South Korea is facing a tectonic change of international environment. The original advanced countries are undergoing a stagnation never seen after 1945, while the growth of China and other developing countries is offsetting it globally. South Korea benefited much from the rise of the Chinese economy, the most remarkable benefit being the trade surplus; however, it is disappearing with China’s catch-up in technological capability. The rise of China poses a challenge to the US hegemony, undermining the rule-based order and making East Asia the arena of a hegemony contest, which is most threatening to countries like South Korea. The country needs the ability to manage relationships with the great powers to cope with it, but whether it has the ability is unclear. Compared with the nineteenth century, when Korea failed to adapt to a tectonic change, the overall ability has improved remarkably, but the ability to form domestic cohesion remains the least improved.

In 1997, a domestic financial crisis broke out with mass chaebol bankruptcy, and then a currency crisis broke out as Japanese banks suddenly pulled short-term loans out with a liquidity crisis at home. Japan was willing to provide the liquidity to cope with the situation; however, the United States brought the case to the IMF to open up South Korea’s capital market and realize its broader national interests in East Asia after the Cold War. South Koreans yet accepted the IMF conditionality willingly to utilize it as a momentum for the reforms they thought desirable. The country carried out thoroughgoing reforms while failing to consider the complementarities between the new and existing institutions. The reforms improved corporate governance and purged the system producing non-performing loans, but they undermined the mechanism of the high economic growth. They also led to the massive layoff of workers and the sale of assets to foreigners.

Chapter Four lays the groundwork by discussing the critical components of coal sector regulation in China, including pricing, investment approval, and capacity control. While the coal sector in China has been steered towards marketisation, government intervention, primarily through pricing regulation and investment approval, has created regulatory ambiguities and complexities for implementation. This chapter also discusses the implications of the capacity control mechanism on coal production and consumption, raising essential questions about the scope of fuel switching under the existing legal and regulatory arrangements.

Chapter Three provides an overview of the supporting mechanisms under China’s Renewable Energy Law and their effects in driving large-scale renewable energy investment in China. This chapter provides an in-depth analysis of the contributing factors, mainly from legal and regulatory perspectives, to the curtailment of renewable energy in the Chinese context. It also discusses newly adopted administrative measures to facilitate the integration of renewable energy. This chapter sheds light on the limited role of market reform in achieving large-scale renewable energy penetration in China and highlights the future direction of market development based on the latest reform objectives.

After the 1997 crisis, South Korea implemented the same industrial policy as before, promoting R&D as a major means. Yet moving labor from traditional to modern service industries came to mainly comprise the structural transformation. Some chaebol firms became true global players, but chaebol system has become less relevant for structural transformation while their corporate governance remains poor. Foreign ownership has not helped to improve it because of its own problems. The government promoted venture business aggressively, which was not so successful initially; however, venture business has become ever more important over the years. The inducement of foreign direct investment followed a similar pattern, but South Korea’s direct investment overseas came to outweigh foreign direct investment. The labor productivity and financial soundness of small and medium-sized enterprises fell in relation to large enterprises while they came to account for a higher share of employment, deepening the labor market dualism.

Chapter Eight focuses on the carbon offset scheme in China, with a particular emphasis on forestry carbon sequestration, which is a critical element of the nature-based solution to meet carbon neutrality requirements. This chapter examines the substantive and procedural requirements that support the functionality of the domestic carbon offset scheme. However, the existing regulatory framework for the offset scheme does not fully support the proliferation of forestry offset projects. The chapter identifies the challenges that affect the development of forestry carbon sequestration projects. To address these challenges, improvements are needed in the parameters of the methodologies and admission standards for new projects. Additionally, the legal ambiguity concerning the ownership of forestry carbon sinks needs clarification.

South Korea implemented vertical as well as horizontal industrial policies in the 1960s and 1970s. Though they performed better than in other developing countries, the cost of the vertical policy outweighed its benefit. Industrial policies went side by side with the emergence of chaebol in a full-fledged form. Chaebol led the structural transformation of the economy, but they also led the production of non-performing loans, helping to deepen the 1979 crisis. In the 1980s, the government lifted vertical policy but strengthened horizontal policy while restructuring chaebol. In the 1990s, South Korea jumped into the newly-emerging information and communication technology industries with industrial policy. Meanwhile, the government began to promote small and medium-sized enterprises and introduced fair trade policies in the 1980s. By the mid-1990s, chaebol emerged as global players in higher-technology industries; however, they had many problems, the financial market problem being the most serious, ready to precipitate a crisis.

The South Korean economy began to grow rapidly in the 1960s, enabling it to converge with the advanced countries in per capita product. It did so as the leadership change enhanced state capacity. The government intervened pervasively in the economy, making sure that firms receiving the favors used them properly. The size of the government itself was small, but the macroeconomic policy was inflationary. The resultant inflation affected the way financial policy, the most important policy at the time, worked. The export promotion policy degenerated as the government employed non-price measures while the price incentives fell in spite of the 1964 exchange rate reform because of inflation, whereas the reform helped to check import growth. Nonetheless, exports grew rapidly, providing important dynamism for the economy. South Korea coped with the emerging balance of payments problem by normalizing its diplomatic relationship with Japan and sending troops to Vietnam.

Chapter One discusses China’s carbon neutrality objective and the essential strategies to achieve this long-term climate goal. The strategies focus on decarbonising China’s power sector, enabling fuel switch from coal to natural gas, electrifying end-use such as transport and industry, and adopting carbon removal mechanisms. Implementing these strategies will depend on China’s energy legal and regulatory systems. This chapter introduces the research context and structure of the book, highlighting its contribution to academia and practice. The chapters of the book are arranged based on the four essential strategies and pathways to achieve China’s carbon neutrality target, providing legal details concerning the development of China’s energy legal and regulatory systems.

Economic growth slowed down as the reforms after the crisis introduced a less aggressive system. Banks lent money to households rather than firms as household loans were liberalized. The current account turned into a surplus, but it failed to produce the equivalent increase in net foreign assets because of the large net capital losses. The country now held more international reserves, but it was for self-insurance purposes after throwing open the capital market. The country failed to avoid a currency crisis in 2008, which was resolved through currency swap agreements. The growth rate fell further with the ensuing Great Recession, and the country faced a deflation threat in 2013, but it was slow to use fiscal policy to cope with it. South Korea fought the pandemic in 2020 well but is currently having difficulties with its disinflation policy as it has to heed the risks in international as well as domestic financial markets.

South Korea has become the only country to make the transition from a developing to a developed country after the Second World War; however, its development process has been a tortuous one. This book first explains how Korea failed earlier in history to become a colony and how its economy changed during the colonial period. The book then describes the provision of the conditions for future growth in 1945–1960 and explains the launching of the high economic growth in the 1960s. The book next discusses the development process after the high economic growth began until the 1997 crisis, examining the three conditions for sustaining growth: macroeconomic management, structural transformation, and social conflict management. After discussing the 1997 crisis and the ensuing reform, the book explains how economic development proceeded subsequently until today, again by examining those three conditions for sustaining growth. Finally, it briefly discusses questions for the future.