As they deindustrialise, Taiwan, South Korea and Japan must reform
Photograph: Getty Images
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A MERICA’S artificial-intelligence boom has put the rich economies of north-east Asia into overdrive. Taiwan’s output is growing at a blistering 14% annual pace, thanks to soaring sales of chips and servers for data centres. In the past year operating profits at South Korea’s makers of memory chips have risen by over 500%. Even sluggish Japan is benefiting—though it long ago lost its title as the world’s pre-eminent chipmaker. In 2025 all three countries enjoyed record exports and current-account surpluses.
The region’s export bonanza, though, obscures an important story in the rest of its economy. As we report, outside its highest-tech sectors, rich north-east Asia is deindustrialising. Strong competition from China, paired with increasing specialisation in chips, has disrupted an economic model based on a wider range of manufacturing exports—the model that helped make the region prosperous in the 1980s and 1990s. Even as it booms, north-east Asia increasingly needs reform.
The ascendant assembler
In the past few years China’s relations with its rich neighbours have been transformed. Once it imported high-value parts from north-east Asia and focused on low-value final assembly. Now it competes across the whole supply chain. Taiwan’s long-running surplus in goods with the mainland flipped into deficit this year, as South Korea’s did years ago (though in the past few months Korean chip exports have returned it to surplus again). In Japan the bilateral deficit with China has plumbed new depths, setting a record earlier this year. Industries from carmaking to chemicals are under intense pressure. As in the West, the perception that domestic manufacturers are competing with goods produced by subsidised Chinese firms is feeding protectionist sentiment.
Chart: The Economist
The specialisation in chips is an understandable development that reflects these economies’ maturity. Yet this particular focus also creates fragility. The tech-hardware cycle is notoriously volatile and its vicissitudes increasingly affect the region’s economies. The tech supply chain also relies deeply on America and China for both critical inputs and end-user demand. On an index of export-basket concentration, north-east Asia is 73% higher than the rich-world average, and concentration has risen since 2019. This leaves the region dangerously exposed to protectionism by either superpower.
There is nothing wrong with specialisation, as David Ricardo would attest. However, East Asia’s rich economies would be better off if they paired their chip-export juggernauts with dynamic domestic economies. The trouble is that domestic demand is too low—a legacy, in part, of outdated economic structures that hold down consumption in order to promote exports above all else.
The time has come to sweep these old systems away. Two-tier labour markets guarantee employment for insiders, often working for big exporters, while inflicting wage penalties and precarity on everyone else. Freeing up labour markets would improve the matching of workers and firms, lifting real wages. Pension systems favour staff at exporters but are stingy for others, leaving the region with some of the rich world’s highest rates of relative poverty among the elderly. Higher minimum incomes would boost aggregate spending. Taiwan has engineered a weak currency, and South Korea and Japan use the state to allocate credit. Less financial engineering would let resources flow to the firms that will use them best.
North-east Asia must allow failing manufacturers to die a natural death. Support should be stopped for mighty firms such as TSMC and Samsung Electronics, which do not require lavish subsidies to compete. And although East Asian countries can hardly avoid relying on markets in America and China—the world’s two biggest economies—they can cut other barriers to trade. Some of these barriers are local. Grievances from colonial times mean that South Korea and Japan still do not have a bilateral free-trade agreement. South Korea should join the Japan-led CPTPP, a top-notch trading pact.
The danger is that, spooked by the China shock, the region’s governments will instead double down on aggressive industrial policy. South Korea has promised $530bn in chipmaking subsidies and Takaichi Sanae, Japan’s prime minister, is overseeing state-led investment into 61 “strategic” goods. Using the power of the government to promote exports succeeded for these economies when they were poor and trying to catch up with the West. It is not an approach that works in places that are already rich. Doubling down on exports will leave north-east Asia poorer and more exposed. Instead, the region’s best economic bet is to become more dynamic at home and more diversified abroad. ■
논증 분석
유형: prescription
핵심 주장
동아시아 선진국(Taiwan, South Korea, Japan)은 AI 붐과 반도체 수출 호황 이면에서 China의 부상으로 인한 탈산업화를 겪고 있으며, 수출 주도 산업정책 강화가 아닌 국내 경제 구조 개혁과 무역 다변화로 대응해야 한다.
논리구조
- 전제: Taiwan, South Korea, Japan은 AI 붐과 반도체 수출 덕분에 역대 최고 수출·경상흑자를 기록하고 있어 표면적으로는 호황 중이다.
- 진단: 그러나 최첨단 반도체 부문을 제외한 제조업 전반에서 탈산업화가 진행 중이다. China가 부품 조달부터 최종 조립까지 전체 공급망에서 경쟁하게 되면서, 1980~90년대 번영을 이끈 다변화된 제조수출 모델이 붕괴하고 있다.
- 진단: 반도체에 대한 과도한 특화는 추가적 취약성을 낳는다. 기술 하드웨어 사이클의 변동성이 크고, 동아시아의 수출 바스켓 집중도는 선진국 평균보다 73% 높아 미국·China 양국의 보호주의에 위험하게 노출되어 있다.
- 진단: 저소비·고수출을 강제하는 낡은 경제 구조가 국내 수요를 억압하고 있다. 이중 노동시장, 불평등한 연금 시스템, 금융 공학적 환율·신용 배분 등이 소비와 자원의 효율적 배분을 막는다.
- 처방: 노동시장 이중구조를 해소하여 임금 매칭을 개선하고, 노인 상대빈곤율을 낮출 수 있도록 연금을 확충하며, 최저소득 상향으로 내수 소비를 진작해야 한다.
- 처방: Taiwan의 인위적 약세 통화 유지나 South Korea·Japan의 국가 주도 신용 배분을 중단하여 자원이 최적 기업으로 흘러가도록 금융 시스템을 정상화해야 한다.
- 처방: 경쟁력을 잃은 제조업체의 자연도태를 허용하고, TSMC·Samsung Electronics 같이 보조금 없이도 경쟁 가능한 대기업에 대한 지원을 중단해야 한다.
- 처방: 무역 다변화를 위해 역내 장벽을 낮춰야 한다. South Korea와 Japan 간 역사적 갈등으로 체결되지 못한 양자 FTA를 추진하고, South Korea는 Japan 주도의 고수준 무역협정인 CPTPP에 가입해야 한다.
- 반론: China 충격에 놀란 역내 정부들은 공격적 산업정책을 강화하는 방향으로 대응할 위험이 있다. South Korea는 반도체 보조금 5,300억 달러를 약속했고, Japan Takaichi Sanae 총리는 61개 ‘전략’ 품목에 대한 국가 주도 투자를 추진 중이다.
- 논거: 국가 주도 수출 촉진 정책은 후발 개발도상국 시절에는 효과적이었으나, 이미 선진국이 된 동아시아 경제에는 적합하지 않으며 오히려 더 빈곤하고 더 취약한 결과를 낳는다.
결론
동아시아 선진 3국의 최선의 선택은 수출 보조금 및 산업정책 강화가 아니라 국내 경제의 역동성을 높이고 수출 시장을 다변화하는 구조 개혁이다.
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