South Koreans frustrated with constant leadership churn: ‘I stopped caring'
In the American drama Designated Survivor, the US secretary of housing and urban development unexpectedly assumes the presidency after 12 officials ahead of him in the line of succession are wiped out.
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A less dramatic but equally surreal scenario unfolded in
South Korea on Friday, though the presidential line of succession did not make it to No 13.
On Thursday, former acting president and Prime Minister
Han Duck-soo resigned to run for president, while former Deputy Prime Minister for Economic Affairs Choi Sang-mok stepped down following an impeachment push in the National Assembly by the Democratic Party of Korea (DPK).
Now, with the snap presidential election set for June 3, Education Minister Lee Ju-ho is serving as acting president.
With former president
Yoon Suk-yeol impeached last month and the nation's No 2 and No 3 officials no longer in power, South Korea is facing an unprecedented leadership vacuum, intensifying public concerns over the uncertainty of its political future.
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'Seriously? Even the education minister is acting president now? That was my first thought when I saw the news,' Song Hyun-woo, a 26-year-old preparing to become a navy officer, said.
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Asia Times
4 hours ago
- Asia Times
China's industrial policy has an unprofitability problem
Analyzing American economic policy isn't that interesting these days, except perhaps as a grim spectacle. So I've been thinking a little about Chinese economic policy. China's leaders leave much to be desired, but to their credit, they still think economic policy is about strengthening their nation, enriching their people and improving their technology instead of pursuing domestic culture wars by other means. Anyway, China has a lot of policy initiatives right now — cleaning up the fallout from the real estate bust, retaliating against America's tariffs, improving their health care system, and so on. But their most important policy — and the one everyone talks about here in the US — is their big industrial policy push. If you want to understand Chinese industrial policy, I recommend starting with Barry Naughton's free book, 'The Rise of China's Industrial Policy: 1978 to 2020.' The basic story is that until the mid-to-late 2000s, China didn't have a national industrial policy as such. It had a bunch of local governments trying to build up specific industries, usually by attracting investment from multinational companies. And it had a central government that tried to make it easy for local governments to do that, using macro policies like making sure coal was cheap, holding down the value of the Chinese currency in order to stimulate exports and so on. But it was not until the end of Hu Jintao's term in office — and really, not until Xi Jinping came to power — that China developed a national industrial policy, in which the government tries to promote specific industries using tools like subsidies and cheap bank loans. If you want a good primer on just how big those loans and subsidies are, and which industries they're going to, I recommend CSIS' 2022 report, 'Red Ink: Estimating Chinese Industrial Policy Spending in Comparative Perspective.' It's a lot. Here are the authors' estimates from 2019: Source: CSIS In some respects, this policy was successful. For example, it moved China up the value chain — instead of doing simple low-value assembly for foreign manufacturers as in the 2000s, China in the 2010s learned to make many of the higher-value components that go into things like computers, phones and cars, as well as many of the tools that create those goods. This had the added security benefit of making China less dependent on foreign rivals for key manufacturing inputs. China has doubled down on its centralized, big-spending industrial policy since then. In 2021-22, China suffered a huge real estate bust, crippling a sector that had accounted for almost one-third of the country's GDP. China's leaders responded by doubling down on manufacturing, encouraging banks — essentially all of which are either state-owned or state-controlled — to shift their lending from real estate to industry. In 2023, you saw charts like this: Source: Shanghai Macro via Bert Hofman Along with this industrial policy, you saw a massive surge of Chinese-manufactured exports flowing out to the rest of the world. The most recent export surge has been labeled the 'Second China Shock', but in fact, the trend was already headed in that direction well before the pandemic: Source: CSIS China's competitive success in manufacturing industry after industry has been nothing short of spectacular. In just a couple of years, China went from a footnote in the global car industry to the world's leading auto exporter: Source: Visual Capitalist Obviously, this export surge is the most important way that people in countries like the US experience the results of China's industrial policy. So most commentary on the policy has focused on exports, trade balances and so on. But it's important to remember that most of what China is producing in this epic manufacturing surge is not being exported. For example, take cars. Even though China is now the world's top car exporter, most of the cars it makes are sold within China: Source: Brad Setser China's auto industry is actually unusually domestically focused, compared to other auto powerhouses like Germany, South Korea, and Japan: Source: Bloomberg via Noahopinion In fact, this pattern holds across the whole economy. For an industrialized country, China is unusually insular — its exports as a percent of its GDP are higher than the US, but much lower than France, the UK, Germany, or South Korea: Source: World Bank Most of China's enormous manufacturing subsidies are not actually for export manufacturing; they're for domestic manufacturing. The rest of the world is just getting a little bit of spillover from whatever Chinese companies can't manage to sell domestically — except for a country as huge as China, a 'little spillover' can seem like a massive flood to everyone else. And here lies the rub. Essentially, China is huge and most of its trading partners are pretty small. There's a limited amount of Chinese cars, semiconductors, electronics, robots, machine tools, ships, solar panels, and batteries they can buy. And on top of that, some of China's biggest trading partners are levying tariffs against it. For most Chinese manufacturers, export markets are simply not going to replace the domestic market. And this means that Chinese manufacturers will be forced to compete against each other for a domestic market whose size is relatively fixed, at least in the short term. That competition will eat away at their profit margins. In fact, this is already happening. Vicious price wars have broken out in the Chinese auto industry, and even the country's top carmakers are under extreme pressure: Chinese carmakers' price war is putting the industry's balance sheet under strain…Current liabilities exceeded current assets at more than a third of publicly listed car manufacturers at the end of last year…China's leading carmakers are being forced to…fight for market share amid heavy [price] discounting… The dominant electric-vehicle maker BYD is deepest in negative territory with its working capital, followed by rivals Geely, Nio, Seres and state-backed BAIC and JAC, while the total net current assets of 16 major listed Chinese carmakers [saw] a 62 per cent decline from…the first half of 2021… 'Given the current downward trend, China's auto industry is expected to enter an industry-wide elimination phase . . . in 2026 at the latest,' [an analyst] warned. 'During the process, some companies will die of liquidity crises.'… BYD recently came under pressure to defend its financial numbers and business practices after Wei Jianjun, chair of rival Great Wall Motor, called for a comprehensive audit of all major domestic carmakers…'An Evergrande exists in [China's] auto sector at the moment — it just hasn't blown up,' he told local media, raising the spectre of the industry following the property sector into a spiralling debt crisis. How can these mighty world-conquering automakers be skating on the edge of bankruptcy when the government is pouring so many subsidies and cheap loans into the auto industry? The answer is simple: China's government is paying its car companies to compete each other to death. The Chinese government pays a ton of different car companies to make more cars. Chinese banks, at the government's behest, give cheap loans to a bunch of different car companies to make more cars. So they all make more cars — more than Chinese consumers want to buy. So they try to sell some of the extra cars overseas, but foreigners only buy a modest amount of them. Now what? Unsold cars pile up, prices are cut and cut again, and all the car companies — even the best ones, like BYD — see their profit margins fall and fall. It's not just autos, either — similar things are happening in solar, steel, and a bunch of other industries. Manufacturing profit margins are plunging across China's entire economy: Source: Bloomberg via Noahopinion A Chinese buzzword for this sort of excessive competition is 'involution.' Why is this bad, though? Who cares about profit, anyway? After all, China's workers are getting jobs, and China's consumers are getting a ton of cheap cars and other manufactured stuff. So what if rich BYD shareholders and corporate executives take a loss? Well, in fact, there are several problems. The first is macroeconomic. Price wars across much of the economy create deflation. In fact, China is already experiencing deflation: China's consumer prices fell for a fourth consecutive month in May…with price wars in the auto sector adding to downward pressure…The consumer price index fell 0.1% from a year earlier…CPI slipped into negative territory in February, falling 0.7% from a year ago, and has continued to post year-on-year declines of 0.1% in March, April, and now May…Separately, deflation in the country's factory-gate or producer prices deepened, falling 3.3% from a year earlier in May[.] A lot of this is probably due to weak demand from the ongoing real estate bust, but price wars prompted by industrial policy will make it worse. Deflation will exacerbate the lingering problems from the real estate implosion. Debts are in nominal terms, meaning that when prices go down, those debts become harder to service. More of the debts go bad, and banks get weaker — all those bad loans on their books make them less willing to make new loans. Consumer debts get more onerous too, making consumers less willing to spend (and consumers, unlike banks, are not government-controlled). This effect is called debt deflation. On top of that, a massive wave of bankruptcies could cause a second bad-debt crisis on top of the one that's already happening from real estate. Wei Jianjun of Great Wall Motor has been warning of exactly this happening. In fact, we can already see Chinese banks beginning to slow the torrid pace of industrial loans they were dishing out a couple of years ago: Source: Bloomberg via Noahopinion All of this could extend China's growth slowdown for years. There are also microeconomic dangers from overcompetition. Competition could spur Chinese companies to just innovate harder. But if China's top manufacturers are constantly skating on the edge of bankruptcy, that means they'll have fewer resources to invest in long-term projects like technological innovation and new business models. Basically, prices are signals about what to build, and China's industrial policies are sending strong signals of 'build more stuff today' instead of 'build better stuff tomorrow.' There's also the danger that China's government won't allow the price wars to end. Ideally, you'd want these price wars to be temporary; eventually, you'd want weak producers to fail, allowing top producers to increase their profitability. This good outcome relies on the government eventually cutting subsidies and letting bad companies die. But letting bad companies die means a bunch of people get laid off. Bloomberg recently had a good report about the political pressures on the Chinese government to keep the subsidies flowing: Local leaders laden in debt are rolling out tax breaks and subsidies for companies, in a bid to stave off the double whammy of job and revenue losses…For China's top leaders, employment is an even more politically sensitive issue than economic growth, according to Neil Thomas, a fellow for Chinese politics at the Asia Society Policy Institute's Center for China Analysis…Already there are signs the weakening labor market is becoming a touchy subject: One of China's largest online recruitment platforms Zhaopin Ltd. this year quietly stopped providing wage data it's compiled for at least a decade. Already, Bloomberg reports that economic protests are proliferating across the country; with the real estate crisis ongoing, the government will be under even more political pressure to keep manufacturing employment strong. This could mean keeping crappy companies on life support. These so-called 'zombie' companies, kept alive only by a never-ending flood of cheap credit, were a big part of why Japan's economy slowed down so much in the 1990s. So this is the scenario where China's industrial policy ends up backfiring. Subsidies and cheap bank loans dished out to high-quality and low-quality companies alike could flood the market with undesired product, spurring vicious cutthroat price wars, destroying profit margins, exacerbating deflation, and generally making the macroeconomic situation worse. And then China's government could double down by trying to protect employment, by never halting subsidies for companies that fail. Usually, when we think of the costs of industrial policy, the main thing we think about is waste, and there is certainly plenty of waste in China's current approach. But China's experience is illuminating a second problem with industrial policy — the risk of vicious price wars and deflation due to the subsidization of too many competing companies. This article was first published on Noah Smith's Noahpinion Substack and is republished with kind permission. Become a Noahopinion subscriber here.
Asia Times
21 hours ago
- Asia Times
Trump's path to Tehran: the making of a global bargaining chip
The second Trump administration no longer needs to prove its foreign policy instincts. They are clear, unmistakable and anchored in brute transactionalism. If the world learned anything from the former—and now resurgent—President Donald Trump, it is that he views diplomacy not as a delicate art of engagement but as a zero-sum game of power projection. His latest rhetoric and posturing over Iran, especially in the wake of Israeli operations and heightened regional tensions, suggest a dangerous and deliberate strategy: to reduce Iran to rubble, not only for the sake of containment but to bolster American dominance in trade negotiations with China and recalibrate all relationships—friends and foes alike—on Washington's terms. At the heart of this approach is Trump's insistence that Tehran must surrender unconditionally. This is not just hyperbole; it is a method. Trump thrives on spectacle and brinkmanship. His entire worldview is predicated on the belief that America is losing because it has been too nice, too generous and too forgiving. Therefore, for Trump to extract what he perceives as 'better deals' from China, Europe, ASEAN, Mexico and Canada, he must first demonstrate that the United States is willing and able to destroy one of its most intransigent adversaries—publicly, unmistakably and with overwhelming force. Trump's obsession with bunker-buster bombs is not new. During his first term, he repeatedly floated the idea of using high-yield ordnance to obliterate Iran's underground nuclear sites. While the Pentagon and international allies balked at the prospect, Trump's inner circle entertained such military options as ways to force diplomatic capitulation. In Trump's view, diplomacy begins only when the enemy lies broken or at least battered enough to come to the table begging. A full-fledged strike on Tehran, targeting its military-industrial infrastructure, would mark not only a significant escalation in the Middle East but a cornerstone of Trump's new foreign policy doctrine: militarized deal-making. The point is not merely to neutralize Iran but to demonstrate to Beijing, Brussels and beyond that Trump's America is prepared to shatter international norms to reassert dominance. By pulverizing Iran's defenses and forcing a surrender, Trump can create a shockwave that ripples through multiple geopolitical theaters. First and foremost is China. Beijing, already embroiled in a tit-for-tat tariff war with Washington, is being forced to reconsider its risk calculus. A United States that can unilaterally take down a major regional power signals a willingness to escalate beyond traditional economic warfare. Trump clearly wants China's leadership to understand that their negotiation counterpart is not a rational actor bound by global rules—but a strongman driven by prestige, leverage and personal victory. Second, Washington's allies would be caught in the moral and strategic dilemma of either backing Trump's new militarist campaign or risking their ties to the US economy and defense umbrella. Members of the European Union—especially France—may voice concern, but ultimately, many of them remain economically and strategically tied to the United States. The same dynamic plays out in Asia, where regional powers depend on US security guarantees while also being wary of American unpredictability. Third, Trump can use the devastation in Iran to undermine Russia's remaining influence in the region. With Iran weakened, Moscow's capacity to counterbalance US interests in Syria, Lebanon and Iraq will be significantly diminished. In this sense, Iran becomes both a target and a message: defiance will be punished, and accommodation will be rewarded—on American terms. Of course, bombing Iran is not without consequences. Trump's team understands the potential for a regional conflagration. Hezbollah in Lebanon, Shia militias in Iraq and the remnants of the Houthis in Yemen may launch retaliatory attacks on American interests and allies. But Trump, emboldened by a Republican-controlled Congress and the politics of spectacle, is likely to argue that such blowback is manageable—collateral damage in a global campaign to reassert American primacy. Israel, already engaged in shadow wars with Iran, would likely welcome such US involvement, seeing it as a decisive moment to dismantle the Islamic Republic's regional ambitions. For Israeli Prime Minister Benjamin Netanyahu, this could be the culmination of a decades-long security doctrine centered on preventing Iran from becoming a nuclear power or a hegemon. For Trump, Israel's support is not just strategic—it is deeply political. It energizes his evangelical base and signals to Washington's hawkish establishment that he is not just a deal-maker but a wartime president. In many ways, this is a return to a form of Nixonian 'madman theory'—showing unpredictability to coerce adversaries into submission. But Trump takes it one step further: unpredictability is no longer a tactic but a brand. From tariffs to trade deals, embassy relocations to drone strikes, Trump has shown that chaos is not a byproduct—it is the plan. Once Iran is bombed and coerced into surrender—should that scenario come to pass—Trump will likely position the act as proof that America is back, that it no longer tolerates deadbeat allies, hostile regimes or trade cheats. He will then pivot to Beijing, pressuring China to remove barriers to US exports, agree to more stringent intellectual property protections and halt its support for Iran and Russia. 'Look what happened to Tehran,' Trump might warn. 'Don't be next.' In Southeast Asia, where countries are watching this dynamic closely, the message is equally stark. Malaysia, Indonesia, and Thailand—economies with strong trade linkages to both China and the US—will face renewed pressure to pick sides. Trump's version of 'with us or against us' will come cloaked in tariffs, sanctions and security demands. Even countries that enjoy exemptions today—such as Malaysia's semiconductor sector—could find those favors withdrawn if they do not align with America's broader geopolitical stance. Trump's strategic calculus rests on one core principle: raw power, not persuasion. His demands for Iran's unconditional surrender are not driven by fear of a nuclear Iran—there is little concrete evidence Tehran is on the brink of weaponization but by a need to demonstrate overwhelming power. In other words, Iran is not the final goal—it is the opening move. In this worldview, multilateralism is obsolete, diplomacy is for the weak, and war—so long as it is winnable—serves a purpose beyond the battlefield. It is the ultimate bargaining chip. What the world must understand is this: Trump's warnings are not rhetorical flourishes. They are statements of intent. The drive to bomb Iran is neither about containment nor about peace. It is about leverage. It is about rebalancing global power by unbalancing the world. And in this dangerous recalibration, Tehran is just the first domino. Phar Kim Beng, PhD, is professor of ASEAN Studies, International Islamic University Malaysia, former head teaching fellow, Harvard University, and Cambridge Commonwealth Scholar Luthfy Hamzah is senior research fellow , Strategic Pan Indo Pacific Arena , Kuala Lumpur
Asia Times
a day ago
- Asia Times
Both Israel and the US should ponder air power's limits in Iran
As the war between Israel and Iran escalates, Israel is increasing its calls on the United States to become involved in the conflict. Former Israeli officials are appearing on US news outlets, exhorting the American public to support Israel's actions. President Donald Trump has signaled a willingness for the US to become involved in the conflict. He's gone so far, in fact, to suggest in social media posts that he could kill Iran's supreme leader if he wanted to. The American military could certainly make an impact in any air campaign against Iran. The problem from a military standpoint, however, is that the US, based on its forces' deployment, will almost certainly seek to keep its involvement limited to its air force to avoid another Iraq-like quagmire. While doing so could almost certainly disrupt Iran's nuclear program, it will likely fall short of Israel's goal of regime change. In fact, it could reinforce the Iranian government and draw the U.S. into a costly ground war. The initial stated reason for Israel's bombing campaign — Iran's nuclear capabilities — appears specious at best. Israeli Prime Minister Benjamin Netanyahu has argued several times in the past, without evidence, that Iran is close to achieving a nuclear weapon. US intelligence, however, has assessed that Iran is three years away from deploying a nuclear weapon. Regardless of the veracity of the claims, Israel initiated the offensive and now requires American support. Israel's need for US assistance rests on two circumstances: While Israel succeeded in eliminating key figures from the Iranian military in its initial strikes, Iran's response appears to have exceeded Israel's expectations with their Arrow missile interceptors nearing depletion. Israel's air strikes can only achieve so much in disrupting Iran's nuclear ambitions. Most analysts note that Israel's bombings are only likely to delay the Iranian nuclear program by a few months. This is due to the fact that Israeli missiles are incapable of penetrating the Fordow Fuel Enrichment Plant, which estimates place close to 300 feet underground. The United States, however, possesses munitions that could damage, or even destroy, the Fordow facility. Most notably, the GBU-57A/B Massive Ordnance Penetrator (more commonly known as a bunker buster) has a penetration capability of 200 feet. Multiple strikes by said munition would render Fordow inoperable, if not outright destroyed. The efficacy of air power has been vastly overrated by the popular media and various air forces of the world. Air power is great at disrupting an opponent, but has significant limitations in influencing the outcome of a war. Specifically, air power is likely to prove an inadequate tool for one of the supposed Israeli and American objectives in the war: regime change. For air power to be effective at bringing about regime change, it needs to demoralize the Iranian people to the point that they're willing to oppose their own government. Early air enthusiasts believed that a population's demoralization would be an inevitable consequence of aerial bombardment. Italian general Giulio Douhet, a prominent air power theorist, argued that air power was so mighty that it could destroy cities and demoralize an opponent into surrendering. Douhet was correct on the first point. He was wrong on the second. Recent history provides evidence. While considerable ink has been spilled to demonstrate the efficacy of air power during the Second World War, close examination of the facts demonstrates that it had a minimal impact. In fact, Allied bombing of German cities in several instances created the opposite effect. More recent bombing campaigns replicated this failure. The US bombing of North Vietnam during the Vietnam War did not significantly damage North Vietnamese morale or war effort. NATO's bombing of Serbia in 1999, likewise, rallied support for the unpopular Slobodan Milosevic due to its perceived injustice — and continues to evoke strong emotions to this day. Iran's political regime may be unpopular with many Iranians, but Israeli and potentially American bombing may shore up support for the Iranian government. Nationalism is a potent force, particularly when people are under attack. Israel's bombing of Iran will rally segments of the population to the government that would otherwise oppose it. The limitations of air power to fuel significant political change in Iran should give Trump pause about intervening in the conflict. Some American support, such as providing weapons, is a given due to the close relationship between the US and Israel. But any realization of American and Israeli aspirations of a non-nuclear Iran and a new government will likely require ground forces. Recent American experiences in Afghanistan and Iraq show such a ground forces operation won't lead to the swift victory that Trump desires, but could potentially stretch on for decades. James Horncastle is an assistant professor and the Edward and Emily McWhinney professor in international relations at Simon Fraser University. This article is republished from The Conversation under a Creative Commons license. Read the original article.
