Korea JoongAng Daily - Daily News from Korea

The author is a sociology professor at Seoul National University.

President Lee Jae Myung has a knack for unveiling policy ideas or political claims that few others anticipate. His supporters may be thrilled, but to experts, they can be dizzying. Universal basic income, a campaign pledge, has been tested only in small pilot programs in a handful of countries. No nation has ever fully implemented it. Direct democracy, which Lee promoted during his time as party leader, is likewise absent worldwide and, according to enduring conclusions in political thought, can even become a threat to democracy itself. Jung Chung-rae, the current party leader, has eagerly inherited and deployed this repertoire.

The latest installment in the series is Lee's assertion, offered while signaling that there would be no extension of the capital gains tax relief on housing, that "there is no market that can defeat the government."

An economic system that leaves all transactions to market principles is a free-market economy. At the opposite extreme is a socialist planned economy in which the government determines every transaction. Real-world economies lie somewhere between these poles. If it were true that no market can defeat the government, it would not have been the former Soviet Union that collapsed, but capitalist countries such as the United States or Korea. We might now be describing Korea as a post-capitalist society rather than calling Eastern Europe post-socialist. Fortunately, the experience of world history has shown the opposite: markets defeat governments.

Whether scarce resources should be allocated by markets or by governments is a central theme of the social sciences. The field is crowded with studies of market failure and government failure. The overwhelming conclusion is that governments cannot defeat markets. This is hardly surprising. Government policy is shaped by the limited rationality of a small number of people and often by distorted political objectives. Markets, by contrast, move through the continuous actions of tens of millions. A government trying to defeat the market is like trying to hold water in one's palm. No matter how careful the effort, the water inevitably slips away.

There are rare exceptions. A well-known saying in investment circles is "don't fight the Fed." It means that strategies built against the Federal Reserve's policy direction are likely to fail. Yet the Fed's tools are interest rates and liquidity. It nudges people to invest in desired directions by adjusting incentives. If policymakers want capital to flow away from real estate, they must make other investments more attractive. Korea instead chooses to punish those who invest in property through taxation.

There is another difference. Interest rates and liquidity apply uniformly, while taxes are imposed selectively on owners of a single high-value home or multiple homes. To justify disciplining only part of the population through taxes, those people must be cast as villains. Yet it is awkward to explain why investing in capital markets, which the Lee administration actively promotes, is virtuous, while investing in housing is immoral. If owning multiple homes were truly reprehensible, the biting satire that asked whether owning two chickens should also be punished would not have left the Moon Jae-in government speechless. Warren Buffett, a globally respected investor who has called for higher taxes on people like himself, owned three homes. Was he a bad person or a good one?

The dark history of Korea's real estate policy shows repeated defeats at the hands of the market. Based on average apartment prices in Seoul, the Roh Moo-hyun administration fought the market, and prices rose from 250 million won (about $175,000) to 500 million. The Moon Jae-in administration fought the market and prices climbed from 600 million to 1.2 billion. After just over a year of fighting the market, the Lee Jae Myung administration has seen prices rise from 1.2 billio...

With former first lady Kim Keon Hee sentenced to one year and eight months in prison, an unprecedented situation has unfolded in which a former president and his spouse have both been sentenced to time behind bars. The ruling by the Seoul Central District Court's Criminal Division 27, led by Presiding Judge Woo In-sung, was stern in tone, rebuking Kim for having "abused her status as first lady as a means of personal gain." The court also found, based on multiple pieces of evidence, that Kim did in fact receive a Graff necklace she had consistently denied accepting. While the prison sentence was imposed on Kim, the sense of shame belongs to the nation as a whole. This painful episode should never be repeated in Korea's constitutional history.

One aspect of the ruling that drew particular attention was the wide gap between the sentence sought by prosecutors, 15 years, and the sentence imposed, one year and eight months. The difference stemmed from the fact that many of the charges listed in the indictment were dismissed. Some have interpreted the verdict as the court correcting what they see as an overzealous special prosecution that inflated minor suspicions. A closer reading of the judgment, however, shows that Kim can hardly claim she was wronged.

In the Deutsch Motors stock manipulation case, the court acquitted Kim, but did so on the grounds that she could not be regarded as a co-perpetrator as charged by the special prosecutors. The ruling leaves open the possibility that the outcome could have been different had she been indicted as an accomplice who aided the scheme. That issue may be revisited on appeal through amendments to the indictment. The court also ruled that some acts related to the stock manipulation allegations exceeded the statute of limitations, a conclusion that reflects delayed and overly lenient investigations into Kim. Prosecutors hesitated in the face of power, while those in power exerted visible and invisible pressure on the prosecution. Acquittals on some influence peddling charges likewise do not amount to a blanket exoneration of Kim's conduct, but rather reflect the court's strict application of evidentiary standards and legal principles. Seen in this light, it would be misguided to interpret the reduced sentence simply as vindication.

A verdict reached through a rigorous evaluation of evidence and careful application of the law deserves respect. It is therefore deeply regrettable that the ruling party has criticized the court, expressing dissatisfaction with what it views as a lenient sentence. This reaction stands in sharp contrast to its response in the earlier case involving former President Yoon Suk Yeol, where a sentence exceeded the prosecution's request. Attacking the judiciary because a ruling is unwelcome and invoking judicial reform as justification goes beyond selective interpretation and risks exerting improper pressure on the courts.

Even if there are objections to the ruling, the appropriate course is to await appellate proceedings with restraint. Kim still faces additional trials, including allegations of influence peddling and cases linked to the Unification Church. The courts must remain unswayed by political winds and deliver judgments based solely on evidence and legal reasoning.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.

This article is by Lee Jae-lim and read by an artificial voice.

SK hynix posted an all-time high operating profit of 47.21 trillion won ($33.1 billion) in 2025, more than double the previous year's figure, as the company fully capitalized on an AI-driven memory supercycle that boosted demand and pricing power.

For the first time ever, the memory maker is set to overtake Samsung Electronics in operating profit, opening a gap of more than 3 trillion won after Samsung earlier this month forecast operating profit of 43.53 trillion won.

SK hynix's operating profit exceeded the market consensus of 44.5 trillion won compiled by FnGuide. Revenue for 2025 reached 97.15 trillion won, up 46.77 percent on year and above the market forecast of 95.3 trillion won. Net profit came in at 42.95 trillion won, surging 116.92 percent on year and topping analysts' expectations of 40.67 trillion won.

Fourth-quarter operating profit jumped 137.2 percent on year to 19.17 trillion won, surpassing the market forecast of 16.46 trillion won. Quarterly revenue rose 66.1 percent to 32.83 trillion won, exceeding the consensus estimate of 31 trillion won, while net profit increased 90.4 percent to 15.25 trillion won, broadly in line with market expectations.

The company said revenue from high bandwidth memory (HBM) more than doubled from the previous year, contributing significantly to its record performance. SK hynix expects the role of memory semiconductors to become increasingly critical in the AI era, as industry focus shifts from training to inference models and as supporting infrastructure, such as data centers, continues to expand.

"Demand is expected to grow not only for high-performance memory such as HBM, but also across the broader memory portfolio, including server dynamic random access memory [DRAM] and NAND," the company said in a statement.

To meet robust demand, SK hynix plans to accelerate the completion of its M15X fab in Cheongju, North Chungcheong, which is scheduled to begin trial operations next month. The company is also constructing the first of four fabs at its Yongin semiconductor cluster in Gyeonggi, slated to start production next year, and is building advanced packaging facilities in Cheongju and Indiana.

SK hynix's global HBM market share stood at 57 percent in the third quarter of 2025, according to Counterpoint Research, more than double Samsung Electronics' 22 percent.

A key determinant of market share and profitability going forward — and a focal point of competition between SK hynix and Samsung — is the allocation of HBM4 supply for Nvidia's next-generation Vera Rubin processors. Multiple local media reports indicate that SK hynix has already secured nearly 70 percent of Nvidia's total HBM4 supply, well above market expectations of around 50 percent.

SK hynix is also reportedly considering establishing a U.S.-based entity to oversee AI investments for SK Group, which would assume control of approximately 10 trillion won in overseas AI-related assets currently held by group affiliates, according to an exclusive report by Maeil Business Newspaper.

The company's shares closed at a record high of 841,000 won on Wednesday, up 5.13 percent from the previous session. Market capitalization reached 612 trillion won on the day. After the market closed, SK hynix announced the cancellation of 15.3 million treasury shares worth 12.2 trillion won, equivalent to 2.1 percent of outstanding shares, to enhance per-share value and shareholder returns.

Analysts expect memory supply tightness to persist through 2027, as Big Tech companies race to secure AI leadership, further fueled by the rise of physical AI applications such as humanoid robots and autonomous driving.

SK Securities raised its target share price for SK hynix to a record 1.5 million won from 1 million won, citing a structural expansion in memory valuation rather than a cyclical peak. KB Securities also increased its target price from 950,000 won to 1.2 million won.

According...

This article is by Kim Ji-ye and read by an artificial voice.

Shedding one's old image is always a challenge for actors, especially for those with long careers — and Hyun Bin is no exception. In the first season of Disney+ series "Made in Korea," he sheds his familiar upstanding image to play Baek Ki-tae, a ruthless man driven by ambition. The actor said he welcomed the chance to explore an unexpected side of himself, describing Baek not as a simple villain but as a character who could exist anywhere, calling him a "warning" to the world.

"I don't think Ki-tae can be defined as a simple villain," said Hyun Bin during an interview with reporters at a cafe in central Seoul on Tuesday. "What he does is clearly not right, both within the story and in the way he acts. Even so, I think there are aspects of him that people can still understand and relate to."

Although the series is set in 1970s Korea, Hyun Bin noted its relevance today.

"Even though the series is set in 1970s Korea, when you look at it through a present-day lens, it's hard to simply say that someone like Ki-tae wouldn't exist," he said. "This kind of person could exist not just in Korea, but anywhere in the world. In that sense, Baek Ki-tae can be seen as a character who serves as a warning."

Directed by Woo Min-ho, who helmed films like "Harbin" (2024), "The Man Standing Next" (2020) and "Inside Men" (2015), the series completed its first season on Jan. 14 and is slated to return with a second season in the second half of this year.

The story is set in 1970s Korea, a decade defined by political repression and rapid economic transformation in the nation and follows Hyun Bin's Ki-tae, an agent at the Korea Central Intelligence Agency (KCIA) — one of the most powerful government bodies at the time — and prosecutor Jang Geon-young, played by Jung Woo-sung. The two constantly collide, pursuing opposing ambitions and doing whatever it takes to bring each other down.

The show also features a seasoned cast alongside Hyun Bin and Jung Woo-sung, including Jung Sung-il, Woo Do-hwan, Seo Eun-soo, Won Ji-an and Cho Yeo-jeong.

Hyun Bin said he focused closely on every detail of Ki-tae's appearance, from his hairstyle and tailored suits to his physique and restrained movements, even down to how he smokes a cigarette. He also gained around 13 to 14 kilograms (28 to 30 pounds) compared to his previous film, "Harbin," to project a more intimidating presence.

"Personally, when I first approach a character, I think it's important how the character looks on camera even when they're not speaking," he said. "The KCIA that Ki-tae belongs to was the most powerful and intimidating institution of that era. I wanted that sense of intimidation to come through the moment people saw Ki-tae, so I decided to bulk up for the role."

He added, "I wanted Ki-tae's strict, meticulous nature and his determination to never show weakness to be reflected in his appearance. So, from his sharply parted pomade hairstyle to his perfectly fitted suits, I tried to make him look completely controlled and flawless."

The series marks Hyun Bin's second collaboration with Woo Min-ho, following "Harbin." Director Woo recently referred to the actor as his "persona" in an interview, a label Hyun Bin said he deeply appreciates. The actor also thanked Woo for discovering sides of him that he might not have found on his own.

"More than anything, I'm thankful to the director for always pulling something new out of me," he said. "Actors may have many sides, but without a director to bring them out and put them on screen, they don't really matter. At times, he brings out the sides I want to show, and at other times, he uncovers sides I wasn't even aware of."

Backed by a star-studded cast and a high-profile director, "Made in Korea" drew strong global attention, becoming the most-watched Korean original title on Disney+ released in 2025 across the Asia-Pacific region during its first 28 days, according to Disney+ on Tuesda...

This article is by Kim Ji-ye and read by an artificial voice.

Shedding one's old image is always a challenge for actors, especially for those with long careers — and Hyun Bin is no exception. In the first season of Disney+ series "Made in Korea" (2025), he sheds his familiar upstanding image to play Baek Ki-tae, a ruthless man driven by ambition. The actor said he welcomed the chance to explore an unexpected side of himself, describing Baek not as a simple villain but as a character who could exist anywhere, calling him a "warning" to the world.

"I don't think Ki-tae can be defined as a simple villain," said Hyun Bin during an interview with reporters at a cafe in central Seoul on Tuesday. "What he does is clearly not right, both within the story and in the way he acts. Even so, I think there are aspects of him that people can still understand and relate to."

Although the series is set in 1970s Korea, Hyun Bin noted its relevance today.

"Even though the series is set in 1970s Korea, when you look at it through a present-day lens, it's hard to simply say that someone like Ki-tae wouldn't exist," he said. "This kind of person could exist not just in Korea, but anywhere in the world. In that sense, Baek Ki-tae can be seen as a character who serves as a warning."

Directed by Woo Min-ho, who helmed films like "Harbin" (2024), "The Man Standing Next" (2020) and "Inside Men" (2015), the series completed its first season on Jan. 14 and is slated to return with a second season in the second half of this year.

The story is set in 1970s Korea, a decade defined by political repression and rapid economic transformation in the nation and follows Hyun Bin's Ki-tae, an agent at the Korea Central Intelligence Agency (KCIA) — one of the most powerful government bodies at the time — and prosecutor Jang Geon-young, played by Jung Woo-sung. The two constantly collide, pursuing opposing ambitions and doing whatever it takes to bring each other down.

The show also features a seasoned cast alongside Hyun Bin and Jung Woo-sung, including Jung Sung-il, Woo Do-hwan, Seo Eun-soo, Won Ji-an and Cho Yeo-jeong.

Hyun Bin said he focused closely on every detail of Ki-tae's appearance, from his hairstyle and tailored suits to his physique and restrained movements, even down to how he smokes a cigarette. He also gained around 13 to 14 kilograms (28 to 30 pounds) compared to his previous film, "Harbin," to project a more intimidating presence.

"Personally, when I first approach a character, I think it's important how the character looks on camera even when they're not speaking," he said. "The KCIA that Ki-tae belongs to was the most powerful and intimidating institution of that era. I wanted that sense of intimidation to come through the moment people saw Ki-tae, so I decided to bulk up for the role."

He added, "I wanted Ki-tae's strict, meticulous nature and his determination to never show weakness to be reflected in his appearance. So, from his sharply parted pomade hairstyle to his perfectly fitted suits, I tried to make him look completely controlled and flawless."

The series marks Hyun Bin's second collaboration with Woo Min-ho, following "Harbin." Director Woo recently referred to the actor as his "persona" in an interview, a label Hyun Bin said he deeply appreciates. The actor also thanked Woo for discovering sides of him that he might not have found on his own.

"More than anything, I'm thankful to the director for always pulling something new out of me," he said. "Actors may have many sides, but without a director to bring them out and put them on screen, they don't really matter. At times, he brings out the sides I want to show, and at other times, he uncovers sides I wasn't even aware of."

Backed by a star-studded cast and a high-profile director, "Made in Korea" drew strong global attention, becoming the most-watched Korean original title on Disney+ released in 2025 across the Asia-Pacific region during its first 28 days, according to Disney+ on...

This article is by Seo Ji-eun and read by an artificial voice.

[NEWS ANALYSIS]

North Korea is poised to convene the 9th Congress of its ruling Workers' Party in the coming weeks — a political grand assembly that experts say will mark a watershed moment and open the second chapter of leader Kim Jong-un's rule.

A North Korean party congress — the first of its kind in five years — is the country's most authoritative and large-scale political event, where decisions effectively become law under the regime's "party-state" system.

In the opaque politics of Pyongyang, the rare spectacle of a party congress is as close as one gets to reading the regime's road map for its future for the next five years.

The congress could serve as an opportunity for Kim to double down on isolation and militarization, or to offer calibrated signals of flexibility, experts say. It may also be used to address North Korea's deepening economic challenges under sanctions, to further entrench a new cult of personality centered on 'Kim Jong-un-ism,' and to lay the symbolic groundwork for a potential successor — ensuring the continuity of the Kim family's dynastic rule into the next generation.

A South Korean Unification Ministry official told reporters Tuesday that past congresses have held their preparatory delegate meetings roughly two to four weeks before the political conference, suggesting the big show will take place in the first half of February.

Formalizing a two-state split with South Korea

One of the most consequential outcomes expected from the 9th Congress is an official redefinition of inter-Korean relations.

Kim declared at a year-end party meeting in December 2023 that South-North ties are those of "two states hostile to each other," no longer a special intra-ethnic relationship. This two-state doctrine marks a departure from the rhetoric of his father and grandfather, who at least nominally upheld "national reunification" as a goal.

A Central Committee decision in December noted that a draft revision of the charter would be presented at the congress, without revealing further details.

"This could mean deleting any remaining references to reunification from the charter and codifying the 'two hostile states' policy," said Yang Moo-jin, a distinguished professor at the University of North Korean Studies in Seoul.

Concrete signs are already visible on the ground.

The state-run media Korean Central News Agency (KCNA) on Jan. 19 released photos of young North Koreans touring an indoctrination exhibition in Pyongyang where bold banners proclaimed "South Korea is the No. 1 hostile country and the unchanging archenemy."

Russia first, China second?

On the international front, the upcoming congress is expected to reaffirm North Korea's course of defiance, particularly regarding its nuclear weapons program.

During visits to a weapons research center in September 2025, he stated that the 9th Congress would advance a new policy of advancing both nuclear arms and the regular military in tandem. This means North Korea aims to modernize its conventional army — such as expanding artillery, drones and other hardware — even as it continues to build more nuclear warheads and delivery systems.

Another key theme to watch at the congress is North Korea's evolving foreign alignments. In place of outreach to Seoul or Washington, Kim is turning outward to Moscow, while to a lesser extent to Beijing.

When reporting on Kim's New Year's cards to foreign leaders, the North's official newspaper listed Chinese President Xi Jinping only by his title and brusquely grouped him alongside leaders of much smaller countries. In contrast, Kim's correspondence and meetings with Putin have received lavish coverage.

Observers are particularly watching whether China sends a high-level delegation to attend the North Korean congress.

"The level of Chinese representation — a top Politburo Standing Committee member versus a lower-ranking official — would speak volumes about the current ...

This article is by Lee Jae-lim and read by an artificial voice.

[NEWS ANALYSIS]

U.S. Commerce Secretary Howard Lutnick's threat to hit foreign memory chipmakers — specifically Korea's Samsung Electronics and SK hynix — with 100 percent tariffs unless they commit to building related facilities in the United States is widely viewed by industry sources as unrealistic.

High labor costs, a shortage of skilled workers, and an underdeveloped manufacturing ecosystem make the United States ill-suited for large-scale production of commodity memory chips compared to foundry operations. Foundries manufacture chips only after pricing terms are negotiated with customers, allowing higher production costs to be partially passed on through contract pricing. Memory chips, by contrast, are standardized commodities produced in advance and sold into the open market.

Memory chips — including high-bandwidth memory (HBM), a segment in which the two Korean chipmakers command over 80 percent of the global market — are semiconductors that store data so processors can access it quickly. In the era of AI, advanced memory has become indispensable, as training and running AI models require vast amounts of data to be moved between processors and memory at extremely high speeds — a process that often becomes the key bottleneck determining overall system performance.

Because of this structural difference, profitability in memory manufacturing is driven not by performance — which varies little across suppliers — but by price. Cost reduction is therefore the single most important factor for memory makers. This is why the vast majority of memory production remains concentrated in the two Korean chipmakers' home country, while manufacturing abroad is difficult to justify and largely limited to China, where cost competitiveness and a mature ecosystem already exist.

Lutnick's remarks also run counter to the earlier U.S.–Korea trade agreement, under which Washington committed to providing Korea with semiconductor tariff treatment no less favorable than that given to other major partners such as Taiwan.

President Lee Jae Myung shrugged off Lutnick's threat, citing the previously reached agreement and the effect such a tariff would have on f U.S. semiconductor prices.

"Taiwan and Korea together account for roughly 80 to 90 percent of the U.S. market," he said. "If a 100 percent tariff were imposed, it would likely result in U.S. semiconductor prices doubling."

"We have already reached an agreement to ensure that Korea will not be put at a disadvantage compared with Taiwan."

Samsung Electronics is investing $37 billion to build a foundry cluster of contract chip manufacturing facilities in Taylor, Texas, with its first fab slated to begin production this year. SK hynix, meanwhile, is constructing an advanced semiconductor packaging facility in West Lafayette, Indiana, with an investment of $3.87 billion.

Concerns have also been raised that substantial large-scale capital investments in Korea by the two firms could suffer with a diversion or reallocation of funds to the United States, posing a risk of weakening domestic employment and eroding the broader industrial ecosystem. Korea is moving ahead with its own massive semiconductor complex in Yongin, Gyeonggi, backed by roughly 1,000 trillion won ($695 billion) in private investment. Both Samsung and SK hynix are expanding memory capacity there to meet surging global demand, including from U.S. Big Tech companies.

Expensive, underdeveloped: U.S. production unlikely

Operating semiconductor fabs in the U.S. is estimated to be 20 to 40 percent more expensive than in East Asian countries such as Korea, Taiwan and China due to higher labor and operational costs and regulatory requirements, according to a 2024 report by the Korea International Trade Association. The report warned that government subsidies, including those under the CHIPS Act, may not be sufficient to offset these long-term disadvantages.

A recent Nomura...

The author is a playwright and director.

This year is the Year of the Red Horse. In the theater world, works such as "War Horse," which traverses the battlefield, come to mind. But when one thinks of the raw energy of a horse running freely, Peter Shaffer's "Equus" (1973) inevitably rises to the surface.

The play sent shock waves through audiences in Europe and the United States with its intensity and unsettling power, and it became a landmark work in Korea as well. First staged in 1975 at the Experimental Theater in Unni-dong, Seoul, it drew some 260,000 viewers over the course of a decade through long runs and revivals. Even now, productions marking the 50th anniversary of its Korean premiere are continuing.

"Equus" centers on Alan, a teenage boy who blinds several horses, and Dysart, the psychiatrist tasked with treating him. At the heart of the story lies worship. Growing up under repressive parents, the boy experiences a horse by chance on a beach and becomes intoxicated by its untamed presence.

Through self-suggestion, including the belief that "even Jesus was born in a stable," the boy elevates the horse to a godlike status. But adolescence brings sexual awakening, and with it confusion. When his attempt at physical intimacy with a girl fails inside a stable, he is overwhelmed by terror. He feels he has betrayed the object of his worship and imagines the horses' eyes watching and judging him. In panic, he drives a metal spike into their eyes.

Why has this story, which can seem pathological or grotesque at first glance, continued to grip audiences for decades? The answer may lie in Dysart's anguished reflection that a doctor can destroy passion but cannot create it.

Today, people consult artificial intelligence even when planning dates. Through social media, they constantly measure themselves against the gaze of others around the world. They labor like machines to prove their existence within online systems of authentication. Yet deep in the unconscious, there remains envy for Alan's desperate flight from the world, for the moment when, while everyone slept, he became one with a horse, drenched in sweat, and ran toward freedom and passion.

As the new year of the Red Horse begins, one hopes that it will not be filled only with news about artificial intelligence, but also with stories that remind us of free spirits, human and animal alike.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.

The author is the head of the AI Industry Center at the LIN Law Firm.

Even if they have not yet reached the level of fully driverless robotaxis, supervised autonomous vehicles are now a common sight on Korean roads. U.S.-based Tesla sells more autonomous vehicles worldwide than any other company, generates profits from those sales and simultaneously acquires vast amounts of driving data at no additional cost. That data is then used to train and advance its AI. Tesla recently announced that starting in mid-February, it will offer its autonomous driving system through a monthly subscription model.

Korea's position as the world's undisputed leader in industrial robot density rests largely on its strengths in electronics and automobiles. Korean manufacturing uses more robots than any other country, and robots have long been standard equipment in automobile production. The industry is now entering a phase in which AI and robots build vehicles, AI operates them and humans ride inside these machines while paying for AI usage. Tesla has explicitly redefined the automobile in the AI era as software delivered as a service.

Korea's "AI Basic Act" came into effect on Jan. 22. Although penalties for violations have been deferred, the law has already set a global precedent as the first comprehensive statute regulating so-called high-risk AI operators. Yet the European Union, which strongly influenced the legislation, has recently postponed its own high-risk AI regulations. The primary concern in Europe is that responding to rapid AI development and innovation with regulation-centered laws could leave the region further behind in global competition.

Like Korea's law, the EU's AI Act assigns responsibility to AI providers to manage high risks and imposes sanctions for violations. Within the EU, however, there is growing unease about how difficult it is to objectively determine what actually constitutes high-risk AI in practice.

The first draft of the EU's law, released in 2021, was built around the idea of managing risks posed by high-risk AI systems. Its stated goal was to protect human life, physical safety and fundamental rights. The proposed method was to regulate risks differently depending on the intended use of AI across specific sectors. That framework, however, was dealt a serious blow in 2022 with the emergence of ChatGPT in the United States.

General-purpose AI systems like ChatGPT create a regulatory dilemma because their uses and purposes cannot be defined in advance. As a result, the EU shifted toward imposing transparency and safety obligations on developers at the model design stage. This approach triggered strong opposition from the United States. The EU's original vision of protecting humans by managing AI risks in advance, sector by sector, was fundamentally disrupted by the release of general-purpose AI.

Since the shock of ChatGPT, AI has become even more deeply embedded in everyday life, and the technology has advanced rapidly. Yet the high-risk AI categories and regulatory approach adopted by the Korean government remain largely stuck in the EU's 2021 draft framework. By becoming the first country to fully implement such rules, Korea has placed itself under intense international scrutiny.

Under Korea's AI law, for example, Level 4 autonomous vehicles already undergoing pilot operations, as well as robotaxis that have been commercialized abroad, would fall under high-risk regulation. Amid the current enthusiasm for physical AI, it is important to note that physical AI does not refer only to humanoid robots. Autonomous vehicles that perceive their surroundings and drive in real-world traffic environments are also a form of physical AI. The intention to protect humans by classifying such technologies as high-risk in advance, assuming errors and accidents, is understandable. But if humanoid robots entering homes are treated as innovation while autonomous vehicles are labeled high-risk businesses and regulated first in ...

The author is a chair professor of economics at Seoul National University.

An AI revolution is underway. In the 18th and 19th centuries, steam engines began to replace human muscle. Today, AI is beginning to replace human cognitive labor, marking the opening phase of a new industrial revolution. Just as Britain completed the First Industrial Revolution and went on to dominate the global order for a century, the trajectory of U.S.–China rivalry will depend on whether the AI revolution widens or reverses the economic gap between the two countries. We stand at a critical historical juncture, and Korea's future will be decided here as well.

Industrial revolutions affect economic growth in three stages. The first is the invention of new technologies and their initial application. Growth accelerates compared to the past, but the increase remains limited. Despite a revolution in mechanization based on steam power, the global economy grew by only about 0.5 percent annually from 1700 to 1820. A recent International Monetary Fund report likewise estimates that AI will raise growth by up to 0.3 percent this year and by about 0.1 to 0.8 percent annually in the medium term. No matter how astonishing a technology may be, it takes time for firms and societies to absorb it fully.

The second stage arrives when new technologies are applied across entire industries, driving a sharp rise in growth. Through creative destruction, new technologies are widely adopted and emerging industries replace old ones. As the second stage of the First Industrial Revolution was nearing completion, global growth rates were roughly four times higher than during the first stage. The social costs of adjustment also intensify. Those who accept change survive, those who adapt succeed, and those who fail are left behind.

At this point, the third stage, institutional innovation, becomes decisive. If political, administrative and judicial systems are reformed in flexible and fair ways, growth accelerates. If reform fails, social collapse can follow. Britain succeeded by suppressing corrupt forces, persuading groups resistant to change and building inclusive institutions. It dismantled mercantilism, which sought rents through trade monopolies, and enacted factory laws to protect labor rights. While firmly containing the violence of the Luddite movement, it expanded suffrage and opened the path to labor unions. By contrast, Germany and Russia failed at institutional reform and paid harsh prices in the form of Nazism and socialism.

Which country, the United States or China, will reap greater gains from the AI revolution? In the first stage, the United States has the edge. Breakthrough technologies are often born from pure curiosity and a desire to make the world better. Many young Chinese researchers, however, still carry the legacy of rapid enrichment, aspiring to earn large sums in their 20s and 30s and retire in their 40s. Such a culture may allow catching up, but it makes surpassing others difficult. The United States also holds an advantage in the third stage. China's rigid political system and high levels of corruption are major obstacles to institutional reform. American politics is troubling, but democracy retains a capacity for self-correction.

In the second stage, however, China holds a decisive advantage. If China develops physical AI and applies it broadly across industry, it can generate widespread growth effects. In that scenario, the growth rate of the United States, where manufacturing is relatively weak, is likely to lag behind China's.

This is precisely where the United States needs Korea. As a manufacturing powerhouse, Korea can engage in an essential exchange of interests with Washington. If Korea helps advance U.S. manufacturing and the United States supports the strengthening of Korean manufacturing, a complementary alliance can narrow the gap with China during the second stage. If Korea instead deepens manufacturing cooperation with China, the U...