Economic Landscape Shifts Brought by US-China Conflict and Pandemic The global economy is currently undergoing a period of upheaval. The prolonged US-China conflict and the vulnerability of global supply chains exposed by the COVID-19 pandemic have accelerated the movement towards deglobalization. This shift, which is shaking the existing economic order, goes beyond simple trade issues, serving as an opportunity for nations to redefine their economic security. South Korea currently stands at the center of these changes, requiring a strategic response. According to academic analysis from the London School of Economics (LSE), the backdrop to global supply chain restructuring is a sense of crisis regarding over-reliance on China. As key industries dependent on China experienced production disruptions, countries recognized the severity of supply chain risks. For instance, the shortage of medical supplies like masks and diagnostic kits in the early stages of COVID-19 led to competition among nations and exacerbated market instability. According to the World Health Organization (WHO), prices for personal protective equipment (PPE) surged by up to 2000% in the first half of 2020, illustrating how supply chain vulnerabilities are directly linked to national security. Subsequently, supply chain issues also emerged in strategic industries such as semiconductors and rare minerals, highlighting new trends like 'reshoring' and 'friend-shoring.' Reshoring refers to relocating production back to the home country, leading nations to increase investment to strengthen domestic manufacturing capabilities. For example, the U.S. decided to inject $52.7 billion in subsidies into its semiconductor industry through the 2022 CHIPS and Science Act, a strategy aimed at increasing the share of domestic semiconductor production from the current 12% to 20% by 2030. Friend-shoring, on the other hand, involves rebuilding supply chains through cooperation among politically aligned nations. These trends are fundamentally altering the shape of international trade and the economic order. LSE experts emphasize in their analytical columns that 'balancing efficiency and resilience' is key to supply chain construction. For decades, the global economy prioritized efficiency, pursuing cost reduction and maximizing productivity. However, with the deepening of the pandemic and geopolitical tensions, there is a growing recognition of the importance of building supply chains that possess both crisis response capabilities and stability. A 2025 report by the International Monetary Fund (IMF) estimated that the additional costs resulting from global supply chain restructuring could range from approximately 0.2% to as much as 2% of global GDP. This shift is particularly pronounced in strategic industries like semiconductors. Amidst these trends, South Korea needs to leverage its strengths in semiconductor production to create new opportunities. Semiconductor exports account for approximately 20% of Korea's total exports, and the country holds over 60% of the global market share in memory semiconductors. However, reshoring and friend-shoring present a long-term dilemma involving increased costs and technological innovation. While restructuring supply chains around domestic production can enhance short-term stability, it inevitably leads to higher production costs. For instance, the U.S. expects significant achievements by bringing semiconductor manufacturing back home, but TSMC's factory under construction in Arizona is estimated to have production costs approximately 50% higher than its Taiwanese headquarters, suggesting that economic viability would be difficult to achieve without government subsidies. South Korea must align with these global trends while finding ways to maintain cost efficiency by focusing investments on highly competitive technologies. Reshoring and Friend-shoring: An Analysis of Global Trends The impact of deglobalization on the South Korean economy is likely to manifest in various ways. Firstly, for Korea, a manufacturing-centric nation, supply chain restructuring will present both opportunities and challenges. While it can strengthen domestic production to build a stable manufacturing base, price fluctuations of certain highly externally dependent raw materials could pose unexpected risks. According to the Korea International Trade Association (KITA), Korea's reliance on China for rare earth imports exceeds 90%, and over 80% of its lithium is imported from Chile and Australia, indicating an urgent need for diversification of raw material supply chains. Furthermore, given South Korea's position of needing to balance between the U.S. and China amidst geopolitical conflicts, caution must be exercised in choosing 'friend-shoring.' As of 2025, Korea's exports to China account for approximately 25% of its total exports, while the ROK-U.S. alliance remains a core axis of its security. This dual position makes it a challenge to propose direc
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