South Koreans vote for new president after failed martial law bid

0:04Hello and welcome to Business Matters here on the BBC World Service. I'm Rahul Tandenplenty coming up on the program. I'm going to talk about China, going to talk about South Korea very, very shortly. A little bit about India, going to get Africa, Bill Gates in there as well to guide us through it all. We have Sushma Ramachandran, independent journalist and columnist with The Tribune newspaper. Good morning to you. Sushma, how are you? I'm fine. Thank you, Rahul. Good morning to you too. Good morning as well. We're going to talk about a possible trade deal between the India and the US. Peter Morisi, economist, professor of business, dapper as well, dressed with a little bow tie on this morning, Peter.

0:43No, and you can see me. Can I? Oh, I can. I can indeed see you. I'm in a golf shirt, for Pete's sakes. There we go. A Ralph Lauren polo shirt with a Henley sweater. I mean, it's the evening, and I'm not golfing. I'm on radio. There we go. There was a bit of a shock when I saw you up on the screen, but a pleasant one. Right, we are going to go. Well, now you know how beautiful I am, you know? Yeah, that's one way of describing it. Now, here we are going to go, though, firstly to South Korea because they are voting to elect a new president. That, of course, follows when the former president of South Korea, President Yoon, was ejected from office late last year after trying and failing to declare martial law.

1:28Those are the sounds that we heard at the time, didn't we, of protesters against martial law at that time. Chung Min-king is from the organization Korea Pro. It is a martial law election because you can see that the regime change sentiment is very, very high. And it wasn't like that before. The conservatives are really struggling to get their party together. Let's hear from some voters in South Korea. I'm actually a member of a different party, but I support Mr. Lee because I believe he's the only candidate who can end the martial law insurrection. I didn't used to care about politics. This is the first time in my life I've ever come to a political rally.

2:08But since martial law, I now trust and depend on Mr. Lee. I'm really concerned about the democracy of this country. I hope our country has the power to save our democracy to be greater than before. My voting will be a piece of power. Let's go over to Seoul now and speak to the BBC's Steve Light, who is in South Korea. And Steve, you were there at the time, weren't you, when we had that declaration of martial law. So, you know, you've been in the country. What are you making of the key issues in this election? Is that issue of martial law still dominating? Yeah, hi, Raul. Good to speak to you. It's a blue sky day here in Seoul, just like it was a blue sky day back in December when that martial law declaration was made.

2:53And so much has happened since then, six months of political turmoil. And that is very much on voters' minds, trying to get back to a sense of political normality, trying to get back or to reinstate South Korea's democracy and the way that it practices its democracy. It really did cause a lot of anxiety and a lot of stress for a lot of South Koreans, the fact that that martial law was declared. And South Korea, like any other country in any other election, has a lot of domestic issues that people here would rather be focusing on, whether it be the difficulty that young people have in getting jobs or the fact that wages haven't been keeping pace with inflation.

3:29That's something we've seen sort of around the world. But this instance and this election will be quite telling with how it plays out as to whether the PPP, the People's Power Party, Yun Sun Yol's party, really bears the brunt for what happened back in December and pays the price for it. Yeah. And if they do pay the price for that, would see South Korea turning towards a Democratic Party, which is a little bit more to the left, isn't it? So could that see changes in some of the policies you talk about when it comes to the economy and also security, which, of course, is a big issue in South Korea?

4:04Yeah, it certainly could. I mean, E.J. Myung, who is the Democratic Party leader, who's thought to be the frontrunner coming into this election, riding on the back of the distaste that was left for many South Koreans as a result of that martial law. He's used this phrase, a real republic of Korea. He wants to focus on jobs and a fair society. He's an interesting character, I guess, because in the previous election when Yun Song-yol came to power, Lee Jae-myung actually lost that election by less than 1%. So he's always been very close and in the frame. But this election certainly gives him sort of, I guess, the advantage coming into this and how he wants to take the country forward if he was to win.

4:53Could see him sort of wanting to, historically he has leaned more to sort of friendlier ties with North Korea and with China as well. quite what that means for how he sees South Korea's relationship with the U.S. We'll have to wait and see. But he has been saying very pragmatic things about South Korea's situation and how it needs to move forward. It's interesting when we talk about South Korea's economy as well. For the first quarter of this year, its economy shrank, and that's even before all the tariff talk has really been felt here. So there's going to be a lot on the plate of whoever becomes the president here in South Korea, both the domestic issues and international issues as well.

5:37Steve, you're going to be guiding TV viewers through this election. And we'll be looking forward to hearing more of you on the radio as well. A lot's going to happen over the course of the next 24 hours in South Korea. Thanks very much for that. Peter Marisi, Shushma, both with us. Peter, firstly, your thoughts on this, because South Korea has been a huge success story economically, hasn't it? Now rising to be the fourth biggest economy in Asia. Absolutely. It's doing marvelous things. Hyundai sells very successful automobiles in the United States, and it does a better job of it than General Motors.

6:09I mean, General Motors and Ford have opted out of the sedan market. They just make SUVs and trucks. And, well, Hyundai not only makes electric SUVs, they make internal combustion SUVs. They can sell them at a profit. Our automakers haven't figured out how to do that. But I'm encouraged by all this, actually. I mean you basically had somebody try to make himself a strong man by declaring martial law. It created a great deal of disruption. The legislative branch impeached him. It led to strong measures and now they're having another election. It indicates to me that their democracy will emerge from this in a more robust manner.

6:47Yeah. Let's see what happens there, Shushma. We've had the US Commerce Secretary saying he expects – this is just coming through now – a deal to be signed with India. in the not too distant future. But do you think India is also looking more to Asia? You know, it's an uncertain time for global trade. Could we see a strengthening of relationships between India and the new South Korean government? Yes, of course. You know, our economic ties with South Korea are really very, very strong. I mean, to the extent that the amount of foreign direct investment that has come from South Korea, I mean, Rahul, you would be aware that Hyundai, Samsung, Kia, they're all household names here.

7:26Nobody talks about Samsung or LG as Korean brands. They think of them as Indian brands, actually. And, of course, on the automotive side, Hyundai, as well as Kia, are big players in India. And, in fact, there is a reverse investment. Indian companies have been investing in South Korea. So if you have about$7-8 billion of investment from South Korea, you have another$3-4 billion of investment by Indian companies into Korea. So the ties are really very strong. Yeah, you really have complementary economies. It really does make sense to have growing and strong ties. Yes, yes. And in fact, it was Korea.

8:03I mean, this is a real winner. It was Korea which actually invested first in India compared to all other Asian economies, barring Japan, which really had the first mover advantage. After that, it was the Koreans who came in in a big way. And it was after that you had Japan and many other companies coming into the country. So our ties with South Korea are very, very good. And of course, India is looking at this whole development very closely. Hopefully, this democracy will win out over there, the strength. And it's certainly a good thing that everybody is looking to oust the party that opted for martial law.

8:47Well, yeah, let us see what happens there, obviously. We will continue to follow that here on the BBC World Service. Let's bring in Mike Lee, who is a photographer and works in the advertising industry in South Korea. Good morning to you. One question, Mike. We've had a lot of people there talking about the great economic success of South Korea. Is that something you feel? Is it something South Koreans still feel? Or are there many economic challenges you face on a daily basis? first of all sorry that I'm not good at English your English is great it's very good and I just woke up that's okay a lot of people fall asleep listening to me so don't worry about it how do you feel economically at the moment are you optimistic about South Korea's future um after that december 3 happened um i feel that the economics went up of course and the people in south korea is kind of mad i mean the people near me is kind of mad because of the Trump issues.

10:11President Trump raised up to 50%. That's a pretty big hit for near my studios and near my companies and even my supplier for the advertise. They got hit, so we got canceled. So with the economic-wise, I don't know what they're going to do for the new government, but it's pretty bad. Yeah, it's pretty bad. Can I ask you another question? We talk about it a lot, which is the aging population in South Korea. You know, it is an aging population. Is it easy to find workers to work in businesses?

10:57Well, for my industry, which is the photos and advertise, the age goes up of course we cannot find any younger generations yet that's why what I'm trying to do is finding people from high schoolers and then make them become a photographer as a job yeah so not easy there What do you want from your next government to make, you know, your business more successful? The lives of South Koreans, you know, you've faced high prices. What would you want them to do firstly? What is the big issue for you? I think all the companies and manufacturers want lower the tax. Yeah, tax issues is getting big. and it's effective for me too.

12:01So lowering the tax or not raising up the tax will be better for us to survive. Well, listen, thank you very much for joining us on the program, for waking up. You can go back to sleep now, so don't worry at all. And when you wake up, maybe there'll be a clear indication of who may be winning this election. Thanks so much for joining us on the program. There might be there who is a photographer, are going to talk a little bit more about South Korea during the course of the week. But we want to talk about relations now between the world's two largest economies. We are, of course, talking about China and the US, speaking on Face the Nation on the US network CBS over the weekend.

12:38This is what the US Treasury Secretary Scott Besson had to say. We do need to de-risk, as we saw during COVID, whether it was with semiconductors, medicines, the other products, we are in the process of de-risking. And the whole world, the whole world, because what China is doing is they are holding back products that are essential for the industrial supply chains of India, of Europe. And that is not what a reliable partner does. But the CEO of J.P. Morgan, Jamie Dimon, had this warning for the U.S. government after his recent trip to China. I just got back from China last week. They're not scared, folks.

13:16There's no notion they're going to come about in America. I wouldn't count on that. And when they have a problem, they put 100 ,000 engineers on it. And they've been preparing for this for years. And in the last few hours, the White House spokeswoman, Caroline Levitt, has had this to say. She asked about the potential call with President Xi. I can confirm that the two leaders will likely talk this week. And as always, when there are foreign leader calls, we will provide a readout of those calls. Shushma, give us a sense from India. When you look at this economic relationship now, where do you and where do you think Indians think the power lies in these?

13:49negotiations with China or the US? Well, I think, you know, it started off with Trump being the leader, but now it seems China seems to have the upper hand because they've taken a tough line on their, you know, the critical minerals, which are used in a lot of electronic components, and the US is upset. The US had already banned export of high-value semiconductor chips to China, thinking that would affect them. But China has hit back. So I think, you know, you can say it's a draw for the time being, but I don't know how this kind of situation will be resolved unless both of them step back. And I think Trump will have to step back first, the US will have to step back first, because they have initiated this war with China, and a war with the entire world, virtually.

14:46I mean, you heard the photographer talking about the tariff impact in South Korea. We look about the tariff impact in India. I mean, there's a lot of concern over the fact that, you know, tariffs have been imposed on steel and aluminum exports to the U.S. So, in fact, India has gone to the WTO on this issue. And the U.S. has actually responded by saying, we're not going to discuss this because this doesn't come under the category of safeguard measures. So India is actually contemplating retaliatory tariffs. But for the time being, nothing is going to be done because, you know, the bilateral treaty is under discussion.

15:24The US delegation is currently in Delhi right now to discuss that. Well, let us see what happens. There's certainly indications coming out from Washington this evening that maybe a trade deal is close, but who knows? Peter Morisi, what are your thoughts on this, there's an increasing sentiment amongst some that it is China who holds, you know, the cards here, who is in a more powerful position and that Donald Trump's now scrambling to get a deal. Is that a fair analysis? I think it is. Donald Trump has made this tragic error declaring a 360 degree trade war. It's antagonized India, Great Britain, the European Union, the countries of ASEAN and so forth, at a time it could use their support in dealing with China.

16:11China's threat to cut off rare earth minerals is a problem. It can be worked around with great difficulty, but it can be worked around. It's going to be a lot easier to work around it if you have friends who are also putting pressure on China because they've got their grievances. You know, the grievances we have with China are mirrored in these other places. But with Donald Trump behaving as he does, you know, we shouldn't expect a whole lot of cooperation. Well, let us get the thoughts of somebody who knows the Chinese leadership well, has been an advisor to the Chinese Central Bank. Professor Li joins us once again on the program.

16:45Thank you so much. Always a pleasure speaking to you. You know, the Americans are making a big play about this call taking place later this week between Donald Trump and President Xi. Give us a Chinese perspective. Do you think this call will take place? Well, I do think the call between the two presidents will happen before too long. And the current holding issues are many details are not being ironed out before the Chinese leader be willing to speak on the phone. Usually the practice is for most issues being pretty much resolved. And then the top leaders will kind of shake hands over the phone and say positive things, say big things.

17:30But now the Chinese side says that not enough progress has been made. Meanwhile, President Trump likes to get his hands on details. He wants to call. He wants to talk. He wants to negotiate on details. So that's the situation. That's the current dilemma. Well, give us a sense then, when the Chinese leadership look at these trade disputes, What for them is their number one issue that they want resolved? You know, is it the tariffs coming down even more? They've come down from the 145%, haven't they, to 30 % at the moment. What is the pressing issue for President Xi? For the Chinese side, the pressing issue is the U.S.

18:10side needs to promise to be more reliable rather than going up and down, rather than giving us surprises. Also, the U.S. side needs to talk about bigger issues, putting trade as one part of the package. The issues including South China Sea, including Taiwan issue, and including the restrictions of export of computer chips, and including Chinese students' visa. So all these things, I don't think it should be on the table because these are top to top. These are principle to principle phone calls. The phone calls should cover more issues than trade. Peter Morisi, the problem is the Chinese say they want the U.S.

19:00to be a more reliable trading partner. The U.S. has exactly the same concerns about China, doesn't it? Yes, we do. But it wins the narrative right now because we haven't been a reliable trading partner to our friends. And so it erodes our standing. This is much a theater to win the support of others, because whoever does that will likely prevail. And so China's playing its hand very, very well. And Donald Trump is just sort of bullying around foolishly and getting himself into deeper trouble. For example, you don't need to have a 50 % tariff on aluminum and steel if you've already tacked 25 % on top of the tariffs we already had.

19:47It just turns to irritate everybody. So my feeling is that there's a lot of issues on the table. China can afford to wait. The Americans can't. But let's go back to something earlier, the Ukraine. If the United States imposes secondary sanctions, that is really going to smart for China because it has been selling a lot of stuff in Russia and it's providing a lot of technology to prosecute its war. And all of a sudden, China becomes vulnerable because that would compel a lot of cooperation from third countries because they don't want to lose access to the dollar payment system. It would. It would.

20:29And we're going to come to – That's the real Trump card. We're going to come to that in a minute with Shushma because that would have a huge impact on India. But I want to get into this tape as before because Naza Nikakta was a former assistant secretary of state for industry and analysis in the first administration. She's now a partner at Wiley Trade. She knows China very well and she advises clients on international trade. Xi Jinping is not the same leader as he was back in 2018 when the U.S. government pushed and he responded. He has indigenized critical capabilities within China. He has pulled in and fortified his control over some pretty significant supply chains, including rare earth elements and magnets.

21:10And he is not willing to negotiate. There's nothing that indicates to me that he is willing to negotiate with the president, with the United States or any country for that matter. Now, with respect to the call, will that happen? Certainly, I think he's going to pick up the phone. But he's not going to pick up the phone, I don't believe, to negotiate. What amount of leverage does presidency have over the United States? Because you were involved in export controls and we're talking about rare earths here, those magnets, which are crucial to so many industrial sectors, particularly defence. What sort of damage is being done to that sector?

21:44Yeah, I've been doing the critical minerals supply chain for the last eight years. In fact, my office produced the first whole-of-government strategy on critical minerals back in 2019, and I drafted the executive order that came out in 2020. So China controls global's processing of critical minerals, including rare earths, right? The separation and the metal making and has a stranglehold also over the magnet supply chain. The reason we need magnets is for our defense industrial base. Every defense capability that the United States, the UK, the rest of the world has depends on magnets. Our automakers need magnets.

22:19A number of electronic goods need magnets. And without China's exports of these magnets, the U.S., no other country in the world can make any of these equipment that I just talked about. There we go. And that is the problem at the moment. Nazak Nkogte there, former assistant secretary of state for industry and analysis in the first Trump administration, now advising a lot of big international clients on how to navigate the very complicated world of international trade. We are going to get Shushma's thoughts. Professor Lee is going to stay with us and Peter Morisi after the news.

23:03Welcome back to Business Matters here on the BBC World Service. Peter Morisi with us. Of course, in the US, Shushma Ramachandran with us in India. We were talking about this possible phone call between President Xi and President Trump that could take place in the next few days. That's according to the US, no confirmation from Beijing. At the moment, Professor Li also with us. He's advised many of the senior Chinese leaders, also advised the Chinese Central Bank as well on its monetary policy. Professor, do you understand? I mean, surely a lot of people in China will understand why so many countries are concerned about China's dominance of supply chains, particularly in areas like rare earths, where those magnets are so important to countries' defense industries and car industries.

23:50You can understand why people say, look, we need to move away from China here. Yes, we all understand the significance of the rare earth supply. And meanwhile, people do understand that President Trump started the whole thing on the liberation day. And I think the current situation is that the U.S. side indeed is very anxious. President Trump wants to talk to President Xi. And I still am optimistic. I think within the coming two days, coming three days, things will happen. And things will happen in the following way. The talk will be very general, very general, okay, putting many things into the discussion.

24:33Taiwan issue, South China Sea, the rare supply, trade tariff deals, and China is trying to restore trading balance with the U.S. So everything will be on the table. So I'm optimistic. But you're pretty convinced this call will take place in the next, what, day, two, three, sometime this week, maybe? One week. I would give it one week. Everything in one week. One week. Yeah. Peter Mauricio, whatever happens on that call, let's be very clear here. It's not just President Trump. President Biden was trying to distance himself from those Chinese supply chains. This is U.S. policy, whether it's the Democrats or the Republicans.

25:10This is one of the policies where everybody agrees. China is a threat. It behaves like an international thug. One of the reasons that it hasn't been able to rally to itself more support in light of America's bad treatment of everybody it does business with in the last two months is that China has been treating people pretty badly for a long time. What you've got is kind of a terrible choice for countries like India, you know, or Korea. Gee whiz, you know, which side do you take? The answer is none, you know. And I don't mean play two ends against the middle, but saying that, you know, maybe you guys could find another planet to play on so the rest of us can get along.

25:53As I look at the arc of countries from South Korea through Taiwan, the South China Sea, all the way to India and Southeast Asia, I see a vibrant economic region emerging that has enormous potential, that's growing very rapidly, that is now generating some of its own technology, that has investment networks and trade networks. They don't need all this disruption from either China or us. Well, let's bring in somebody from India. Shushma, is it a choice between the US and China for India? That's a complicated one because there's territorial disputes in China as well. But do you think India sees it in that way?

26:34Does India think, look, as these two fight it out, it's an opportunity for us to strengthen our own supply chains? Well, yeah, well, that, of course. But the fact is that it's a very difficult choice, even though we have all the border tensions with China. The fact is that during all this, you know, you would have thought that for the last few years, India is moving strategically towards the U.S. But what's happened is that during the India-Pakistan conflict, those few days, you had subsequently Donald Trump trying to take the initiative and saying, you know, look, we've taken charge of the ceasefire.

27:14We've done the job. And he's consistently been saying that he has done it, even though India has said, no, we dealt with it bilaterally. So now that's not the reaction of a good friend. Even if the U.S. took part in diplomatic efforts to bring the ceasefire, to bring this conflict to an end, a good friend would have taken a more local approach. At the same time, what's very interesting, during this whole tariff battle between U.S. and China, and of course it's going on with India also, relations between China and India have improved. China has deliberately reached out and had sort of the issues over the border have kind of been, you know, kind of softened, I would say.

28:04They haven't gone away. They have softened a lot of the differences. Talks are going on. And the situation is very different between India and China. Sushma, let me ask you this. Yeah. Sushma, do you think you can really trust the Chinese? No. See, the relations are getting better. Do you really think you can make a deal with them and trust them? The point is, Peter, it's what you said. I mean, who do we trust? The U.S. is not exactly the best of friends. The China, of course, obviously is not. So neither. You know, we have to be independent, as we have always been. Yeah, let us. Yeah, I'm just going to interrupt you there because we've got to let Professor Lee go in a minute.