrial policies of major countries are causing the position of our companies in the global market to decrease, which is a very concerning situation in light of the downward trend in growth potential.
In particular, while our competitors are significantly strengthening public-private cooperation, our industrial competitiveness is relatively weakening. This is recognized as a problem, and through a 'comparison of support policies for representative companies in each cutting-edge industry in major countries', it was revealed that Korea's policy support is insufficient compared to the US, China, and Japan.
The US, China, and Japan are strengthening their support for semiconductors for economic security reasons. At the signing ceremony of the Chips Act in 2022, US President Biden said that US national security depends on the semiconductor industry, and in October of the same year, he strengthened export controls on semiconductors to China through a revised semiconductor export control measure. Along with this, the company also announced a plan to invest $8.5 billion in subsidies for Intel to resolve semiconductor production in the country, which had previously been dependent on Asian countries.
China recognizes its high dependence on foreign countries for semiconductor supply as a weakness, and has started to provide subsidies of 270 million dollars to the leading semiconductor company SMIC starting in 2023 to increase the self-sufficiency rate of semiconductors to 70%. In addition, the government is also spurring government-led investment and research and development as a major shareholder (with a stake of 30% or more).
The Japanese government has already invested over $6.3 billion in subsidies to establish Rapidus, a joint semiconductor company, with the aim of revitalizing the semiconductor industry, and the Ministry of Economy, Trade and Industry is reportedly considering additional support measures.
The US, which does not have a clear secondary battery representative company, is responding to China by protecting the electric vehicle market. It is trying to build a secondary battery production value chain by inducing production in the US through the electric vehicle subsidy of the IRA (Inflation Reduction Act). Since subsidies are paid only when at least 50% of secondary battery parts are produced and assembled in North America, secondary battery companies from other countries that cannot overlook the huge US market are considering local production. In fact, many companies such as CATL and LG Energy Solution have built or are planning to build production plants in the US.
The Chinese government's support for the secondary battery industry began in 1990 with the 8th Five-Year Plan. The Chinese government has been providing various support to CATL, currently ranked first in global market share, since its establishment in 2011, and is expanding the scope of subsidies to all-solid-state battery research and development to take the lead in the all-solid-state battery market.
Japan has also recently been strengthening its investment in the secondary battery industry. As Korean and Chinese secondary batteries dominate the market, the Japanese government has decided to provide Toyota with $850 million in secondary battery research and development subsidies, recognizing secondary batteries as an energy policy and economic security issue. In addition, subsidies have begun to be provided to secure domestic secondary battery production facilities.
In contrast, Korea has no subsidy policy for the secondary battery industry following the semiconductor industry, and the global market share of Korea's three major manufacturers (LG Energy Solution, SK On, and Samsung SDI) fell 7.1 percentage points in just two years, from 30.2% in 2021 to 23.7% in 2022 and 23.1% in 2023.
Korean LCD products, which dominated the global market for a while, are evaluated to have lost their price competitiveness since the Chinese government selected the display industry as one of the “seven strategic new growth industries” in 2012 and invested large-scale subsidies.
Korea currently has a slight edge over China in the OLED sector, which requires high technology, but even this is in danger due to large-scale subsidies and investments from China. The Chinese government has paid $420 million in subsidies to BOE, China’s leading LCD and OLED manufacturer, in 2023, and is also providing support such as free land and buildings and local government investment.
The Japanese government attempted to restore the competitiveness of the display industry with subsidies worth 2.5 billion dollars in 2012, but unlike Korean companies that made preemptive investments in OLEDs since the early 2000s, it missed the right time to invest and has continued to run deficits since 2014. Likewise, there are concerns that if the Korean display industry does not receive timely support, it could lose the lead in the OLED market to China.
The commonality in the semiconductor, secondary battery, and display industry policies of major countries is that they seek to achieve economic growth through government intervention. In particular, subsidy policies are mainly utilized because they are effective in securing price competitiveness and technological prowess in advanced industries that exhibit a first-mover advantage and a winner-takes-all pattern.
Korea is focusing on indirect support such as tax credits for companies, but considering the industrial policy trends of major countries and the detailed shortage situation this year, it is necessary to move forward with policy support such as the Direct Pay system being implemented in the United States to attract domestic production bases and conduct research and development.
The Korea Economic Research Institute agrees with the need for the government to maintain fiscal soundness, but emphasized that government support such as subsidies for cutting-edge industries is an investment in future food, unlike increased debt due to consumer spending, and that this will have a very significant impact on the national economy.
The United States, China, and Japan have all strengthened their economic security control towers. The United States promoted the White House Office of Science and Technology Policy to the level of a minister in 2021, and is promoting industry and security policies in a single organization. China upgraded the Ministry of Science and Technology, which was under the Prime Minister, to the Central Committee of the Party (Central Science and Technology Commission) under the President last year, so that the leadership directly oversees science and technology policies.
Japan has also continued to strengthen its economic security capabilities since China’s rare earth export restrictions. A representative example is the establishment of the Office of the Prime Minister for Economic Security, a ministerial-level organization, in 2021 to establish an integrated response system across ministries led by the Prime Minister. In this way, major countries are pursuing policies based on a unified economic security control tower.
Lee Sang-ho, head of the Economic and Industrial Headquarters of the Korea Economic Council, emphasized, “The strengthening of support policies for semiconductors, secondary batteries, and displays by major countries is the result of a sense of crisis that losing the lead in cutting-edge industries would threaten national security.” He added, “At a time when rapid technological advancements and supply chain reorganization require preemptive and effective responses, investment in these cutting-edge industries is absolutely necessary for Korea to play a pivotal role in the reorganizing global supply chain, not to mention security.”
He also said, “Korea also needs to establish bold financial support measures to enable related companies to secure global competitiveness, and it is necessary to reorganize related laws and systems through a unified control tower.”