After a long, drawn-out struggle, the issue of the tax law amendment was finally settled.
The amendment passed by the National Assembly was quickly delivered to Cheong Wa Dae, and Cheong Wa Dae announced that, after a three-month grace period, it would begin imposing the financial investment income tax in earnest.
A tax that had not existed before was now being levied, so repercussions were inevitable.
The KOSPI, whose plunge had come to a halt, fell back into the 4,300 range, and people voiced strong concerns that the KOSPI would soon return to the days of “Boxpi.”
But that would not happen.
Some confusion for the time being was unavoidable, but if my memory served me right, the KOSPI would soon normalize.
Korea had many daunting tasks piled up, but the fact that it held semiconductor hegemony in the AI era was an enormous advantage. On the back of consecutive earnings surprises from companies, foreign investors returned, then institutions returned, and finally individual investors returned as well.
Of course, it took quite a long time to recover the previous high from before the financial investment income tax, but if my memory was correct, our stock market never collapsed simply because of that one tax.
“Hello, Prime Minister!”
When everything had been wrapped up, I met Lee Chanho on the outskirts of Seoul.
Over the past few months, his face had aged dramatically, and it seemed the stress from the tax law amendment had been tremendous.
“How could I be well? I barely made it out alive.”
“I’ve been closely following your actions through the news, Prime Minister. It may sound strange coming from me, but you truly accomplished something remarkable. I sincerely respect you for it.”
“What’s this? Sejun, flattering me to my face? And to the person who pushed through the financial investment income tax, no less?”
“It was something absolutely necessary for the sake of the future vision.”
“Is that so? Haha. I never thought I’d hear someone from the pension fund tell me I did well, of all people.”
Perhaps it was the relief of having solved a major assignment, but he soon smiled.
“Come to think of it, if I met you, Sejun, I wanted to thank you separately.”
“What did I do?”
“To be honest, the pros and cons of this tax law amendment were neck and neck even within the party. You have no idea how hard it was to persuade the opposition faction.”
“Ah...”
“The governing funds you gave me helped me in all sorts of ways. I’m especially grateful for that.”
This tax law amendment, which had faced fierce public opposition, was not something that could be done empty-handed. His borrowed-name account in Singapore had served splendidly as a reliable war chest.
“Please, not at all. If it had been another politician, money alone wouldn’t have solved it. The president’s and prime minister’s firm control over the party was the greatest contributor.”
“You really are to my liking, Sejun. Despite your young age, you’re always humble without any arrogance. And considering you recognized my potential back when I was out of office, you’ve got a good eye too. Sejun, have you really never thought about going into politics?”
“You honor me too much. I will help from the shadows, Prime Minister.”
Though I poured out difficult requests every time we met, Lee Chanho was always favorable toward me.
Like a giving tree, I steadily offered political funds without ever once asking for a position in return, so there probably wasn’t anyone as admirable as me.
“By the way, why did you ask to see me again today? Surely you didn’t call me here to make some difficult request of the man who barely managed to pass the tax law amendment?”
“It’s about our electric vehicles, Prime Minister.”
“Electric vehicles?”
“Yes. In fact, if we’re talking about the key businesses in renewable energy, electric vehicles can’t be left out. But this industry is facing many obstacles.”
Lee Chanho gave a bitter smile and lifted his teacup.
“Well, I’ve heard. They say even the domestic position is in danger because of China’s low-price offensive?”
“Yes. With similar specifications at half the price, concerns about competitiveness are emerging. In truth, if we want to meet the UN NDC carbon reduction targets, we have no choice but to push electric vehicles harder ourselves. But if this situation continues, domestic consumers will naturally be more inclined toward cars that cost half as much.”
China’s electric vehicle offensive must never be taken lightly.
Even Europe, which would sing hymns about eco-friendliness in its sleep, recently imposed a 50% tariff on Chinese electric vehicles. Even so, the market share of Chinese cars was rising by the day.
“So?”
“We need a macro-level response from the government...”
“That’s not something to be considered so easily. When Europe responded with tariffs, China is now considering retaliatory tariffs as well. Korea is currently imposing an 8% tariff on Chinese products too, but anything beyond that is unreasonable.”
The Korean government was not sitting entirely idle either.
We had our own problems to worry about, so Korea was currently applying zero tariffs to electric vehicles from every country, but it was imposing 8% on Chinese ones alone.
“But it’s meaningless. BYD headquarters has decided to absorb Korea’s 8% tariff themselves.”
“And you want me to raise it further? Are you telling me to get into a trade dispute with China, on top of the United States?”
“No... Rather than tariffs, could you provide subsidies?”
“Subsidies?”
I carefully handed over the documents.
“This is Asan Motor’s own analysis of next year’s outlook. Despite the impact of tariffs, its U.S. sales reached a record high, but operating profit instead fell to around one trillion won. Most experts diagnose it as having sold at a loss.”
“Cheong Wa Dae is receiving reports on this issue by the hour too. But what can we do? We can’t change the United States.”
“But you can provide institutional support. Like BYD, which is absorbing Korea’s 8% tariff on its own.”
“...Are you telling me to spend tax money on this?”
“If we trace BYD’s funding sources, in the end, it will probably be the Chinese authorities. Since we absolutely cannot give up the U.S. market, please have our government respond to these tariffs as well.”
Asan Motor, which had recently begun a bloody price war, was rapidly exhausting its retained earnings while desperately waiting for next year’s U.S. presidential election.
But a company could not rely solely on its retained earnings. This was not a matter of price or technology; these tariffs were imposed purely because of America’s hegemonic position, and the only answer was help from the state.
Lee Chanho smiled bitterly and said,
“In fact, there’s been talk about it both inside and outside as well. That domestic companies can’t keep selling at a loss, and that some kind of institutional support may be necessary.”
“Yes, that’s right. Once market share is taken, it takes a very long time to restore.”
“So the point is, you want me to look after the R&D budget in this area?”
“Yes. And one more thing. Domestic market share as well.”
“Domestic?”
“BYD, which has now landed in Korea, is not showing a remarkably rapid advance yet, but within Asan Motor, there is a considerable sense of crisis. The scariest thing is the price.”
“...That makes no sense. Responding to U.S. tariffs at least has justification, but losing market share on the domestic stage is the company’s own responsibility, isn’t it? We can’t support it all the way to that point with taxes collected through blood and tears.”
“Then we have no choice either. Like Europe, we will have to impose a 50% tariff on China.”
Lee Chanho pressed his fingers to the bridge of his nose.
Whether to apply tariffs, or to provide equivalent subsidies... Theoretically speaking, the former would increase national tax revenue, while the latter would require pouring in an enormous amount of tax money, so naturally the latter was preferable.
But considering the Korea-China trade dispute those tariffs would cause, it was not an easy decision to make.
“In the end, it all comes down to money... It’s all a game of chicken between countries.”
In truth, the recent trade trend after the collapse of neoliberalism was all like this.
It was no longer a market order formed through competition between companies, but fiscal competition through subsidies from each country... Most of the industries China pushed as key sectors seized the market in exactly this way, and by the time people came to their senses, China had already taken control of the major supply chains.
In fact, this was an issue that had been raised since the Obama era, when the pro-China stance was abandoned and containment of China began. China’s trade policy, which locked its own gates and openly intervened in the market order, was certainly problematic.
But then the United States should have come up with some high-level measure befitting America, yet instead, it was busy beating up even its allies... Now, we too had been left with no choice but to find our own way to survive.
“By R&D support like China’s, you mean taxes, right? Indirect support such as corporate tax reductions, low-interest loans, and labor cost support for master’s and doctoral researchers?”
“Yes, that’s right. Only with indirect support will there be no traces left, and it will be difficult to take issue with it.”
This was also the context in which the global community so desperately hoped for China’s democratization.
If labor unions formed there too, and if the voices of the poor demanding redistribution grew louder, it would become difficult for the government to concentrate its budget on specific industries alone. But who knew when that would happen?
“...”
But I was not too worried.
If my memory was correct, as China’s economy grew, its advantage in labor costs eventually disappeared. And when the unit cost of humanoids became cheaper than their labor costs, China’s growth rate also declined sharply.
Of course, by the time global society reached that point, it would have to worry about entirely different social problems.
When machines had replaced everything humans could do, what, exactly, should humans do?
“Fine, I understand. We were already discussing what to do about electric vehicles as renewable energy came up, so I’ll take your opinion seriously, Sejun.”
“Then...”
“We can’t announce it publicly, but there will be a great deal of indirect support. I promise you that much.”
I sprang to my feet and bowed.
“Thank you, Prime Minister!”
“What is there to thank me for? It only means we’ll spend a bit more of the budget we were going to spend anyway. Then there’s nothing else besides this issue, right?”
“No, there isn’t.”
After saying that, I asked cautiously,
“Ah, one more thing... This isn’t a request. It’s just something I’d like to ask.”
“What is it?”
“By any chance, is Cheong Wa Dae preparing any ‘de-Seoul’ policies, such as relocating companies or school districts?”
“What are you talking about?”
“It’s just that, during this tax law amendment, you greatly strengthened the comprehensive real estate holding tax and the real estate capital gains tax as well. I wanted to ask whether there was some kind of macro-level policy to prevent the concentration in Seoul...”
He burst into a hearty laugh.
“Well, well. These days, everyone I meet talks about real estate, don’t they? Don’t worry about that sort of problem. Our administration has prepared a very solid real estate policy, and there is absolutely no chance that housing prices in Seoul will skyrocket.”
Seeing his confident face, I felt relieved.
The future I knew would not change.
*
“Well now—Manager Lee.”
“Hello, Director!”
One day, after the R&D issue had been wrapped up.
I made dinner plans with Yu Myeongjin, the head of the alternative investment office.
“What’s the occasion? You asking to see me separately. Did the risk team give some kind of bad feedback?”
“No. Actually, I’ve always wanted to sit down with you one-on-one at least once, Director, and I happened to have some free time lately.”
The pension fund’s alternative investment office.
This place, famous even within our headquarters for frequent overtime, handled only nontraditional assets such as real estate, infrastructure, and private equity funds. To put it simply, the alternative office was the place that dealt with all other “alternative” products besides stocks and bonds.
“Why did you want to meet with me so badly? Manager Lee, aren’t you the type who has nothing to do with alternative investments?”
“Come on. I’m the one who persuaded the department head to start buying gold. If anything, I’m the person closest to the alternative office.”
“Now that you mention it, that’s true. Haha. But does someone as busy as you have time to meet someone as idle as me?”
I asked him,
“Director, is the alternative office really that quiet these days?”
“Do I even need to say it? Domestic and overseas stock markets are all soaring these days, so our performance is dead last in headquarters. Honestly, the economy is impossible to understand. In theory, if the economy is this good, alternative assets should also be soaring, but we’re the only ones in this state.”
“Even real estate, though? Commodities are always unstable, sure, but real estate too?”
“Real estate has been a thing of the past for a long time now. The recent real estate regulations from the government turned out to be more effective than expected. The upward trend around Seoul was sharply broken, and the provinces fell too. Maybe it rose too much ten years ago, but for a while, there’s no sign of it going up. But why do you ask?”
I emptied a mouthful of beer and asked,
“Director. Is it possible for the alternative office to purchase ordinary housing as well?”