{"id":2207318,"date":"2024-11-29T16:48:14","date_gmt":"2024-11-29T07:48:14","guid":{"rendered":"https:\/\/koreapro.org\/?p=2207318"},"modified":"2024-12-02T17:00:41","modified_gmt":"2024-12-02T08:00:41","slug":"yoon-and-south-koreas-opposition-pivot-on-policy-eyeing-political-center","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2024\/11\/yoon-and-south-koreas-opposition-pivot-on-policy-eyeing-political-center\/","title":{"rendered":"Yoon and South Korea\u2019s opposition pivot on policy, eyeing political center"},"content":{"rendered":"

South Korean politics is witnessing an unusual shift as President Yoon Suk-yeol and opposition leader Lee Jae-myung move away from traditional stances on policies relating to business and the economy.<\/span><\/p>\n

Yoon, who focused on small government and fiscal conservatism during the first half of his term, is now advocating for expanded welfare spending to address \u201c<\/span>economic polarization<\/span><\/a>.\u201d And despite internal <\/span>pushback<\/span><\/a>, some in his office are apparently <\/span>discussing<\/span><\/a> supplementary budgets \u2014 a policy tool he once criticized his predecessor for overusing.<\/span><\/p>\n

Meanwhile, Lee is increasingly <\/span>adopting<\/span><\/a> pro-business stances and supporting corporate-friendly policies that seem at odds with his previous stances. His top aides have also <\/span>referred<\/span><\/a> to him as \u201cpro-business\u201d in media interviews, an apparent attempt to promote a new image.\u00a0<\/span><\/p>\n

This follows Lee’s series of meetings with business leaders where he endorsed corporate-friendly reforms such as separate taxation on dividends and repeatedly emphasized that “growth is the foundation of welfare.\u201d<\/span><\/p>\n

The timing of these shifts reflects mounting political pressures on both leaders as South Korea faces immediate economic challenges and looming external risks.<\/span><\/p>\n

THE THREAT<\/b><\/p>\n

South Korea faces major external economic risks as a highly export-dependent country. The International Monetary Fund and Seoul\u2019s own institutions lowered its economic growth forecasts for 2025, and the urgency appears heightened by President-elect Donald Trump’s plans to impose aggressive tariffs upon taking office in January.\u00a0<\/span><\/p>\n

This outlook has translated into concerns from not just businesses but also the general public, <\/span>contributing<\/span><\/a> to a recent downward spiral in consumer expectations for the economy in the new year.\u00a0<\/span><\/p>\n

Just this week, the Bank of Korea made a surprise cut to the base rate, while lowering the GDP growth forecast to 1.9% for 2025, citing risks related to a protectionist U.S. administration\u2019s return and heightened global financial volatility.\u00a0<\/span><\/p>\n

Although South Korea needs to improve policies on various social issues such as housing, education inequality and the low birth rate, the ruling People Power Party (PPP) continues to <\/span>emphasize<\/span><\/a> fiscal discipline.\u00a0<\/span><\/p>\n

This is one of the many indicators of the <\/span>divergence<\/span><\/a> between the administration and ruling party, and of the conflict between Yoon and PPP leader Han Dong-hoon that has been escalating for months.<\/span><\/p>\n

\"\"

Then-U.S. President Donald Trump is applauded after delivering a State of the Union address on Feb. 28, 2017. | Image: Trump White House<\/p><\/div>\n

YOON\u2019S CALCULATIONS<\/b><\/p>\n

It appears that one of President Yoon\u2019s main <\/span>priority<\/span><\/a> during the second half of his tenure is improving his administration\u2019s public appeal rather than maintaining airtight policy consultation and <\/span>alignment<\/span><\/a> with the ruling party.<\/span><\/p>\n

Yoon\u2019s approval ratings remain stuck in the low 20s as he passes his presidency’s halfway mark, with public dissatisfaction mostly driven by first lady-related <\/span>scandals<\/span><\/a>, Yoon\u2019s communication style and reliability, and the economy, according to Gallup Korea polls.\u00a0<\/span><\/p>\n

Public dissatisfaction is unlikely to disappear after Yoon vetoed yet another bill on a special prosecutorial probe targeting his wife earlier this week, and it appears the president is focusing on garnering support by pushing to \u201cresolve economic polarization,\u201d expanding welfare policies and increasing fiscal spending.<\/span><\/p>\n

However, this strategy risks alienating fiscal conservatives within his party and longtime PPP supporters who prioritize small government principles. The calculation appears to be that gaining centrist voters will offset any potential loss in base support, though this remains untested.<\/span><\/p>\n

LEE\u2019S CALCULATIONS<\/b><\/p>\n

Lee’s rightward shift on economic policies appears strategically timed with his legal <\/span>challenges<\/span><\/a>. With his political future uncertain due to ongoing court battles, Lee seems to be using this period to fundamentally reshape his image.<\/span><\/p>\n

This transformation from progressive firebrand to business-friendly centrist is likely aimed at distancing himself from his previous positions and promoting himself as a more palatable candidate to a broader electorate.<\/span><\/p>\n

His increasingly pro-business remarks in the past few weeks come as he has simultaneously faced two major court rulings that could bar him from running in the 2027 presidential elections, although he was acquitted in the second case.<\/span><\/p>\n

The verdict has temporarily lowered the risk for the Democratic Party (DP), which is likely to continue pursuing a strategy that positions Lee as a potential presidential frontrunner for the time being, rather than actively seeking an alternative.<\/span><\/p>\n

His recent <\/span>endorsement<\/span><\/a> of eliminating the financial investment tax, <\/span>easing<\/span><\/a> criminal liability for breach of trust and separate taxation on dividends, alongside his meetings with business leaders, suggest a calculated effort to rebuild his image from a progressive figure powered by left-wing supporters seeking economic equality to a pragmatic centrist that supports a corporate-driven economic growth model.<\/span><\/p>\n

This pivot puts him at risk of <\/span>potentially losing<\/span><\/a> progressive supporters who have been the backbone of the DP\u2019s electoral success, particularly labor unions and youth activists who supported his previous economic equality platform. However, like Yoon, Lee appears to be betting that centrist gains will outweigh any erosion of his base.<\/span><\/p>\n

Lee recently has particularly focused on policies that could appeal to small business owners and retail investors \u2014 demographics that traditionally lean conservative but face increasing economic pressures.<\/span><\/p>\n

\"\"

South Korean President Yoon Suk-yeol (right) meets with main opposition Democratic Party leader Lee Jae-myung, April 29, 2024 | Image: ROK Presidential Office<\/p><\/div>\n

CENTRIST CONVERGENCE<\/b><\/p>\n

Both leaders appear to be responding to immediate economic challenges where traditional ideological positions may prove insufficient to address multifaceted pressures.<\/span><\/p>\n

After various reform announcements earlier this year on education, pensions, labor, the medical system and the birth rate, the presidential office has notably begun emphasizing resolving economic polarization. Mounting economic pressures \u2014 from weak domestic consumption to growing external threats \u2014 may have forced Yoon to rethink his fiscal conservatism.\u00a0<\/span><\/p>\n

Lee’s shift appears even more dramatic, suggesting the DP\u2019s determination to regain power in 2027 by addressing traditional weaknesses on economic management.\u00a0<\/span><\/p>\n

Lee’s pro-business pivot appears calibrated to position the DP as capable of managing the economy through what could be a turbulent period of global trade restructuring under Trump’s second term.<\/span><\/p>\n

Yet both leaders face credibility challenges in their policy shifts that go beyond implementation. The presidential office’s mixed messaging on supplementary budget options this week \u2014 rapidly walking back after party pushback \u2014 highlights the challenges Yoon faces in pivoting toward more progressive economic policies.<\/span><\/p>\n

For Lee, convincing businesses of his sincerity while maintaining support from traditional progressive allies will be equally difficult.<\/span><\/p>\n

Both leaders appear to be betting that pragmatic policy shifts, even at the cost of some ideological consistency, will resonate with voters increasingly concerned about economic security over traditional partisan divisions.<\/span><\/p>\n

\"\"

An illustration of two politicians converging on fiscal and business policies | Image: Korea Pro<\/p><\/div>\n

IMPLICATIONS AND FEASIBILITY: MEET HALF WAY?<\/b><\/p>\n

The parallel policy shifts by Yoon and Lee signal broader changes in ROK politics as the country navigates increasing global economic uncertainty and younger voters grow less interested in ideological political divides that used to set conservatives and progressives apart.\u00a0<\/span><\/p>\n

For instance, the traditional conservative-progressive divide on business regulations, market intervention and fiscal policy appears increasingly blurred as the ROK faces multiple external challenges, from Trump’s protectionist threats to supply chain restructuring pressures.<\/span><\/p>\n

Both leaders’ turn to the center reflects recognition that South Korea\u2019s export-dependent growth model, and domestic economic and social policies that largely depend on the growth, may need adjustment in an era of growing trade barriers and geopolitical tensions.<\/span><\/p>\n

Until Trump takes office in January and tariff-related prospects become clearer, both leaders will likely experiment with their economic policy stances and carefully gauge public reactions to them.<\/span><\/p>\n

Most importantly, the government\u2019s welfare expansionary policy may not be immediately feasible.\u00a0<\/span><\/p>\n

The administration’s ability to fund welfare expansion faces significant fiscal constraints: Government data this fall showed a widening consolidated fiscal deficit, driven by plummeting corporate tax revenues amid weak business performance, while mandatory spending on military salaries, parental benefits and basic pensions continues to rise.<\/span><\/p>\n

Financing options will be limited and will require the National Assembly\u2019s cooperation \u2014 issuing more government bonds could offset the effects of the BOK\u2019s recent rate cut and pressure inflation, while the administration’s attempts to utilize various government funds for stopgap financing have drawn criticism as accounting manipulation.\u00a0<\/span><\/p>\n

This fiscal squeeze threatens to turn Yoon’s promises of addressing economic polarization into mere rhetoric unless the government can fundamentally revise its revenue forecasting methods and reconsider certain tax reduction policies.<\/span><\/p>\n

Such policies will require tighter consultation between the opposition and the ruling parties and the Yoon administration \u2014 and the current temporary policy convergence between the progressives and the conservatives might provide an optimal time to do so.<\/span><\/p>\n

Edited by Alannah Hill<\/span><\/i><\/p>\n

Business & Economy<\/span><\/a>Domestic Politics<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"

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