Trump: “No Reason to Meet Xi.”.

• A second rare earth element war has begun.
• Donald Trump (U.S. President) posted on Truth Social: “There is no reason to meet Xi Jinping (Chinese President).” Their planned meeting at the Gyeongju APEC summit later this month has fallen through.
• China has already restricted exports of seven rare earths—including samarium and gadolinium—to the U.S. since April. As the U.S. refused to lift tariffs, Beijing retaliated by announcing additional restrictions on five more rare earths—including holmium and erbium—starting in December.
• Trump has already warned of 100% additional tariffs from next month.
• Politico analyzed: “The imbalance between Beijing’s long-term strategy and the Trump administration’s impulsive approach is growing.”
• Craig Singleton (Foundation for Defense of Democracies Research Fellow) said: “Beijing sees export controls as leverage, while Washington sees them as betrayal. Both sides are simultaneously pulling out economic weapons, and neither seems willing to back down.”
• Lee Jaemin (Seoul National University Professor) predicted: “The U.S. might rush to conclude negotiations with South Korea to focus on the Chinese issue.”
• Related Link.
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34%→104%→125%→145%→30%→100%.

• The U.S. tariff rate on Chinese imports has flipped like a pancake.
• It imposed 34% on April 2, then raised it to 145% after Beijing retaliated—only to slash it to 30% a month later.
• Raising it back to 100% means the ceasefire is over.

It Was an Everything Rally.

• Things were looking good as recently as Friday, but the mood shifted over the weekend. The S&P 500 and Nasdaq indices each plummeted by nearly 4% and 3% last Friday. The U.S. stock market’s total valuation shrank by $2 trillion.
• Speculation is growing that the shock of the April tariff war might be repeating.
• 90,000 and 420,000. Samsung Electronics and SK Hynix hit 94,400 won and 428,000 won respectively last Friday—up 6% and 8%.
• The KOSPI’s total market cap grew by 248 trillion won over the past month, with these two companies accounting for 219 trillion won of that gain.

Will the Exchange Rate Trip Up Stock Prices?

• Won-dollar exchange rate surged to 1,421 won.
• There’s also the Takaichi effect: Yen-dollar rates jumped after Sanae Takaichi (Liberal Democratic Party Leader) was elected. As the yen weakens, the dollar strengthens, creating a three-cushion effect that drags down the won.
• Some forecasts suggest preparing for a new normal: a weak won amid a weak dollar phase. While higher exchange rates help exporters, the current situation only drives up producer prices due to rising import costs.
• The dominant view is that exchange rates will stabilize only after U.S. tariff negotiations are resolved.
• Related Link.

Gold Rises Again, Crypto Crashes.

• It hit $4,018 per ounce. As the U.S. dollar weakens, investors flock to safe-haven assets.
• Cryptocurrencies plummeted. Bitcoin fell nearly 8% to $111,816 after Donald Trump (U.S. President) posted on Truth Social that he would not meet Xi Jinping (Chinese President).
• Ethereum and Ripple also dropped over 10%.

Should Have Bought Gold Instead of U.S. Treasuries.

• Calls are growing for the Bank of Korea to aggressively purchase gold. Its gold reserves have remained unchanged for 12 years. Gold accounts for only about 1% of South Korea’s foreign exchange reserves.
• According to the National Assembly Research Service, an investment of 100 million won in U.S. Treasury bonds (1-year maturity) in 2016 would have grown to 141.08 million won by the end of September this year. If invested in gold, it would have reached 476.23 million won. A 7:3 split between bonds and gold would have yielded 231.63 million won.
• A Bank of Korea official stated, “Gold is difficult to sell once purchased, so we don’t increase holdings solely based on price appreciation.”
• Related Link.

What Matters Now.

Peace Talks in Egypt Today, Without Key Players.

• Trump’s Nobel hopes failed, but he’s setting the stage. Today’s Gaza peace summit in Egypt will host the signing ceremony for the first phase of the peace plan.
• Co-chaired by Trump and Abdel Fattah el-Sisi (Egyptian President), attendees include Keir Starmer (UK Prime Minister), Emmanuel Macron (French President), and António Guterres (UN Secretary-General).
• Hamas won’t attend. Benjamin Netanyahu (Israeli Prime Minister) is also likely to skip.

“Dedicate This Award to Trump.”.

• Maria Corina Machado (Venezuelan opposition leader), who won the Nobel Peace Prize, said this.
• Trump’s Nobel bid failed. He’s not too upset: “I’m happy because I saved millions of lives.”
• “I didn’t ask for the prize, but I think they might have given it to me if I had.”
• The Nobel Committee praised Machado as “a woman who refuses to let democracy’s flame be extinguished, even in deepening darkness.”

Third Round of Real Estate Regulations Unveiled.

• On June 27, loans over 600 million won were banned.
• On September 7, expanded supply was promised.
• Now, the third policy package arrives this week. Speculation suggests a sweeping rollout: expanding regulated zones, restricting resale of subscription rights, tightening eligibility criteria. The 600 million won loan cap could drop to 400 million won.
• A proposal to lower the DSR (Debt Service Ratio) limit from 40% to 35% is also under review.

Property Taxes Remain Untouched.

• Korea Economic Daily projected, “Tax policy cards are unlikely to be included.” The analysis: “Fears that it could destabilize the regime’s support base without curbing housing prices.”
• While arguments for raising holding taxes while lowering transaction taxes like capital gains and acquisition taxes were widespread, the backlash from the Han River Belt remains a critical obstacle.
• Related Link.

Will Realistic Valuation of Assessed Property Prices Also Be Abandoned?

• The Moon Jae-in administration aimed to raise assessed property prices to 90% of market value, but Yoon Suk-yeol reversed the policy.
• The realization rate for assessed prices of apartments over 1.5 billion won has stagnated at 75.3% since 2023, down from 81.2% in 2022.
• Raising assessed prices increases taxes—a politically sensitive move that achieves revenue gains without directly altering tax rates.

One Solid Property Still Holds Strong.

• Chosun Ilbo openly declared, “Seoul home prices will be hard to contain.” Seven experts were interviewed, all emphasizing the prevailing upward trend.
• “The mood feels similar to 2018, when the real estate surge began,” one remarked.
• Related Link.

Deep Dive.

Cho Hee-dae Attends National Assembly Audit, Makes Brief Appearance.

• He plans to attend as customary but deliver only opening remarks before departing.
• The Democratic Party is determined to prevent Chief Justice Cho Hee-dae (Supreme Court Chief Justice) from leaving. The People Power Party condemns this as “judicial annihilation.”
• No National Assembly law prohibits withdrawal. The Democratic Party intends to issue a compulsory attendance order if Cho refuses to testify.
• The Hankyoreh editorialized, “Cho Hee-dae has an obligation to explain,” arguing, “Leaving after greetings is not a legal right but merely a convention.” It emphasized, “Previously, few cases required the Chief Justice’s direct response, but this time is categorically different.”
• The Kyunghyang Shinmun editorial noted, “Suspicions of Supreme Court election interference cannot be resolved without Chief Justice Cho’s convincing explanation,” adding, “The audit could be a valuable opportunity.” It cautioned, “The Democratic Party should also refrain from questioning the merits of rulings still under judicial review.”
• Related Link.
• Related Link.

Begins with Cho Hee-dae, Ends with Kim Hyun-ji.

• National Assembly audits begin today. The People Power Party is focusing firepower on summoning Kim Hyun-ji (Director of Presidential Affairs). There is no special reason for her not to attend, but there are also no major pressing issues.
• The paralysis of the national computer network and the controversy over the arrest of Lee Jin-suk (former Chair of the Korea Communications Commission) are key points of contention. Disputes are also expected over unfair contracts in nuclear power plant exports and the Daewang Whale Project.
• With 195 corporate witnesses, behind-the-scenes negotiations are in full swing. Chung Eui-sun (Hyundai Motor Chairman) has been excluded, while Chey Tae-won (SK Chairman) and Chung Yong-jin (Shinsegae Chairman) are scheduled to appear.
• Lee Bong-kwan (Seohee Construction Chairman), suspected of offering bribes to Kim Keon-hee (former First Lady), submitted a non-attendance letter. “Preparing for surgery due to potential sudden death,” it claims.

A Yangpyeong Public Servant’s Suicide Note: “Worn Down by Persuasion and Coercion.”.

• Police have withheld the suicide note, leaving its contents unknown.
• According to the Korea Times, a Land Ministry secretary-general dispatched to the transition committee in April 2022—just before Yoon Suk-yeol’s administration took office—was confirmed to have instructed private contractors to review route changes. Despite contractors’ objections that “the economic feasibility assessment might be unfavorable,” the official repeatedly emphasized, “This is a priority for the transition committee.”
• Per the Kyunghyang Shinmun, there are also signs that this official received bribes worth 30 million won and funneled a construction project to a specific company.
• Related Link.
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Drug Investigation Pressure Allegations: Direct Orders to Lim Eun-jung.

• President Lee Jae-myung (President) reportedly urged Lim Eun-jung (Seoul Eastern District Prosecutors’ Office Chief) to conduct a thorough investigation, according to the Presidential Office.
• The president’s instructions were threefold: first, dispatch Baek Hae-ryong (former Yeongdeungpo Police Station Criminal Division Chief), who had previously investigated the case, to the investigation team; second, deploy additional prosecutors if necessary; and third, investigate without regard to rank or status.
• According to Baek Hae-ryong’s claims, this case resembles the Chae Sang-byeong incident—a 2023 October case where Yeongdeungpo Police Station apprehended a Malaysian drug trafficking ring, uncovering the involvement of Incheon Customs officials. There were also suspicions that Shim Woo-jung (then Incheon District Prosecutors’ Office Chief, former Prosecutor General) may have interfered to suppress the investigation.
• Given remarks that “Yongsan is taking it seriously,” rumors circulated that Yoon Suk-yeol and his wife might have been involved.
• While it is unusual for the president to issue investigation directives, assigning the case to Baek Hae-ryong—the whistleblower of alleged pressure—is unprecedented. A Presidential Office official stated, “It is only right for the person who knows the case best to lead the investigation.”
• The stage is set—now it’s Lim Eun-jung and Baek Hae-ryong’s turn to prove their mettle.

“Are They Out of Their Minds?”: The Proposed Chinese Shopping Ban Law.

• Kim Eun-hye (People Power Party Floor Leader) claimed, “Our citizens cannot properly enjoy health insurance benefits, voting rights, or real estate transaction freedoms abroad, yet Chinese nationals exploit loopholes in the system to ‘shop’ for medical care, elections, and property.”
• The bill has no chance of passing, and many claims are factually incorrect. The health insurance finances of Chinese residents in Korea have turned a surplus. More Seoul apartments are owned by Americans than Chinese.
• Chinese tourists spent an average of $1,622 last year—by far the highest. If one million visit, it generates 2.3 trillion won in economic benefits.
• Jeong Im-su (Dong-A Ilbo columnist) noted, “Spreading indiscriminate anti-Chinese sentiment and stifling the shoots of improved Korea-China relations is a matter directly tied to national interest.”
• Related Link.

Cho Kuk’s Chosun Ilbo Interview.

• When asked about admissions irregularities, he apologized again. “I accept the criticism that I’m guilty of ‘do as I say, not as I do,’” he said, adding, “But my actions will inevitably be judged as political.” He added, “I won’t claim I’ve been wronged.”
• “The Democratic Party is a conglomerate, while the Cho Kuk Innovation Party is a startup,” he emphasized, “so we’ll compete with our own brand.” There will be no merger—it’s not about entering the tiger’s den but catching the tiger from outside.
• Chosun Ilbo’s subheadings capture the interview’s intent:
• “Not the Democratic Party’s second brigade.”
• “Should center on the presidency, not Rep. Chung Cheong-rai.”
• “I am not pro-Moon.”
• Related Link.

Korean Desk Established in Cambodia.

• A Korean college student was kidnapped by a Chinese criminal organization, tortured, and died—officially recorded as cardiac arrest, though Cambodian police cited electric shock as the cause.
• From January to August this year, there have been 330 reports of kidnappings or detentions of Koreans in Cambodia.
• The police have belatedly decided to establish a Korean Desk and dispatch Korean officers to the Cambodian National Police headquarters.

Another Take.

Collapse of Japan’s LDP Coalition Government.

• Takahashi Sanae (LDP President) was widely expected to smoothly assume the premiership, but the coalition partner Komeito Party’s withdrawal has reduced the LDP to a minority government.
• The LDP holds 196 of the 465 House of Representatives seats—37 short of the 233 needed for a majority. Without Komeito’s 24 seats, it loses the casting vote.
• The Constitutional Democratic Party (148 seats), Democratic Party for the People (27 seats), and Japan Innovation Party (35 seats) could secure a majority if Komeito joins them.
• Saito Tetsuo (Komeito Leader) stated, “We’ve endured enough.”
• Scenarios have multiplied: Tamaki Yuichiro (DPFP Leader) could become prime minister, or the Japan Innovation Party might ally with the LDP. Without Komeito’s moderating influence, the LDP could shift further right.
• The Nikkei concluded, “Regardless of who becomes prime minister, forming a stable long-term administration will be difficult.”
• Related Link.

Midterm Review of Japan’s $550 Billion Investment.

• Ryosuke Akazawa (Japan’s Minister of Economic Revitalization) sparked rampant speculation when he told AFP, “Direct investment accounts for only 1–2% of the total.”
• This aligns with Kim Yong-beom (Presidential Policy Office Chief)’s remarks in July after tariff negotiations: “If equity (self-funded capital) is below 5%, the rest will be filled with loans and guarantees.”
• This isn’t new—he made similar comments in an August interview with the Nikkei Shimbun.
• Akazawa said, “I was taken aback when Trump compared it to a baseball player’s signing bonus, but it’s detailed in the MOU (memorandum of understanding).” Yet, based on what’s known, the MOU still heavily favors the U.S.
• Japan can only claim half the profits, and after recouping its investment, it’s limited to 10% of profits. If losses occur, Japan bears them entirely. The U.S. seems to want to wipe its nose without touching its hands.
• Akazawa’s claim that “the U.S. isn’t particularly interested in distinguishing between direct investment, loans, and guarantees” likely reflects his hopes. Trump has repeatedly emphasized “upfront payment.”
• As Akazawa suggests, Trump might care only about cash hitting the table—whether via loans or guarantees. Even if true, the condition remains: sufficient cash must be laid out to satisfy Trump.
• Akazawa noted, “For investments guaranteed by the Japan Bank for International Cooperation (JBIC) and NEXI (Nippon Export and Investment Insurance), the contribution ratio was 1.9%—we’re considering that level.” But this ratio is meaningless. Even if loans or guarantees reach $550 billion, Japan must hand over a significant portion of profits to the U.S.
• Akazawa insisted, “Washington isn’t particularly concerned with distinguishing investment, loans, and guarantees,” and “U.S. and Japanese positions aren’t different.” He made similar remarks to the Nikkei.
• However, the U.S. stance differs. Treasury Secretary Steven Bezanet told Fox News, “If Trump isn’t satisfied after quarterly evaluations, tariffs will return to 25%.”
• Related Link.
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Currency Swap? Do We Even Have Money to Exchange?

• South Korea’s situation is no different. The U.S. continues to demand a written agreement, but Seoul is stalling.
• Right after the tariff negotiations, Kang Yu-jeong (Presidential Spokesperson) said, “The discussions went so well that a formal agreement wasn’t even necessary,” but this might have been a misunderstanding on her part.
• Kim Jeong-gwan (Minister of Trade, Industry and Energy) once stated, “Practical trust matters more than putting it in writing.” Kang Hoon-sik (Presidential Chief of Staff) added, “There was an internal judgment that taking tactical time isn’t bad” and “There’s little evidence that rushing the negotiations would be advantageous.”
• Japan’s amount is larger, but considering economic scale, Korea’s burden is heavier. It’s possible Kim Yong-beom and others were overly optimistic or misjudged the situation.
• Kim Yong-beom reportedly thought of it as “matching policy funds with an American investment fund,” even claiming, “I’m someone who runs a fund,” but this turned out to be untrue. He said, “I understood the $350 billion as an investment ceiling,” but perceptions clearly diverged.
• Japan has already signed a blank check. To reverse it, Seoul must offer different conditions.
• Korea hasn’t signed yet, but has no real alternatives.
• Park Byung-won (Chairman of the Toegye Academy) analyzed, “Emphasizing upfront payment seems like a negotiation tactic.” He views the currency swap as no solution: “If exchange channels open, does Korea have a plan to secure this money in won? It’s practically impossible.”
• Once again, the Lee Jae-myung government faces a critical test of its diplomatic prowess.
• Related Link.
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Three Questions for Trump.

• First, why is he so harsh on South Korea? Kim Seung-ryeon (Editorial Director, Dong-A Ilbo) suggests it’s because its loyalty is less than Japan’s.
• Second, can’t the $35 billion be reduced further? Kim believes the U.S. knows it won’t fully deliver the $35 billion anyway—this is likely a bargaining tactic.
• Third, will the U.S.-ROK alliance endure? Even if the values-based alliance is damaged, a contract-based one will remain, depending on how much we accept U.S. demands.
• “A deal requires U.S. concessions. But what can we offer in return? Ultimately, the path lies somewhere in accepting America’s alliance vision—whether framed as ‘strategic flexibility,’ addressing China, or ‘alliance modernization.’”
• Related Link.

8,354 Students Attempted Suicide Last Year.

• 5,058 elementary, middle, and high school students attempted suicide in the first half of this year alone.
• Over 4 years and 6 months, 31,811 students attempted suicide or engaged in self-harm. During the same period, 940 suicides were recorded.
• In the Korea Disease Control and Prevention Agency’s Youth Health Behavior Survey, 2.8% of students reported having attempted suicide last year.

North Korea’s Military Parade.

• Rodong Sinmun described ballistic missiles as “aimed at our principal enemy.” Korean Central Television referred to “the most hostile state and the sharpest confrontation line.” The principal enemy is the U.S., while the most hostile state is South Korea.
• Li Chang (Chinese Premier) and Dmitry Medvedev (Chairman of United Russia) attended.

The Fix.

Living Long Isn’t Enough—We Need to Live Well.

• We must extend the working-age period.
• This is an era where people must endure 25+ years without income after retirement.
• Extending retirement age and guaranteeing post-retirement income are essential. Healthcare, caregiving, and housing welfare must also be upgraded. Naturally, health is wealth.
• Lee Sam-sik (Director, Hanyang University Institute for Aging Society) emphasized, “It’s time to design new systems suited to a ‘long-lived society.”

More in Their 70s Than 20s.

• As of last year, the population in their 20s was 6.3 million, while those in their 70s numbered 6.54 million.
• According to Statistics Korea projections, by 2044, the 20s population will shrink to 3.59 million, while the 70s population will swell to 7.89 million—more than double.

ICYMI.

Choi Tae-won-Noh So-young Lawsuit Ruling on the 16th.

• 1st trial awarded 66.7 billion won; 2nd trial jumped to 1.3828 trillion won.
• Two key issues in the Supreme Court: First, whether SK shares held by Choi Tae-won (SK Chairman) are subject to division. Second, whether 30 billion won from Roh Tae-woo’s (former president) slush fund was Choi’s seed money.
• Noh So-young (Art Center Nabi Director) claims the assets are marital property.
• Choi Tae-won insists, “They should be recognized as separate property acquired before marriage.”
• Critics argue, “Even if the 30 billion won flowed into SK, it should be returned to state coffers, not credited to Noh So-young’s contribution.” Noh So-young counters, “There is absolutely no evidence this was illegal funding.”
• Related Link.
• Related Link.

Short-Form Content Dominates the AI Transition.

• Everyone claims the world is changing, but the hottest trend right now is short-form content. So much so that Kakao has integrated it into KakaoTalk.
• Kim Heung-rok (Deputy Head, Seoul Economic Daily Tech Growth Bureau) pointed out, “We believed AI would revolutionize medicine, strengthen security, and boost manufacturing productivity—but before these expectations materialized, addictive content and algorithmic sophistication arrived first.”
• “We are a nation with Korean-language search engines and messengers. Naver and Kakao have succeeded by swiftly delivering services tailored to Korea’s realities, grasping the essence of technological revolution. In the AI era, beyond enhancing short-form algorithms with AI, what value can our platform companies provide? The answer may determine the potential of sovereign AI.”
• Related Link.

Why Japan’s 30% Share Isn’t Saving K-Abalone from Collapse.

• 1kg at 19,420 won—down 7% from last year.
• First, the recession. People aren’t eating abalone much.
• Second, it’s laborious to prepare.
• Third, shipments surged by nearly 12%. While flatfish and rockfish perished, abalone suffered less.
• Exports are rising too. Of $50 million, $40 million goes to Japan. There, 1kg costs 11,171 yen, while Korean abalone—even with tariffs and shipping—sells for 3,361 yen.
• Japan’s aquaculture is nonexistent, producing only 1,500 tons. Korea’s natural and farmed output exceeds 20,000 tons.
• Related Link.

Worth Reading.

Judicial Independence: A Civic Aspiration.

• “What citizens desire from the judiciary is not merely a strategy to protect its own power from external forces, but a judiciary that deliberates as public servants—what to cherish and what to refrain from, engaging citizens not only in courtrooms but also in public squares to discern the spirit of the times, and moving proactively as experts in response to calls for reform.”
• Choi Tae-hyun (Seoul National University Professor) noted, “Judicial independence is more urgently needed by citizens who feel wronged.”
• “The independence of trials is not a sacred, inviolable principle but a modern construct”—a reminder that it is “an essential means for guaranteeing freedom and human rights, but must not become an end in itself.”
• Related Link.

“I’m in a Hurry Too.”.

• “But if the process is flawed, that too is a problem.”
• These were the words of Woo Won-shik (National Assembly Speaker) on December 3 last year, ahead of the vote on the martial law repeal motion. Yoon Suk-yeol could not dispute the Assembly’s decision.
• Hong Jin-su (Kyunghyang Shinmun Social Affairs Bureau Chief) emphasized, “The greatest task of the Lee Jae-myung government is to restore the destroyed system” and “prosecutorial reform and judicial reform must also proceed based on proper procedures.”
• “While past trauma can fuel current reforms, it must not dictate the methods. Democracy is sometimes frustratingly slow. Yet it is precisely through these procedures—self-correcting errors and advancing with constituent consent—that it successfully reaches the finish line.”
• Related Link.

Bashing Cho Hee-dae Weighs on the Lee Jae-myung Government.

• This is the advice of Lee Chun-jae (Hankyoreh Columnist), who has strongly demanded judicial reform.
• The Moon Jae-in administration’s approval ratings first crossed the dead line in November 2020, when Cho Kuk (then Minister of Justice) referred Yoon Suk-yeol (then Prosecutor General) to a disciplinary committee.
• The issue was not necessarily the disciplinary action itself, but the COVID-19 pandemic and widespread public frustration over neglected livelihoods.
• Lee Chun-jae pointed out, “Repeating the same mistake is not an error—it’s incompetence.”
• “The priority must be livelihoods over two rabbits,” he argued.
• Related Link.