No Reversal for Lee Hye-hoon.

• Lee Jae-myung (President) withdrew the nomination of Lee Hye-hoon (Minister of Planning and Budget nominee).
• Hong Ik-pyo (Chief of Political Affairs at the Blue House) said, “Despite serving three terms as a lawmaker in a conservative party, she failed to meet public expectations.” He did not mention insufficient vetting.
• Hong explained, “Choosing to withdraw the nomination rather than accepting a resignation reflects responsibility as the appointing authority.”
• According to a Blue House official, Lee Hye-hoon had insisted on not resigning voluntarily.
• Speculation arises that she may face investigation rather than become a minister.
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What Matters Now.

Lee Hae-chan, the man who made four presidents.

• He collapsed from a myocardial infarction during a business trip to Vietnam and was moved to a hospital, but died.
• He was called the Democratic Party’s kingmaker. A seven-term lawmaker and a de facto prime minister. As education minister, he overhauled the college entrance system, creating the “Lee Hae-chan generation” (criticized for lowering academic standards).
• Born in 1952. While attending Seoul National University, he was sentenced to 15 years in prison for the Mincheonghakryeon incident but was released after one year due to a suspended execution. He ran Gwangjang Bookstore and Dolbegae Publishing.
• He graduated 15 years later and entered politics through a recommendation by Kim Dae-jung (former president). Elected as a Peace Democratic Party lawmaker in 1988, he served as education minister under Kim Dae-jung and prime minister under Roh Moo-hyun. As Democratic Party leader under Moon Jae-in, he secured 180 seats.
• Lee Jae-myung (president) followed Lee Hae-chan as a mentor since his Seongnam mayoral days. The “Lee Jae-myung bandwagon” was also Lee Hae-chan’s work.
• A senior Democratic Party lawmaker assessed, “At every election, he stood by the person who could create the most change.”
• Lee Jae-myung left a message: “We have lost a great mentor in history.”
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U.S. Immigration Agent Kills Another Citizen.

• This time, it happened in Minneapolis. The victim was helping direct traffic at a protest.
• One agent sprayed tear gas at demonstrators, causing a participant to collapse. As another person tried to help the fallen individual up, other agents tackled and shot the victim.
• The victim was Alex Jeffrey Pretti, a nurse at a veterans’ hospital. The U.S. government claims Pretti was carrying a gun.
• However, footage shows no evidence he drew or threatened with a weapon. Over 10 shots were fired within 5 seconds.
• The New York Times noted the video has become “a Rorschach test for America’s social divisions.”
• This is the second death in a week, following René Good. Both were U.S. citizens.
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Fast Ends, Gains None for Jang Dong-hyeok.

• Failed to secure a special prosecutor. Couldn’t resolve the Han Dong-hoon (former People Power Party leader) issue. Han Dong-hoon never filed for a retrial.
• Opinions abound that “Han should apologize and Jang should withdraw the expulsion motion,” but Han hasn’t apologized and likely won’t.
• In a Gallup Korea poll, the People Power Party’s approval rating dropped 2 percentage points to 22%.
• Lee Jae-myung (President)’s approval rating jumped from 58% to 61%—a press conference effect.

48% of People Power Party Supporters Say “Han Dong-hoon’s Expulsion Was Appropriate.”.

• One People Power Party lawmaker said, “Fasting laid the groundwork for conservative unity—pushing ahead with Han Dong-hoon’s expulsion is tantamount to self-destruction.”
• Han Dong-hoon, highlighting rallies by supporters demanding the disciplinary action’s reversal, assessed, “This is the real conservative consolidation.”

Deep Dive.

Multiple Homeowners Face Revived Surcharge.

• Higher tax rates will apply to capital gains taxes for those owning multiple homes.
• Capital gains tax rates range from 6–45%, but in regulated areas, two-homeowners face an additional 20 percentage points, while three-or-more homeowners face an extra 30 points. This is stipulated in Article 104 of the Income Tax Act.
• The Yoon Suk-yeol government delayed the law—originally enacted under Moon Jae-in and set to take effect in May 2022—by one year via an enforcement decree, with the postponement ending on May 9th.
• There were predictions that the Lee Jae-myung (President) administration would extend the delay for another year, but Lee posted on X (Twitter), “No extension is being considered at all.” The message: multiple homeowners should settle their properties before May 9th.
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May 9 Deadline: Will Multi-Homeowners List Properties?

• Hankyoreh warned it could instead trigger a listing freeze.
• Woo Byung-tak (Shinhan Premier Senior Advisor) said, “The current capital gains tax surcharge is defined by enforcement decree—at minimum, an action elevating it to statutory law is necessary.”
• Critics argue that only by increasing holding tax burdens will multi-homeowners list properties. Since capital gains taxes apply only when selling, many may simply hold out. Chae Sang-wook (Connected Ground CEO) noted, “If transaction costs rise without increasing holding costs, listings will inevitably freeze.”
• In an editorial, Hankook Ilbo cautioned, “Lee Jae-myung’s belief that ‘no market can defeat the government’ is somewhat dangerous,” adding, “Even with good intentions, excessive government intervention breeds backlash and unintended consequences.” “Regulatory overconfidence is risky,” it concluded.
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Lee Jae-myung’s X Politics.

• He flooded X (Twitter) with posts. Major issues piled up over the weekend alone.
• He cited an Artificial Analysis article stating, “South Korea has solidified its position as the definitive third in AI,” and commented, “When you can’t avoid it, you might as well enjoy it.”
• He shared a news screenshot titled, “Cambodian crime networks eradicated,” and praised, “Thanks to the dedication of public officials—police, NIS, and others.”
• Regarding the deferred multi-homeowner capital gains tax surcharge, he stated, “It was already set for February 2025,” and emphasized, “Unfair benefits from abnormal circumstances must be eliminated, no matter how difficult.”
• “Should the benefits of holding out exceed the costs? There are countless ways to normalize the abnormal. When seriously ill, you endure pain and costs but operate. A temporary ache leads to better health and greater earnings.”
• Lee Jae-myung’s X account has 970,000 followers and follows 460,000 users.
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U.S. National Defense Strategy: “South Korea Bears Primary Responsibility for Deterring North Korea.”.

• “South Korea must bear primary responsibility, with the U.S. providing decisive yet limited support.” This is outlined in the NDS (National Defense Strategy), a subordinate document to the NSS (National Security Strategy).
• Speculation arises that the U.S. Forces Korea’s mission may shift from North Korea deterrence to countering China.
• Lee Jae-myung (President) posted on X, “It is unthinkable that South Korea, with the world’s fifth-largest military power, cannot defend itself.”

Why North Korea’s Denuclearization Was Omitted from the U.S. Defense Strategy.

• The U.S. administration’s shift in stance could be a signal. Trump made remarks on multiple occasions that seemed to acknowledge North Korea’s nuclear status.
• The JoongAng Ilbo editorial criticized, “Lee Jae-myung’s (President) three-stage proposal for resolving the North Korean nuclear issue—freeze, disarmament, denuclearization—could give Pyongyang an excuse.”
• North Korea insists that only nuclear-armed states should engage in disarmament talks. This implies South Korea has no place at the table.
• The JoongAng Ilbo emphasized, “We must ask what the implications are of a defense strategy without denuclearization and persuade allies to maintain cooperation.”
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Xi Purges Military No. 2.

• China’s Ministry of National Defense announced investigations into Zhang Youxia (Vice Chairman of the Central Military Commission) and Liu Zhenli (Military Commissioner) for disciplinary and legal violations.
• Analysts suggest Xi Jinping’s (Chinese President) regime will strengthen. The likelihood of Xi’s fourth term has also increased.
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Democratic Party Supporters Say “KOSPI Will Rise” at 64%.

• People Power Party supporters stood at 24%.
• “KOSPI Will Fall” saw 11% for the Democratic Party and 42% for the People Power Party.
• The results come from a Gallup Korea poll. Lee Jae-myung (President) shared it on X, remarking, “It’s also regrettable.”
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“It Was When My Son’s Marriage Was at Its Worst.”.

• Lee Hye-hoon’s (former Minister of Planning and Budget nominee) explanation was outlandish.
• Reconstructing the timeline:
• In August 2023, her eldest son was employed at the Institute for International Economic Policy in Sejong but continued living in his parents’ home.
• In December 2023, her eldest son acquired a newlywed home in Yongsan, Seoul, and held a wedding ceremony—but did not register the marriage. His official address remained his parents’ home.
• In February 2024, only the daughter-in-law registered her residence at the newlywed home.
• In July 2024, the daughter-in-law suddenly moved out. A few days later, Lee Hye-hoon’s husband applied for a subscription to Raemian One Pentas. The next day, Lee Hye-hoon, her husband, and their three sons moved their addresses to the newlywed home. This all happened within days.
• A month later, in August 2024, they won the subscription for One Pentas. The following month, September 2024, Lee Hye-hoon, her husband, and their three sons registered their residence at One Pentas. The next day, the daughter-in-law moved her address back to the newlywed home.
• The eldest son and daughter-in-law finally registered their marriage in November 2025.
• Lee Hye-hoon’s explanation:
• After the wedding, the couple’s relationship deteriorated to the worst point, preventing them from registering the marriage. They lived with her parents. This timing coincidentally allowed them to receive higher subscription points, coincidentally win the subscription, and coincidentally resolve their marital issues to move out. Coincidentally, this was the day after the Ministry of Land, Infrastructure, and Transport announced its investigation into fraudulent subscriptions.

Another Take.

Was the “Airport Reversal” Just Chung Chung-rae’s Delusion?

• Lee Jae-myung (President) and Chung Chung-rae (Democratic Party leader) have subtly clashed over the supplementary investigative authority of the Public Prosecutors’ Office.
• Lee told Chung, who greeted him at the airport, “There should be mutual checks and balances. We can’t just eliminate prosecutorial authority.” This implies that weakening the Public Prosecutors’ Office too much is problematic.
• The Blue House spokesperson’s office also released a message: “The President instructed the party to deliberate and the government to gather opinions.”
• Jeong Woo-sang (Chosun Ilbo columnist) pointed out, “Normally, this is where things would end, with behind-the-scenes coordination between the President and the ruling party.”
• Yet Chung Chung-rae declared, “The ‘airport reversal’ means the principle of separating investigation and prosecution is more likely to be upheld,” a completely different take.
• Days later, Lee Jae-myung said at a press conference, “I think supplementary investigations shouldn’t happen, but there are exceptional cases where they’re necessary.” This could have been a signal to Chung to tone it down.
• A Democratic Party official met by Chosun Ilbo said, “The conflict between the President and the ruling party will eventually explode.” While this might be Chosun Ilbo’s wishful thinking, there are also observations that Kim Min-seok (Prime Minister) is eyeing the Democratic Party leadership rather than the Seoul mayoral position. Chung Chung-rae’s strong push for a one-person-one-vote system might stem from this context.
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Can Chung Chung-rae’s Leadership Work?

• The merger between the Democratic Party and the Cho Kuk Innovation Party is currently pending the latter’s decision.
• Chung Chung-rae unilaterally proposed the merger without coordinating with senior party members. While there is no outright opposition, many criticize the approach of first announcing the merger and then seeking approval as inappropriate.
• One Democratic Party lawmaker emphasized, “A strong charismatic leader’s authority might suit a persecuted opposition party, but this is an era of member sovereignty.”
• Cho Kuk (Cho Kuk Innovation Party leader) stated, “This is when we must hold our ground firmly.” Discussions can only proceed once the Democratic Party resolves its internal logistics.
• Cho Seung-rae (Democratic Party Secretary-General) said, “We must finalize this within two months at the latest.” With local election candidate registration on June 3 and the need to confirm candidates a month in advance, time is pressing.

Hyundai’s Robot Costs Could Drop to $30,000 at 50,000 Units.

• Hyundai Motor’s subsidiary Boston Dynamics’ humanoid robot Atlas currently costs $130,000–$140,000 per unit. Samsung Securities estimates mass production of over 10,000 units would bring the price below $50,000.
• Producing 50,000 units could reduce costs to $30,000 (approximately 43.39 million won).
• At 10,000 units, the actuator—a core component—costs as low as $561 per unit. Each robot uses 31 actuators. The largest expense is data center depreciation, accounting for $26,666 per robot.
• Compared to cars, robots reach break-even far faster. Cars require 100,000 units to break even due to complex processes and numerous parts (30,000 in internal combustion engines, 12,000 in EVs), with fixed costs (presses, molds) consuming 6–12% of expenses. Humanoids, with 5,000–10,000 parts and 1–2% fixed costs, achieve economies of scale at just 10,000 units.
• Samsung Securities forecasts Hyundai could reduce costs by 1 percentage point annually depending on deployment speed. If robots permeate the entire value chain, costs could drop by 50%.
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Robot Proliferation Could Cut Chinese Labor Costs to One-Sixth.

• U.S. manufacturing labor costs range from $70,000 to $80,000.
• As of 2023, U.S. automakers’ hourly labor costs were $65, projected to rise to $88 by 2027.
• A 24-hour Atlas robot’s hourly wage starts at around $9.40, dropping to $1.20 at 30,000+ units—about one-sixth of Chinese labor costs. Tesla’s Shanghai plant operates at roughly $7 per hour.
• Hyundai’s U.S. plant costs $65/hour, while its Korean plant costs $38.
• Robot base costs include not just hardware but added software expenses. Samsung Securities estimates software at $99/month for 30,000-unit production. Maintenance costs are about 5% of the robot’s price.

Physical AI’s Bottleneck: Contextual Data.

• Tesla, which learns from real-world action data, has seen rapid improvements in driving performance, while Waymo has not significantly advanced. Unlike Tesla, which ingests video data into its learning loop, Waymo relies on location-based data, leading to assessments that its scalability is limited.
• Google’s choice of Boston Dynamics as a partner also stems from the need for data learned through real-world robot testing.
• It’s a cyclical structure: virtual training → real-world data → improved learning. Just as Tesla collects data on actual roads, Hyundai must collect data in its factories.
• Lim Eun-young (Samsung Securities researcher) explained, “As real-world behavioral data accumulates, actions to avoid become clear, and the robot develops its own understanding of situations (context), creating behavioral policies. As AI models develop hidden layers (tacit knowledge), they can respond to long-tail unexpected scenarios.”
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Kim Min-seok Meets Vance: “No Discrimination Against Coupang.”.

• Claims emerged that the Korean government was unfairly attacking a U.S. company. Some Coupang investors have filed an ISDS (Investor-State Dispute Settlement) against the South Korean government.
• The intent-to-mediate document states, “As Coupang began seizing market share from large Chinese companies with close ties to the Democratic Party and Lee Jae-myung, the government weaponized administrative power to obstruct Coupang’s operations.”
• Kim Min-seok (Prime Minister) met with JD Vance (U.S. Vice President) and explained, “There was no discriminatory treatment.” Vance said, “I understand there may have been legal issues with Coupang.”
• The Hankyoreh editorial criticized, “A company that earns nearly all its revenue and profit in South Korea has crossed a line by resorting to lies to drive a wedge between the U.S. and South Korean governments.”
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U.S.-Japan Joint Intervention Drags Down the Won Exchange Rate.

• Both the yen-dollar and won-dollar exchange rates fell by 1.7%. The New York Federal Reserve launched a survey of major investment banks on the appropriateness of the yen exchange rate. This measure followed Taya Satsuki (Japan’s Finance Minister)’s meeting with Janet Yellen (U.S. Treasury Secretary).
• From the U.S. perspective, there are concerns that rising Japanese government bond yields could dampen the upward momentum of U.S. stocks.
• Lee Jae-myung (President) had previously stated at a press conference, “The won-dollar exchange rate is somewhat linked to the yen-dollar exchange rate,” adding, “It’s said to drop to around 1,400 won in a month or two.” This forecast may have been made with such considerations in mind.

The Fix.

Basic Sanitary Pads? The Root of the Problem Must Be Addressed.

• It’s true that Korean sanitary pads are more expensive than overseas products. A small-sized product costs 352 won, while on Amazon it’s around 234 won. For panty-type products, Korea charges 1,556 won, whereas Amazon lists them at 969 won.
• Lee Jae-myung (President) remarked, “Government support only helps to legitimize price gouging,” and instructed, “Review a plan to produce low-cost sanitary pads that meet basic quality standards and supply them free to specific groups.”
• The Women’s Environmental Network welcomed the “active willingness to resolve the issue” but criticized, “Proposing free distribution without first examining structural factors distorting prices—such as distribution stages, import regulations, and certification-labeling systems—is reversing the policy sequence.”
• The rise in sanitary pad prices stems from safety concerns. The explanation is that consumers opted for premium products like organic and eco-friendly pads, perceived as safer.
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Labor-Robot Conflict? Is Negotiation Possible?

• Labor-robot conflict has emerged as a core agenda.
• Jang Young-jae (KAIST Professor) explained, “For robots to achieve productivity beyond humans, factories must operate 24/7, and supply chains and overall operations of component suppliers must shift to robot-friendly systems.”
• “Such a systemic overhaul will require at least a decade,” he added.
• Lee Byung-hoon (Chung-Ang University Professor) emphasized, “This is also an opportunity to create a model case for exemplary negotiations,” and stressed, “Companies and unions must find ways to minimize negative impacts on jobs and working conditions through communication and consultation.”
• A Metal Workers’ Union official stated, “When changes occur in employment and work methods, discussing them with the union aligns with the purpose of collective agreements,” and clarified, “The Hyundai Motor Union’s key stance is to negotiate with management regarding the introduction of ‘Atlas.’”
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ICYMI.

Twice as Expensive: TSMC’s Arizona Factory.

• Taiwan’s TSMC is building a semiconductor plant in the Arizona desert.
• The 4.62 million square meter site—larger than Central Park—features $165 billion in facilities, ranking among the most expensive projects on Earth.
• A 12,600-employee Intel factory also operates nearby. Plans include building an entirely new city called Halo Vista for 9,000 households.
• According to the New York Times, the Arizona plant costs 50% more to build than one in Taiwan. It required 18,000 approvals and took more than twice as long.
• The facility needs 61.5 million liters of water daily, with wastewater treatment systems recycling it.
• The real issue is labor. “It’s faster to do it ourselves than teach someone,” one worker remarked. Over 500 employees were even relocated from Taiwan.
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‘Dubai Chewy Cookie’ Campaign Sparks Blood Donation Surge.

• It’s short for “Dubai Chewy Cookie.”
• Blood donations doubled at locations hosting the ‘Dubai Chewy Cookie’ giveaway event. Seoul Central Blood Center saw daily donations rise from an average of 221 to 561 during the campaign. Other centers also reported near-doubling.
• Donations at local cafes increased too. The Jeondu Hwajung Party donated 200 Dubai Chewy Cookies to the blood center.

Grade Inflation Reaches Critical Levels.

• Korea University’s College of Humanities awards A grades or higher to 69% of students. Seoul National University’s College of Humanities stands at 65%.
• This is because law school applicants must have A grades or higher. Law school applicants have more than doubled from 8,246 in 2016 to 19,057 this year.
• Even Sogang University, which had insisted on relative grading, increased its maximum A grade ratio from 30% to 40% starting last year.
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Brokers’ Research Reports Fall Short.

• Analyses show a heavy skew toward buy ratings and declining informational value.
• The findings come from Kim Joon-seok (Capital Markets Institute Research Fellow)’s analysis of 700,000 listed company reports from 2000 to 2024.
• Excess returns sharply declined after 2013.
• The proportion of buy-rated stocks doubled from 38% pre-2012 to 69% post-2012.
• The score gap between top and bottom consensus portfolios narrowed from 1.12 to 0.75—too many buy ratings make it hard to distinguish quality.
• Kim Joon-seok emphasized, “Evaluation-reward systems should prioritize predictive objectivity and accuracy over brokerage revenue contributions, and the research sector’s independence must be strengthened so analysts’ reputations align with information quality.”
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“South Korea’s Exports Surpass Japan” Dong-A Ilbo Exclusive Is Not Factually Accurate.

• South Korea’s exports last year were $709.4 billion, while Japan’s were 110.4 trillion yen. Dong-A Ilbo claimed that at current exchange rates, Japan’s exports amounted to $695.9 billion, thus asserting that South Korea had overtaken Japan.
• The issue lies in the exchange rate. When converted using the average exchange rate for last year, Japan’s exports totaled $738 billion—still slightly higher than South Korea’s.
• Japan does not officially report exports in dollar terms, but CEIC data shows cumulative exports of $678.2 billion through November. Adding December’s exports of 10.4115 trillion yen (converted at December’s rate of 156.7 yen per dollar, or $66.5 billion) brings the total to $744.7 billion. While final figures may vary slightly, the gap remains significant.
• The Dong-A Ilbo headline was revised from “[Exclusive] Annual Exports Surpass Japan for First Time… South Korea 1.041 Quadrillion Won Vs. Japan 1.021 Quadrillion Won” to “[Exclusive] Annual Exports Nearly Surpass Japan… South Korea $13.5 Billion Ahead at Current Rates.” However, comparisons based on current exchange rates remain largely meaningless.
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Worth Reading.

Did the Public Really Approve of Nuclear Power?

• Polls alone might suggest so. Kim Geon-woo (Participation and Solidarity Policy Planning Team Manager) pointed out, “Public opinion is not necessarily the people’s will, and reflecting it cannot always be political.” The distinction lies in shaping public will versus merely identifying it.
• Lee Kwan-hoo (National Assembly Legislative Research Service Director) also warned, “A vote lacking diversity and debate cannot be democratic, no matter how much consensus it garners.”
• Kim Geon-woo added, “If claiming to be a government of popular sovereignty, more attention must be paid to public discourse.”
• Related Link.

The Democratic Party Performed Better When There Was a Left Wing.

• When Kwon Young-gil (then Democratic Labor Party candidate) was present, Roh Moo-hyun (then Democratic Party candidate) could expand toward the center.
• When Lee Jung-hee (then Unified Progressive Party candidate) withdrew in support of Moon Jae-in (then Democratic Party candidate), Park Geun-hye (then Saenuri Party candidate) won.
• Sung Han-yong (senior Hankyeoreh reporter) analyzed, “Over time, Democratic Party members’ opinions will likely lean toward merger.” But it’s a story that this may not be a sufficient condition for electoral victory.
• Han Gyu-seop (Seoul National University professor) pointed out, “As the Cho Kuk Innovation Party takes more extreme positions, there’s a clear effect of making the Democratic Party appear relatively moderate.” While the disarrayed People Power Party is giving the Democratic Party indirect benefits, the Cho Kuk Innovation Party’s occupation of the far left significantly expands the Democratic Party’s reach toward the center.
• In an editorial, Kyunghyang Shinmun emphasized, “For the merger of the two parties to hold meaning, it must be a merger of values,” and stressed, “They must be able to explain how politics can improve if they merge.”
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