Book Cover (Landscape).001

© June Park (2021). Proposed cover by the author.

Why do the export economies of Asia – China, Korea and Japan – respond differently to U.S. pressures in the digital economy under COVID-19?

Chips, data, and digital finance are shaping the global leadership into the post-pandemic era. During the COVID-19 pandemic, supply chains disruption compelled the U.S. and China to weaponize it, and under contactless economy the digital transition and tech became the centerpiece of hegemony. Efficiency based on interdependence no longer suffices and self-sufficiency matters a great deal under persisting geopolitical risk. The global chip shortage during the pandemic has prompted the U.S. to consolidate semiconductor production capacity within its own territory/alliance system, amid the continued global debate on equal access to COVID-19 vaccines (“chips for jabs” in the case of certain U.S. allies). Digitalization is accelerated in the contactless economy in the absence of a global regulatory framework on data governance. Cashless societies are emerging at a rapid pace, and central banks have shifted their policies to launch digital currencies within centralized finance, while declaring intent to regulate decentralized finance. All the while, cyberspace becomes a breeding ground for hacking of critical infrastructure and financial institutions (e.g., energy grids, banks) under the lack of regulatory measures.

At such a pivotal point of digital transformation, this book aims to explain the reasons as to why China, South Korea and Japan’s responses to U.S. protectionist pressures under COVID-19 are different. This book argues that the East Asian states responses have not been uniform, not merely owing to the geopolitical underpinnings of the bilateral relationships, but because of the institutional variance in policymaking regarding digital transformation in each jurisdiction. For the longest time, scholars have relied on the existence of bilateral security alliances in order to gauge policy responses from U.S. trading partners in times of U.S. economic pressures. This book offers an alternative narrative of institutionalism for predicting state responses, and argues through a three-step process that involves a) identifying the dominant player in the digital trade policymaking at large based on the levels of bureaucratic autonomy, b) investigating the triangular ‘statebureaucracyindustry’ dynamics per sector (chips, tech and finance), and c) deciphering the policy preferences of the dominant player in each political system. My central argument in this book is that if we are to forecast the behavior of states in the digital trade wars and currency conflict, relying solely on the geopolitical dimension for analysis is far from the complete picture, especially at a time when geopolitics and geoeconomics go hand in hand.

This book manuscript is enriched by a 2019-2020 Next Generation Researchers Grant of the National Research Foundation of Korea (NRF-2019S1A5B5A07106479). Built on the theoretical framework of institutional variance developed in my PhD dissertation based on-site research consisting of interviews with government officials, policy analysts, lawyers, academics, and business persons in addition to archival research in Tokyo, Seoul, Beijing, and Washington, DC (2010-20), the updated cases on digitalization during COVID-19 make the central thesis of the book a compelling argument for our time and provides a tool for policy projection into the digital economy in the post-pandemic era. It is currently under review at two reputable university presses.

Chapter 0.

PREFACE: The U.S. and Them

U.S.-China Trade Wars continued: From Trump to Biden

Ecosystems of Digital Futures: Chips, Data and Digital Finance

Monolithic vs. Multipolar (G-0) World
Chapter 1.
INTRO: The Global Leadership in AI Supremacy

Dealing with "The Elephant in the Room" with Pressures

The Puzzle: Why do they respond differently?

Policy Relevance

Argument: Institutional Variance in Policymaking in Digitalization

Research Design, Data and Methodology

Contributions and Avenues for Further Research 

Outline of the Book
Chapter 2.
HISTORY: How the Old, the New, and the Final Target came to Respond

U.S. Pressures 2.0: Geopolitics mixed with Geoeconomics - Trump's 'America First'
U.S. Pressures 3.0: Geopolitics mixed with Geoeconomics - Biden's Unilateral Multilateralism
The Old Target Responds: Japan 
The New Target Responds: South Korea 
The Final Target Responds: China
Playing the Game of Geopolitics with Geoeconomics in the Digital Economy
STAKES: Inside Today’s Trade Wars on the Path to Digitalization

Tariffs – Trade remedy and WTO disputes (albeit paralyzed)
Currencies – Beggar-thy-neighbor policies and digital currencies
Tech – Data, Chips, 5G and AI
Energy – From fossil fuel and nuclear to renewables and electrification
Cyber - The upgraded warfare of data breach and crypto theft
Chapter 3.
ARGUMENT: Predict Policy Moves by Institutional Variance

Theorizing Institutional Variance in Digital Policymaking and Responses

Limitations of Existing Explanations on Bureaucratic Decisionmaking

The Framework of Institutional Variance in Responses

-Political Systems

-Bureaucratic Autonomy

-State-Business Relations

-Dominant Players

-Policy Preferences

The Key to Utilizing Institutional Variance for Policy Prediction
Chapter 4.
RESPONSES: Varying Degrees in Retaliatory Measures

China: “Strike back.”

-Political System: Authoritarian

-Bureaucratic Autonomy: None, only empowered

-State-Business Relations: Business gripped by the State

-Dominant Players: The Party - the CFEAC and the CNSC

-Policy Preferences: Escalation & Desperate resistance

South Korea: “Stay Ambivalent.”

-Political System: Presidential

-Bureaucratic Autonomy: Some but subservient
-State-Business Relations: Business bargaining with the State
-Dominant Players: The V.I.P. and presidential aides 

-Policy Preferences: Rebuttal & Defensive Refutation 

Japan: “Stand in line.” 

-Political System: Parliamentarian 

-Bureaucratic Autonomy: High as a technocracy 

-State-Business Relations: Business at arm's length from the State

-Dominant Players: The Technocrats of MOF & METI supported by the PM 

-Policy Preferences: Acquiescence & Selective adjudication
Chapter 5.
CASES: Digital Trade Wars 

The Chip War: The Race for Supremacy in Semiconductors
(Subsidiary case: COVID-19 Vaccines and Semiconductor Supply Chains)

China: Huawei's Fall under Trump and the Rise of Xiaomi and SMIC under Biden

South Korea: Huawei safe haven, Samsung rivaling TSMC and Intel

Japan: In line with the U.S. Ban on Huawei

Data Governance and Digital Trade Agreements
(Subsidiary case: 5G/6G Connectivity and Electric Vehicles)

China: Personal Information Protection Law (PIPL) and Data Security Law, CPTPP accession application (to fend off Taiwan)

South Korea: Personal Information Protection Act (PIPA) and DEPA (CPTPP?)

Japan: Act on the Protection of Personal Information (APPI), CPTPP Chapter
Chapter 6.
CASES: Digital Currency Wars 
Digital Currencies in CeFi (CBDCs) and DeFi (Cryptocurrencies)
(Subsidiary case: E-Payment Systems and Cross-Border Transactions)

China: Crackdown on DeFi and everything non-CeFi 

South Korea: Undecided 

Japan: Launching CBDCs but not outlawing DeFi
Chapter 7.
TAKEAWAYS: The ‘So What?’ Question

Recognizing the New Normal of U.S. Pressures

Utilizing Institutional Variance as the Policy Move Predictor

Strategies for the Future based on Anticipated Responses
Chapter 8.
CONCLUSION: It’s Who Decides What That Matters

Focusing on the Dominant Players in Digital Trade wars and Currency Conflict

Future Research - Moving the Stage to Europe to observe responses to the rivalry of U.S. and Chinese Pressures

(Institutional Variance in European responses - Germany, France, Italy and the UK - to Faustian Bargains with China and U.S. Pressures since Brexit)