Reshoring from China: comparing the economic statecraft of Japan and South Korea

Abstract

This article examines the Japanese and South Korean governments’ reshoring and diversification policies of supply chains especially away from China since the early 2010s, with particular attention to the measures taken under the 2020–21 pandemic. The article also explores how much Japanese and South Korean reshoring from China, a subset of foreign economic policy, counts as economic statecraft as a deliberate government attempt to achieve geopolitical objectives using ‘economic’ means. One would expect these governments, which innovated proactive industrial policies and guided the private sector to catch up with developed economies in the 20th century, to have an easy time encouraging businesses to re-shore. While these two governments have employed various policy instruments to shift their economic dependence away from China, there is only limited success in motivating businesses to return to their homeland. This leads to an intriguing departure in our understanding of the capacity of those two Asian nations, which used to be considered prototypical ‘developmental states’ where governments have significant influence over business behaviour. This research brings more nuance and complexity to prevailing state-as-unitary-actor assumption of the economic statecraft literature and advocates closer attention to domestic sources of foreign economic policy.

Keywords:

• Developmental state
• FDI in China
• Japanese economic statecraft
• Korean economic statecraft
• Reshoring
• South Korea
• Covid-19 pandemic

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 For a skeptical view of the impact of the pandemic on supply chains, see Curran and Eckhardt (2021).

2 The Kishida administration has also committed $10 billion (¥1.3 trillion) in the second supplemental budget for FY2022 to support semiconductor investment and development to bolster domestic production in Japan (Nikkei Shimbun, 2022).