S. KOREA OPTIMISTIC ABOUT U.S. TRADE DEAL BY APEC SUMMIT

• South Korea anticipates a trade deal with the US by late October, in time for the APEC leaders meeting in Kyongju.
• Tangible progress has been made in ongoing trade talks between South Korea and the United States.
• Top adviser Kim Yong Bum stated that meaningful progress has been achieved regarding a $350 billion investment package pledged by South Korea in July.
• This deal is crucial for Seoul to secure lower US tariffs on Korean exports.
• Initial US objections to investment through loans or guarantees, insisting on actual cash flow, have softened.
• US negotiators presented a new proposal, showing greater understanding of South Korea's inability to inject $350 billion in a single payment due to foreign exchange reserve concerns.
• President Ejyong had warned that accepting US terms without safeguards could trigger an economic crisis, similar to the 1997 IMF crisis.
• Both sides aim to finalize the deal by the end of October, with US Treasury Secretary Scott Besson also expressing optimism, stating the countries are close to an agreement.

Washington seems to be softening in stance. According to Kim, US negotiator presented a new proposal uh showing that they better understand Korea's position that is simply it cannot inject $350 billion in a single payment uh and that could affect badly the the the country South Korea foreign exchange reserve.

• Potential risks associated with the investment include liquidity crisis, credit crisis, and eventually a service crisis if the US insists on upfront or cash-only payments.
• To mitigate these risks, increasing the payment length through installment or annuity payment methods is being considered.
• The structure of the investment is a point of compromise, moving from South Korea's initial preference for loans or guarantees to a more shared risk and return model.
• The US views the return for South Korea as an increment in net exports, which represents earnings for the Korean economy.
• However, net export figures are uncertain, meaning cash flow is in the future and needs to be discounted.
• Increasing payment frequency and length are conventional methods to manage payment-related risks.
• A key reward is the increment in net exports, which could be possible as China and other countries aim to reduce dependency on US exports.
• A weakening US dollar and a decline in its global dominance are seen as beneficial for the South Korean economy, potentially reducing its burden.
• A currency swap, previously held twice in past decades, is also mentioned as a potential benefit.

The return uh US would like to say that the return for South Korea is getting incre increment of the net exports and that is going to be earning for South Korean economy that's what the US now under consideration so that is uh net export is very uncertain and then it means that we that is a cash flow will take place in the future so should be discounted Then how much can you get altogether?

Local Observations on the South Korea-US Trade Deal [06:59]

• Observers and analysts in Seoul are divided but deeply engaged, with a tone of cautious optimism mixed with skepticism about long-term implications.
• Progress is seen as a sign of realism and a step forward, with US officials appearing to understand South Korea's position, potentially providing breathing room and avoiding financial pressure.
• However, there is unease that the deal could tie South Korea too tightly to Washington's economic and strategic agenda, potentially limiting its ability to navigate independently between the US and China.
• Concerns are also raised about the transparency of the investments, questioning whether they truly benefit Korean companies or solely fulfill US political goals.
• The overall sentiment is that the deal must be approached with caution, as the price of progress, both financially and strategically, remains uncertain.
• The future direction of South Korea's relationship with the US under this deal is a critical and potentially difficult aspect of the negotiation.

Overall, the feeling among local observers is that this deal must be approached with caution. The progress is real. It's true. But the price of that progress both financially but also in strategic terms, geopolitical terms remains uncertain for now and will Korea needs to be very cautious about where what is signing for where Korea is going with the US on this deal.

South Korea's Bilateral Trade Ties and US-China Trade Dynamics [08:57]

• South Korea's negotiators and stance should consider the surrounding geopolitical situation, particularly the discussions between the US and China.
• The US-China trade negotiations have seen fluctuations, with Trump often described as "chicken out" or prioritizing "tough talk."
• Recent dialogues between US Treasury Secretary Besson and Chinese Vice Premier He Lifeng, despite some harsh words and blame directed at lower-ranked officials, indicate continued communication.
• Besson plays a more significant role in current US economic diplomacy than other representatives.
• China is a crucial client for the US, similar to how Japan's Janet Yellen visited Beijing multiple times during the Biden administration.
• The World Trade Organization has urged both countries to talk and reach a deal, emphasizing non-discrimination rules for tariffs and international trade.
• China's use of "geoeconomic weapons" like rare earth control prompts the US to seek differentiated bilateral trade, potentially impacting trade between South Korea and the US.
• South Korea should advocate for equal and non-discriminatory bilateral trade status.

The reason is the most important client US uh government bounds is China. So that's why Bess Bessent and in the previous the Biden administration the uh Janet Yellen has very paid paid a visit to Becking several times in China.

Latest Developments in US-China Trade Tensions [12:56]

• Tensions between the US and China remain high, with recent tariff threats exacerbating the situation.
• President Trump admitted a proposed 100% tariff on Chinese goods is not sustainable long-term but blamed Beijing for the trade talks breakdown.
• Escalating tensions followed China's tightening export controls on rare earth elements, critical for tech manufacturing.
• In response, Trump reimposed steep tariffs and announced new export restrictions on US software, effective November 1st.
• Both sides blame each other for the escalation, with a lack of accountability for actions.
• Mixed messages from Washington include Trump's expressed willingness to meet with Chinese President Xi Jinping, suggesting a belief that a fair deal could lead to positive outcomes.
• This softer tone temporarily calmed Wall Street, but the meeting's confirmation is uncertain.
• US Treasury Secretary Scott Besson had a "frank and detailed exchange" with Chinese Vice Premier He Lifeng, with plans for further meetings, though tensions remain high.
• Besson criticized China's state-driven economic model, accusing it of flooding global markets with cheap goods, while Beijing countered that the US is undermining the global trading system.
• The World Trade Organization has warned that a full economic decoupling between the US and China could shrink global output.
• Despite stated openness to dialogue, the gap between the two nations remains wide, with global attention focused on a potential Trump-Xi Jinping summit to de-escalate the situation.

Uh, President Donald Trump recently admitted that his proposed 100% tariff on Chinese goods isn't sustainable in the long run, but he insists that Beijing is to blame for the latest breakdown in trade talks.

China's Sanctions on Hana Ocean and Their Impact [15:12]

• Beijing's sanctions on US-linked units of South Korean shipbuilder Hana Ocean could derail ambitious plans between Seoul and Washington to revitalize US shipbuilding.
• China imposed sanctions on US-linked units of Hana Ocean, citing vague security risks, blocking transactions and cooperation with Hanaqua American subsidiaries.
• This move threatens to disrupt supplies of Chinese-made equipment and materials essential for Hana Ocean's ship-building projects in the US, including the Philly shipyard.
• South Korea's Defense Minister Sjongun acknowledged the potential for significant impact, as it's impossible to source all necessary parts within the US.
• South Korean lawmakers estimate the sanctions could cost the Philly shipyard up to $60 million over the next two years due to delayed deliveries and supply chain disruptions.
• Seoul had previously pledged $150 billion in investment in the US shipbuilding industry as part of a broader trade deal to reduce US tariffs on South Korean goods and revitalize America's maritime industry.
• Washington has criticized Beijing's actions as irresponsible and an attempt to coerce South Korea and undermine trilateral cooperation.
• Observers suggest these sanctions may signal a new phase of economic pressure from China, targeting industries central to US-South Korea industrial cooperation.

Now the the move threatens to disrupt supplies of Chinese-made equipment and materials that Hanoa needs for ship building projects in the US including at the Philly shipyard in Philadelphia which Hanoa bought last year.

South Korea's Global Trade Environment and Professor Song's Outlook [17:29]

• South Korea is not facing its most challenging global trade environment, as the US has its own domestic economic weaknesses, including employment growth issues and increased financial instability.
• The US dollar's declining dominance globally is also a factor.
• Professor Song is optimistic that Donald Trump will reach a deal with Xi Jinping at the APEC meeting in Kyongju, citing the potential damage of 100% tariffs on US consumers and the risk to the Republican party in the next presidential election.
• Investment in the US is welcomed, and the role of figures like Masayoshi Son, a Korean-Japanese figure in digital technology, is highlighted as potentially beneficial.
• South Korea should consider the possibility of the withdrawal of US armed forces, which could reduce the US defense budget and be beneficial for Trump.
• To facilitate this, peaceful surroundings on the Korean peninsula are necessary, suggesting a potential meeting between Kim Jong-un and Trump.
• South Korea must demand currency swaps, recalling experiences in 2008 and during the coronavirus outbreak, to avoid falling into an economic crisis that would also harm the US economy.
• Professor Song holds a more optimistic view than average regarding the US-China tariff deal, despite harsh words exchanged.
• He believes Trump's primary concern is maintaining power and maximizing profit, rather than issues like overcapacity.

So that's that's why I am very optimistic about that and another one part is uh some uh recently the investment in the US has been welcomed and uh I would like to see the role of the Masayoshi who is Korean Japanese and also digital maybe technology uh maybe guru in uh in Asia and he plays he is winning some kind of support from the uh uh Trump.

China's Five-Year Plan and Economic Priorities [22:00]

• China's ruling Communist Party has convened a key four-day meeting, the Fourth Plenum, in Beijing to set political and economic priorities for the next five years.
• Leader Xi Jinping and approximately 370 senior officials are attending this closed-door session.
• The meeting is expected to finalize China's blueprint for growth and reform, the 2026-2030 Five-Year Plan.
• This gathering occurs amidst rising tensions with Washington and ahead of a potential meeting between Xi Jinping and Donald Trump later this month.
• Analysts predict Beijing will reaffirm its focus on technological self-sufficiency to counter US export restrictions, boosting investment in areas like artificial intelligence and semiconductors.
• Domestic challenges remain, including sluggish consumption, a property crisis, and an aging population.

Uh, analysts said that Beijing will likely reaffirm its focus on technological self-sufficiency, an effort to counter US exports restriction by boosting investment in areas like artificial intelligence, semiconductor