US Treasury Secretary Janet Yellen gives a speech during her visit to LG Science Park in western Seoul on Wednesday. (LG Chem)
US Treasury Secretary Janet Yellen urged her South Korean counterparts and businesspeople to build stable supply chains with allies and to expand investment during her jam-packed visit to Korea on Tuesday, which buoyed market expectations on forging stronger bilateral ties to fight against economic uncertainty.
Starting the day by visiting LG Science Park in western Seoul, Yellen had separate meetings with South Korean President Yoon Suk-yeol, Finance Minister Choo Kyung-ho and Bank of Korea Gov. Rhee Chang-yong later in the afternoon where she reiterated the need for a stronger supply chains. Analysts say that her repeated speech on building stronger supply chains might have been intended to stress the need for Korea to participate in the US-led “Chip 4” alliance, which Seoul has been pondering.
“Working with allies and partners through friend-shoring is an important element of strengthening economic resilience while sustaining the dynamism and productivity growth that comes with economic integration,” Yellen said in a speech after touring the LG Chem battery facility. “Friend-shoring,” touted by Yellen, refers to a strategy to break through economic issues such as supply chain disruptions and inflation by strengthening cooperation among allies.
“We cannot allow countries like China to use their market position in key raw materials, technologies or products to disrupt our economy or exercise unwanted geopolitical leverage,” Yellen said.
The US treasury secretary also pointed out the importance of having economic resilience through strong partnerships but mentioned how a global crisis such as Russia’s invasion of Ukraine can change the scene in an instant.
“Economic resilience is not just about trade and investment ties. Russia’s illegal war with Ukraine has underscored just how vulnerable we are to global energy shock. The United States and Korea have been hard hit by rising commodity prices, including energy price spikes caused by the war in Ukraine,” she said.
Sitting down with Choo, Yellen also discussed ways to build close ties related to the capital and foreign exchange markets amid the ongoing volatility in won-dollar exchange rates, according to the Ministry of Economy and Finance.
Yellen said, “Making our economies and supply chains more resilient will help protect us against costly disruptions that lead to higher prices and adversely impact our workers, consumers and businesses.
In her meeting with President Yoon Suk-yeol in the afternoon, the two shared views on a continued strong economic, financial and security alliance.
During the meeting, Yoon said he fully supports the US’ global leadership in economic security, according to the press statement released by the presidential office.
The office said Yoon and Yellen also discussed the recent surge in inflation.
Referring to his experience at the NATO summit in June, Yoon stressed that the “current crisis facing the world economy cannot easily be solved by just one country, but must be overcome through concerted efforts based on solidarity and cooperation.”
Yoon said, “International cooperation should help stabilize global energy prices and resolve supply chain difficulties, and that the two countries should actively cooperate toward a common goal.”
Yellen agreed that such cooperation was the way Korea-US relations could develop into an industrial and technological alliance beyond a security alliance, according to the presidential office.
Yellen’s visit to Seoul came amid burgeoning concerns over a weakening Korean currency. But her meetings with Korean authorities did not seem to address renewing their currency swap arrangement that would mitigate the effects of the strong dollar on the Korean markets.
The accord, which took effect in 2020 to reduce COVID-induced volatility, expired last year. Calls for a renewal have recently grown as the Korean won weakened to a 13-year low against the US dollar on growing demand for the safe-haven asset amid global economic uncertainty.
Central bank chief Rhee earlier suggested that a discussion on resuming the deal would not take place at the meeting with the treasury secretary, because the authority to do so is held by the US Federal Reserve. Global economic conditions would be the main agenda, Rhee told reporters last week.
The US treasury secretary’s visit to LG Science Park, meanwhile, was her only stop at a Korean company during her three-day trip to Seoul.
LG Chem CEO Shin Hak-cheol guided her through the “sustainability gallery” where the company’s carbon neutral strategies, including electric vehicle batteries, are displayed. LG Science Park is where the research and development organizations of LG Group’s major eight affiliates are located.
Shin said LG Chem was considering establishing a cathode manufacturing plant in North America to strengthen and localize the battery supply chain.
The LG Chem CEO also noted that the US official’s visit to LG Science Park showed how the company’s relationship with the US in the battery businesses will lead to greater cooperation in the future in terms of increasing electric vehicle penetration.
LG Chem, along with its subsidiary LG Energy Solution, invested 60 billion won in acquiring a 2.6 percent stake in Li-Cycle, the biggest battery recycling company in North America, in December. It also signed a 10-year contract to receive 20,000 metric tons of key battery material -- nickel sulfate -- starting next year. The amount is enough to build batteries for 300,000 electric vehicles, according to LG Chem.
By Kim Yon-se (
kys@heraldcorp.com), Kan Hyeong-woo (
hwkan@heraldcorp.com) and Choi Si-young (
siyoungchoi@heraldcorp.com)