Production of semiconductor chip File photo: VCG

Discussions about industrial competition with China have been intensifying in South Korea, reflecting a certain anxiety across government and business circles. South Korean Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol said at a press conference on Wednesday that China is catching up with South Korea extremely fast in the semiconductor sector, the Yonhap News Agency reported.

This week, an industry survey from the Federation of Korean Industries showed that Chinese companies have already surpassed their South Korean counterparts in competitiveness in five of the 10 major export industries, and are expected to outcompete in almost all 10 industries in the next five years.

South Korea's increased attention to industrial competitiveness comes amid mounting pressure. On one front, the technological gap between China and South Korea in critical fields such as semiconductors is narrowing at an accelerating pace, fundamentally reshaping the competitive landscape. On another front, the trade agreement between Seoul and Washington commits South Korea to invest $150 billion in the US shipbuilding industry and an additional $200 billion in other sectors. 

While deepening economic ties with the US, these commitments have sparked concerns about potential investment outflows from domestic industries and the risk of industrial hollowing-out. Caught in this dual pressure, anxiety within South Korea's industrial circles is escalating, making proactive responses imperative.

In the face of these challenges, South Korea's industrial sector is moving decisively. Samsung Electronics, Hyundai Motor, and other major South Korean manufacturers on Sunday pledged to invest about $550 billion in the country over the coming years, focusing on emerging growth areas such as semiconductors and artificial intelligence (AI), aiming to nurture the next generation of core technologies domestically. This substantial investment demonstrates South Korea's determination to maintain its technological competitiveness while highlighting its intention to secure a resilient industrial base amid a shifting geoeconomic landscape.

However, in today's deeply interconnected global supply chains, neither domestic investment alone nor strengthening a single alliance can provide comprehensive solutions. Pursuing broader and more diverse international partnerships remains essential in navigating today's volatile economic environment. This explains why, even as competition with China grows, cooperation in areas such as semiconductors continues to gain importance. Balancing the relationship between competition and cooperation has become a crucial issue that South Korea needs to think through.

For South Korea, maintaining a lead in core technologies while actively exploring cooperation with China in emerging industries will be crucial. This dual approach will shape the depth and breadth of South Korea's industrial development as well as its long-term position in global value chains.

Given the high complexity of the semiconductor industry, a global division of labor and collaboration remains essential. South Korea's strengths in high-end manufacturing and core technologies naturally complement China's advantages in market scale and supply chain completeness.

Similarly, in emerging fields like AI, biotechnology, and the green economy, there is also significant potential for China and South Korea to build equal and mutually beneficial partnerships. Particularly in the field of AI, both China and South Korea have elevated it to a national strategic priority and developed considerable international competitiveness, while collaboration potential appears substantial. 

China demonstrates comparative advantages in application layers, technical infrastructure, and system implementation, while South Korea possesses solid technological foundations and practical expertise. Through establishing joint laboratories, promoting technology sharing, and coordinating regulatory frameworks, the two countries could overcome technical barriers and expand AI applications across the manufacturing and services sectors, collectively enlarging the AI market.

Although maintaining competitiveness while expanding cooperation space is fraught with challenges, it is an inevitable path for South Korea to explore in today's complex international economic environment. If China and South Korea can seize this opportunity and identify ways to cooperate amid competition, they will inject new impetus into their respective processes of industrial development and make positive contributions to the stability and prosperity of the regional economy.