China’s Low-Cost Product Attack and Trilateral Summit Talks: Finance Ministers Discuss Economic Changes and Sanctions

The finance ministers of Korea, the United States, and Japan gathered in one place for the first time. At the meeting, there was a shared awareness of recent changes in the economic and financial situation, such as the decrease in the value of the won and the yen and the attack made by China on low price products. They also agreed to continue discussing items on the agenda previously discussed between the leaders of the three countries, such as sanctions against North Korea and Russia.

Deputy Prime Minister and Minister of Strategy and Finance Choi Sang-mok, US Treasury Secretary Janet Yellen, and Japanese Finance Minister Shunichi Suzuki held a meeting in Washington, DC on the 18th and accepted the joint declaration of the three ministers finance for the first time. .

The Korea-US-Japan Finance Ministers’ Meeting is a continuation of the Korea-US-Japan conference that was held at Camp David in the US last August. The basic nature of the meeting is to expand the cooperation between the two countries, including Korea-US and Korea-Japan, to the level of the three countries and review the discussions between the leaders at the time

◆ Consensus on the changed economic situation = The finance ministers of the three countries confirmed their consensus on the changed economic and financial situation. A representative example is the devaluation of won and yen. As a result of the forecast that the US interest rate cut will be delayed and risk will be disturbed due to instability in the Middle East, the dollar exchange rate recently entered the range 1,400 won intraday for the first time in 17 months, and the yen-dollar. exchange rate entered the 154 Yen range for the first time in 34 years.

Accordingly, the day before, the finance ministers of Korea and Japan made a verbal intervention in a bilateral meeting, saying that appropriate measures could be taken to deal with the volatility of the foreign exchange market. The United States also seemed to share this sentiment by agreeing to include in this joint declaration the phrase, “We are aware of the serious concerns of Japan and Korea a- out about the recent rapid depreciation of the yen and won.”

There is a shared view that the recent rapid depreciation of the premium and the yen has been disconnected from fundamentals. The fact that the current agreement of the 20 main countries (G20) was mentioned in the joint declaration is also explained in this context.

Considering the reluctance of the US government to get involved in market price decisions, this is evaluated to reflect the situation of Korea and Japan as much as possible.

◆ China’s overproduction was also on the agenda = The question of China’s overproduction, which the United States is still raising, was also on the meeting’s agenda.

“We emphasize the importance of cooperation to overcome the damage that other countries’ non-market economic practices can do to our economies, including chain vulnerability supply, economic coercion and overproduction in key sectors,” said the finance ministers of the three countries.

Although China was not specifically mentioned. Considering Secretary Yellen’s recent trip to China, there is an explanation that he is targeting China. China is said to have taken issue with this when it pushed domestically produced products abroad, which had become difficult to digest due to a decline in domestic demand.

During her visit to China, Secretary Yellen reportedly mentioned the potential negative effects of China’s industrial policy and overproduction on the global economy.

The three countries are expected to continue working-level discussions in the future and focus on finding ways to respond to this.

In addition, the fact that the joint declaration includes a reference to ‘strengthening supply chain resilience through a global supply chain strengthening partnership (RISE)’ is interpreted as a target for China.

The RISE program is an international fund to expand the role of middle and low income countries in the whole process, including mining and mineral processing. It is described as a stepping stone to reduce the dependence on China for the supply of key minerals such as cobalt.

◆Follow-up discussion on the summit agenda = At ​​this meeting, the finance ministers of the three countries continued discussions between the leaders, including sanctions against North Korea and Russia.

They shared the status of sanctions in each country in response to Russia’s war in Ukraine and North Korea’s weapons development and expressed their intention to continue to cooperate using the their sanctions tools.

It is expected that agenda items such as the reform of multilateral development banks and international financial institutions, and support for ASEAN (Association of Southeast Asian Nations) and the Pacific island countries will continue to be discussed. becoming more certain in the future.

The first meeting of finance ministers of the three countries is likely to be significant as it marks the first step towards ‘trilateral cooperation’ between Korea, the United States and Japan.

However, at this meeting, no agreement was reached on holding a regular Korea-US-Japan Finance Ministers’ Meeting. It is expected that discussions will continue at the working level and try to hold discussions in the future.

Reporter Seong Hong-sik [email protected]

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