Trump Invited Korean Industrial Company? Inauguration Networking, Why Spend $1 Million?

■ Broadcast: YTN Radio FM 94.5 (09:00-10:00)
■ Host: Reporter Cho Tae-hyun
■ Air date: December 26, 2024 (Thursday)
■ Talk: Cha Young-joo, Director of the Institute of i-Asset Economics, Professor Lee Jung-hwan of Hanyang University School of Economics and Finance

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information.

◆ Reporter Cho Tae-hyun (hereinafter referred to as Cho Tae-hyun): It's the story of the economy that moves the world. World Economy, which will expand your economic horizons to the world. We have you in two expert studios. Director Cha Young-joo has come to the I Asset Economic Research Institute. Please come in.

◇ Cha Young-joo, Director of the Ai Asset Economic Research Institute (hereinafter referred to as Cha Young-joo): Yes, hello.

◆ Cho Tae-hyun: Professor Lee Jung-hwan of Hanyang University's School of Economics and Finance is also here. Please come in.

□ Lee Jung-hwan, professor of economics and finance at Hanyang University (hereinafter referred to as Lee Jung-hwan): Yes, how are you?

◆ Cho Tae-hyun: 2024 is really fast. Today is the last time for the 2024 world economy. How do you feel?

◇ Cha Young-joo: You're right. Today is the last day of dividends in the stock market. It's very meaningful. I think it's been a while, but I hope we can make a hopeful Korea next year by dealing with more positive and good news.

◆ Cho Tae-hyun: After all, I don't think I remember talking about anything good this year. How have you been for a year, professor?

□ Lee Jung-hwan: I was busy. It was a bit confusing. There must be a lot of reasons why it's so hectic. Personally, I'm busy, but the country is a little confused, and if the economy is bad, people are psychologically shrinking, and I think I don't know how time goes. I think it's been a busy and lonely year because it's like the best to be comfortable on vacation, and it's kind of like working and burdening right now.

◆ Cho Tae-hyun: A really chaotic year is coming to an end. I hope it will be organized next year, but I don't know. I think it'll be more confusing and I think I need to see the situation. When it comes to the biggest performers in our World Economy class, there are me, the director, and the professor, but I think Trump was the overwhelming number one in terms of characters, but I'll tell you a little bit about Trump today. If you listen to Trump's comments. There are a lot of things I wonder how this person can talk like that when he is elected, but this time, he talked about Greenland again. What were you talking about?

□ Lee Jung-hwan: The story of buying Greenland. That's a story that's been said before. During the first Trump administration, he said he would buy it once in 2019. Since checks against Russia become important as the Russian Ukraine crisis breaks out, Russia should purchase Russia under the opinion that Greenland is above Canada and between Russia, so it will be an important resource for the national economy and security. So, especially if we try to keep Russia in check, we're trying to buy it within the big framework of whether it's better to strengthen security there through this purchase.

◆ Cho Tae-hyun: Wait a minute. What land is Greenland now?

□ It's Danish land right now. It's Danish territory, and of course it's rejected. Greenland is a large land, especially since it is known as a land with many rare earths and many resources, so I don't think Denmark will sell it easily. The fact that the people sell it like this is different from the past. We remember that the United States bought Alaska from Russia in the days of imperialism in the past, but it was the time of imperialism and it would not be easy to live on the territory like this in the time of sovereign states.

◆ Cho Tae-hyun: Maybe because he's an imperialist thinker.

□ [Lee Jung-hwan] So it's not easy, so I think you can see it as a message that Russia's relationship has become important and so has economic security.

◆ Cho Tae-hyun: I understand the message, but I don't think it's actually possible. As you said just before, if there is a problem such as rare earths, can it be said that Russia and Russia were targeted like this?

◇ Cha Young-joo: I think a comprehensive judgment can be made. If you ask where Greenland is, when you were in school, you saw a large white land on the top left when you were in the classroom. If you look at the social studies department there, the earth is round, but if you spread it out, you can see the top and bottom big, but the land that looked white on the left is Greenland. In reality, it's not that big, but it's there, but I think the view from rare earths may differ from Trump's idea in a way. So rare earths are buried all over the world, and of course, 43 of the 50 rare earths are buried later, so these are possible, but Greenland and other Nordic countries have strict environmental regulations. So, selling rare earths means that rare earths ruin the environment. If we dig a huge land, we'll get about 1g. Then the environment is completely destroyed, and you have to use strong chemicals, so if Greenland diplomatically, diplomacy and the military might agree with the United States. As that happens, you may have different thoughts about whether you really like to be in Denmark or the United States. But the U.S. is coming and digging for resources? Then there's a possibility that you won't be able to accept it in Greenland. So, I think we should look at this as one of the various perspectives, and I think the professor's mentioned earlier about checking Russia or Trump's, really, Trump is making a good defense with vulgar words. It's really distracting when it comes to these areas where you're making good shots, and if we do this, we might be like this. There's an American military base there, and it's the northernmost American military base. As we strengthen that further, there are parts where we can ask for more money from the European countries underneath, so I can't rule out the possibility of detour pressure on other countries through Greenland rather than the purpose of Greenland. That's what I'll say.

◆ Speaking of rare earths, there is a story that rare earths are rare in the name, but it is not that rare on the surface, but as you said, it is difficult to extract them, so it is a lot of environmental pollution, so it is an industry that is mainly done by authoritarian and mid-sized countries. Now, let's say it's not just Trump, the president of the United States, who had his eye on Greenland. Who else was there?

□ Lee Jung-hwan: So did President Truman. Greenland is important in location, so if we look at the evangelism, the location is a little ambiguous, but if we look at the globe, it's really in the Arctic. In a way, the Arctic has strategic importance, and as the director said earlier, China has continued to raise issues about China. China also cooperates with Denmark on military bases. The relationship between the U.S., Europe, and China is not bad, so the U.S. is also a burden to the U.S. when threat facilities are introduced. If you go over Canada and Canada, you can enter the U.S. right away, so you're under this threat. And I think there's a story that President Truman used it as well. But we don't know each other's strategic importance and development of Arctic resources to the North and what will happen when it gets warmer, so we're trying to acquire strategic importance to North Korea and we're going to block it from telling the United States strongly. Since they can actively control who will come in if they make it, they will block China and Russia directly and prevent China from coming in. Russian submarines, which say that many submarines appear in Greenland, will also appear through the Arctic Ocean, so we will keep territorial sovereignty and exclude them from the perspective of the United States. So, if a submarine comes over there and shoots a nuclear missile, it's very threatening, and especially Russia, but Chinese submarines are in a position that they did and never wanted to shoot there, so I think it's an opinion that reflects the U.S. position to block it altogether, with actual economic and security issues. Of course, it's good to buy from the U.S. side.
◆ Cho Tae-hyun: I don't know why they ignore the sovereignty of other countries when their sovereignty is their own.

□ Lee Jung-hwan: I think I can tell you that it is inevitably difficult to sell from Denmark's point of view.

◆ Cho Tae-hyun: If you look at another country's sovereignty, if you look at one more place, the Panama Canal, which is a problem right now, we're going to bring it back. Who has the Panama Canal now?

◇ Cha Young-joo: Of course the Panama government has it. It was originally made by the United States, so the United States made it in 1914 and took ownership of it. At that time, the concept of a country was not big except for the big countries, but first, the United States and Panama signed this agreement in 1977, and now it's officially owned by the Panama Canal Authority. So these are the parts that a single agency manages in one country. It's been 99 years, so it hasn't been that long. But in the case of the Panama Canal, isn't this an important trade route through the Pacific Ocean to the United States to the United States? If it's not here, the way a ship from Shanghai or Busan Port can get to New York Port is very important because it's a situation where you have to go back to South America. First of all, Trump said he would bring this, but it's really causing a flat wind everywhere. What's really scary about this is that if Cha Young-joo says, for example, I'll take out reporter Cho Tae-hyun and sit in the host's seat, people aren't that interested.

◆ Cho Tae-hyun: Well, our production team is going to be snoring.

◇ Cha Young-joo: What are you talking about? But for example, if someone like Yoo Jae-seok comes and says, "I'm going to sit in reporter Cho Tae-hyun's seat," he changes his words. So, the status that Trump has now is ridiculous. Greenland and Panama are talking about mine. And if we have to deal with it here, it's a little different in weight to just move on to a simple happening. I'd like to explain like that.

◆ Cho Tae-hyun: If President Sheinbaum said this in Mexico, he would have said, "I'm crazy," but I have to deal with it like, "Isn't it Trump?"

◇ Cha Young-joo: You're not really taking it, because I think like this.

◆ Cho Tae-hyun: Because he's a scary person. But what President Trump said outwardly was that the toll was too high. How expensive is it?

□ Lee Jung-hwan: They say that it's expensive, about $2.4 billion a year comes from toll income. Every year, 14,000 ships go back and forth from there, 6% of the world's trade volume, $2.4 billion in revenue, and Panama's GDP is about $80 billion. Isn't it more than 20% of the Panama government's income? It's incredible. Because the economy is so small and Panama itself is small, it is a huge profit compared to the size of the economy. In the case of a cargo ship, it's about $500,000, so of course, the longer the cargo, the longer the ship, the longer it takes, so it's natural to charge a lot of tolls. It's said that cargo ships charge up to $500,000, and the United States has to pass through it to get back to the Pacific Ocean or the Atlantic Ocean, so the United States absolutely occupies it because goods have to pass through the Panama Canal to move back and forth from the west or east. In particular, President Trump is talking about the Panama Canal very actively, with concerns that he is trying to take ownership of the Panama Canal in China by bringing in Chinese capital. And it's also an important culture connecting both sides of the United States. There is a lot of traffic volume and a lot of traffic volume, but Chinese companies occupy this? These are situations where it is difficult for Trump or the United States to sit idly by, so it doesn't matter if it's okay now, but if it becomes a security issue, like Greenland, a nuclear submarine appears there, so it should be removed. If the ownership of the Chinese company increases, it will be difficult to block logistics in a way.

◆ Cho Tae-hyun: The Panama Canal itself is an awkward method, so I think it costs a lot of money and is inevitably expensive as I keep filling it with water. There's a story about China, but what's the connection?

◇ Cha Young-joo: So we have enough anxiety right now. CK Hutchison, a Hong Kong-based company, continues to expand its investment in the Panama Canal region. So, there are some misunderstandings in the area that may be suspected of being actually Chinese funds, although they are Hong Kong-based, so if investment continues to expand now, China's influence on the Panama Canal region will inevitably increase, as you said, and the problem is that it doesn't matter normally, but isn't it important to give it a leash when it's decisive? That's why Trump posted before Christmas this time. "To the great soldiers of China who operate the Panama Canal carefully but illegally." So in a way, what the professor said may be the key. Panama simply has a high trade volume, but it officially put the aspect of keeping China in check. That's why China pays the U.S. for the repair of the canal, and they only pay tolls, and the U.S. pays tolls, but there are some parts of the remuneration, so there are some things like this. Furthermore, on the other hand, that's what they see. Aren't you putting 25% tariffs on Canada and Mexico right now? If that's the case, wouldn't Chinese food be cheaper even if Canada and Mexico fed 25% and China fed 60% anyway? So, if Canada or Mexico doesn't come in, where should I go to bring Chinese? In the end, I can tell you a little bit about the possibility of going through the Panama Canal, about the possibility of China right now and about the justification of hitting China.

◆ Cho Tae-hyun: Okay. Panama Canal is important. It takes a long time to get to something. But it's much faster than turning around.

◇ Cha Young-joo: The Panama Canal has recently expanded a bit. Because the ship is limited to the standard that allows it to pass through the canal, it is not able to carry much cargo, so as far as I know, the cost of the expansion this time was paid by the United States. That's why I think it's possible to claim ownership of those parts because the ship in the United States needs to be expanded a little bit to the side compared to the past.

◆ Cho Tae-hyun: Okay. Trump continues to touch the Panama Canal like this, and China seems to have some place in the background. A bill called the Ship Act was proposed in the United States, and it is evaluated that this ship law was also targeted at China. What is this ship law?

□ Lee Jung-hwan: First of all, I have to talk about a certain shipbuilding industry between the United States and China, because China is behind the high value-added line commonly referred to in Korea, but other ships make the most in the world. We're making a lot of bulk carriers and container ships, so it's a merchant ship. It's a merchant ship, but if the merchant ship is in an emergency, it can be changed as the warship was made. Even in World War II, the U.S. was severely damaged once in Hawaii, and the warships were almost damaged, and it continues to photograph them almost in a year. Since the shipbuilding industry was based on the shipbuilding industry, fortunately, it is not a shipbuilding project limited to this county, but only if there are enough merchant ships, you can approach it with the concept that when warships fall down, so when they are newly built, they can load water.

◆ Cho Tae-hyun: We used merchant ships a lot during World War II.

□ Lee Jung-hwan: So the shipyard built by merchant ships is converted into a shipyard that makes military weapons in case of emergency, so it cannot be built at all without dock, so the only situation in the US shipbuilding industry is military facilities. So, they say that you can make battleships, but in case of war, making merchant ships is also necessary to change the dock to make battleships, but this capability is very insufficient compared to China. That's why as soon as the Trump administration came in recently, there is talk of cooperating with Korea's shipbuilding industry. Because of the lack of ships, the merchant ship can be quickly turned into a warship. So, it's okay. So, of course, if you look at the current warship, of course, the U.S. is ahead, but once it's all overturned, it has to be made again, so it can't keep up with the speed when making a new one. This is how I made the ship law. The ship law is that because the U.S. rarely makes merchant ships now, there are few operating as U.S.-registered merchant ships. It can be considered that overseas merchant ships are almost operating, but within 10 years, it will increase to about 250 ships and operate a strategic merchant fleet. It can be seen from the position of increasing it very much, and if you do not develop your own shipping industry and part of it, it will become a problem for shipbuilding and later use ships and other things, so it is a security problem and it reflects the situation that we cannot help but consider the scenario of an all-out war with China, so we want to strongly insist on maritime security in the end.

◆ Cho Tae-hyun: You have to rule the sea. That's what it means.

□ Lee Jung-hwan: You can make a lot of fighter jets, but if you can't build a ship, you can't build a ship next, so of course, there are many good ships now, but if it collapses, you can't build the next ship, so this concern is serious.

◆ Cho Tae-hyun: Okay. I took a quick look at the history of war. Now, President-elect Trump is checking China in everything, but in terms of checking China, the Democratic Party and the Republican Party do not seem to have different stance at all. This time, we will investigate unfair trade practices against legacy semiconductors from China. What's the announcement from the Biden administration, what are you going to do?

◇ Cha Young-joo: So in the past, we used to be high-tech semiconductors. There are many types of semiconductors. It has prevented parts of advanced semiconductors from entering China. Specifically, the U.S. should not give China semiconductors with certain specifications. But now I've changed that. So it's a different dimension to say that we shouldn't cover everything and that we shouldn't cover everything. Now, there were a few things that didn't work, but now we're going to comprehensively see where it comes to use. It means that if it goes into some kind of military and security of China, it shouldn't. In addition to that, general-purpose semiconductors, so-called legacy semiconductors, semiconductors that we can use right now, semiconductors that go into your cell phones, and semiconductors that go into your desktops are all general-purpose. But if the computer is used for military purposes, the semiconductors in it are also not allowed. So now, I think the U.S. is a little embarrassed because China is breaking through so many detours and a lot of technology development is coming out faster than expected. At first, we said, "If we don't give high-tech semiconductors and exposure equipment, China will have a hard time for a long time." Just a year and a year from now on, we said, "If you don't pressure the Netherlands to make high-tech semiconductors, they won't be able to do it," but we made 70,000 as you can see. And the cutting-edge parts of China are not as slow as they thought in the past, so it's like running slowly or not walking or crawling, so I don't think the U.S. can stop more of these parts. I don't think that's the case if it stops more here, so these are the parts of legacy semiconductors in general right now, but the problem is Korea. In this case, in the case of legacy semiconductors in Korea, Samsung Electronics and Hynix have factories in China, and China has a high proportion, but of course, these parts have not been organized yet. The United States will clean up when a new administration is established, but if that happens, the part of how to use our Hynix and Samsung Electronics' Chinese factories is also a bit of a problem for Korea right now.

□ Lee Jung-hwan: Super 301 Article, which is commonly referred to as Super 301 Article of the Korean Trade Act, is an issue that China subsidizes too much, but it's too much because it's been subsidized too much and it's used too much. We can say that we're doing it for military purposes or because they're going to be a problem for the U.S. when semiconductors are cut off.

◆ Cho Tae-hyun: That's why the voice of de-China keeps getting louder. By the way, how much money did you invest in it, so can you de-China easily? Anyway, there's another event that gets attention. Trump's inauguration is just around the corner. There's about 20 more days left. I guess a lot of money is coming in in in this situation. What's the situation?

□ Lee Jung-hwan: The U.S. is a capitalist country, so the U.S. raises money at the inauguration, politics is done with money, legislation is done with money. When the recent incident occurred, companies can talk their opinions through money, but ordinary people can't talk about it. The U.S. is a society where political capitalization is so severe that there are issues like this.

◆ Cho Tae-hyun: They talk about democracy, but I don't think it's democracy. I think money does everything.

□ Lee Jung-hwan: You can think of it as capitalism, and when you take office, you are assigned seats according to the amount of donations. So at the time of the first period, it was about 107 million dollars, but just on the 16th, it's now 150 million dollars, so you can say that you're receiving a lot. And before that, we're going to have a festival. There's also a festival called the Maga Festival from the 18th, and tickets are distributed to preferred places based on $1 million and $2 million. And then 100,000 dollars to participate in the Sunday service. If you want to participate in the Sunday service, you can donate $100,000 and if you donate more than $1 million, you can have a dinner with Vice President Vance. I think this is a very capitalist country in the United States. You can have a big context of lobbying and networking. These are the situations where you are receiving money for inauguration as a networking channel.

◆ Cho Tae-hyun: But among Korean business leaders, there is a person who received an invitation to the inauguration ceremony. Chairman Ryu Jin of Pungsan Group, how is it known that you were invited?

◇ Cha Young-joo: In this case, because we have the chairman of the Korean Business Association, and Pungsan, the United States cannot ignore Pungsan. Copper and zinc, especially we are a major defense industry manufacturer that manufactures ammunition. These are the aspects of the inauguration ceremony, so if you look at the people who are invited to the inauguration ceremony, Chairman Chung Yong-jin, and the president of the Korean Business Association. In a way, we are in a position where the president should be invited, but since we can't, there are a few lawmakers in diplomacy and trade, but in a way, it's kind of weird for us to pay like this to attend, but in a way, I think the U.S. may be a natural thing. It's natural for us, but they're like that now. Anyway, there are people who want to go if I'm in a business position, so there are people who are officially invited to the office, and I can tell you that many other companies are now in line.

◆ Cho Tae-hyun: Also, this person has so much personal emotion that he needs to network more, so he should mobilize his in-laws' uncle. However, there seem to be some bad signs recently to see if Trump will be able to continue cruising. In particular, the budget bill was shut down again this time, so it was resolved, but I don't think it worked out as Trump intended. How did you like it?

□ Lee Jung-hwan: The budget bill was passed this time, but Trump's request was to remove the debt limit. It was a proposal to eliminate the debt limit, but to eliminate the debt limit is a proposal to make more deficits.

◆ Cho Tae-hyun: No, if you say there's too much and ask me to remove the debt limit, it doesn't add up at all.

□ Lee Jung-hwan: He's saying he's going to use as much as he can.

◇ Cha Young-joo: I'm just saying I'm going to use it without consulting Congress.

□ Lee Jung-hwan: From that point of view that the administration will use it enough, the Republican Party opposes it. That's because eliminating the debt limit is not in line with the Republican Party's stance of pursuing a small government that's not in line with the Republican stance. When Trump was first rejected, he put in the debt limit mentioned earlier, but the proposal to remove the debt limit was finally passed, leading to a view that was a little contrary to the Republican position and the Trump administration's position. And this is why Trump's policy doesn't fit the Republican position. The Republican Party is basically conservative and goes for the efficiency of a small government, but it's a little hard to understand policy, so it didn't get the consent of Congressman to increase the debt limit, so it's not accepted in a way to increase the debt limit indefinitely.

◆ Cho Tae-hyun: Well, some say that the grip within the Republican Party has become stronger, but looking at this, I think Trump can't go that well. I'll look at one more and wrap it up. Baristas at Starbucks and Amazon couriers are on strike. Trying to expand nationwide before Trump takes office. Why would you do this before Trump?

◇ Cha Young-joo: What do we usually mean by strike? People who feel that the strike is a bit disadvantageous to the workers, so they insist on hearing their voices. These are also things that can be done enough within a certain legal framework. But in the case of Starbucks baristas, there were some parts where they paid too little compared to the CEO, right.

◆ Cho Tae-hyun: I heard you're supporting the CEO's flight to and from work?

◇ Cha Young-joo: But the management is rather reluctant to negotiate, so it started at about 50 places and is gradually increasing to 300 places now, but when we go on strike, people usually don't listen to us when we go on strike. That's why it's going to an extreme strike, and even if I'm a worker, I think it's an appropriate strike time. If there's anything that could hurt the company in the Christmas season and then the inauguration of the president, would the new president feel good? Someone is trying to meet up with someone, but isn't it possible to hear something like, "Hey, why is your company so loud?" So in a way, I think we're a characteristic before the election. Before the election, Trump and Harris had a strike in the old days asking each other to hear their positions, but there was one strike all over the world. And now, if it's a strike that's going to happen anyway, this is the way to maximize their profits, so they're aiming for this, and eventually, from Starbucks' point of view, the CEO should pretend. I think I should read it in that context.

◆ Cho Tae-hyun: It must not have had a good effect on Starbucks' stock price, right?

◇ Cha Young-joo: It's not that good for Starbucks' stock price, but since Starbucks in Korea is a separate and independent company, it belongs to Chairman Chung, so I don't think Starbucks in Korea is as popular as in the past.

◆ Cho Tae-hyun: Okay. We'll stop here with the dangerous remarks. So far, I have looked at the international situation centered on Trump with Professor Lee Jung-hwan of Hanyang University's School of Economics and Finance and Cha Young-joo, director of the I Asset Economic Research Institute. Thank you for talking today.

◇ Cha Young-joo, □ Lee Jung-hwan: Thank you.

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