Thought - What if the Korean War Restarted?

[wdolson]

Recent sabre rattling on the Korean peninsula got me thinking about what would happen to the world economy if the Korean War started up again (the first one never technically ended). In 1950 many countries poured resources into the Korean War because of it's location with respect to other places of interest to the world powers, not because it was of any economic value to anybody. Both Koreans were practically starving to death when the war started.

Since then South Korea has become a world economic power and for the auto industry not only is it a major car maker now, it supplies a lot of car parts to other car makers. And for the world EV market, it supplies an outsized share of the non-Tesla EV and hybrid batteries. Daimler recently made a deal to buy something like 2 GWh/yr of batteries from South Korea.

A lot of Korea's industry is in Seoul which almost certainly would be devastated in the first days of a war with the North. The North Koreans have lots of artillery pointed at Seoul and their initial barrage would probably do significant damage to the city's industrial heart.

Even if North Korea was easily defeated, the damage to South Korea would probably knock a fairly good chunk of their battery production offline for a year or two. If it happened in the next couple of years it would be happening just as the Model 3 hit production. Tesla has announced they will be getting tires from Hankook, probably made in South Korea, but changing tire suppliers would be a minor blip in production. Tesla has teamed up with the South Korean company Mando for some parts for the Model 3, but I believe the factories where most of the parts are coming from are in the US.

A war in South Korea probably wouldn't disrupt the battery supply for US hybrids. I believe most of the Korean batteries for US made hybrids come from a factory in Michigan. But the Bolt would almost certainly go out of production for the duration of the war.

So many car parts come from so many places, only the car makers know which parts in their cars come from South Korea, but we do know that a fairly large share of the world's battery production for EVs is within range of missiles from North Korea and at least some is within North Korean artillery range (in Seoul or near there).

 

[anticitizen13.7]

I'm more concerned about integrated circuits, display panels, and other electronics production.

Samsung produced a lot of flash memory, OLED panels, LCDs, and is a foundry for its own Exynos and Apple's Ax series CPUs. Companies like LG and Hynix also produce critical electronic parts. Not all fabs are located in the Seoul area or even in S. Korea, but destruction of some factories, company headquarters, and R&D centers could have repercussions lasting years.

A war on the Korean Peninsula could also result in missile strikes against Japan. And while I doubt that North Korea would attack Taiwan or Mainland China, nothing is impossible. TSMC is another critical electronics foundry.

The cynical side of me views war with North Korea as inevitable, since the stated goals of each side are irreconcilable. The North Koreans want nuclear ICBMs as a deterrent against becoming the next Iraq. The U.S. government, and President Trump have publicly stated that they will not allow North Korea to posses nuclear ICBMs. Presumably because the North Koreans would use the weapons to extort Asian neighbors for resources, or because the North could sell the weapons or knowhow for money.

The window for diplomacy is rapidly closing. War will soon be the only option.

 

[McRat]

We have been preparing for an NK ballistic missile attack for 20 years that I know of. Japan has not been sitting on their hands either.

Russia and China are the wild cards. Russia not as much.

China is still very much Communist with long term territorial ambitions. Their core doctrine never changed.

Doesn't it puzzle anybody why China would continue to bolster NK, when NK is arming Islamic radicals, and China is now having their own problems in that area?

China wants communist neighbors. Globally. They always have. Communism can only truly work if ALL natural resources and labor are under central communist guidance. But they are patient. North Korea, Vietnam, Hong Kong, South China Sea, (Taiwan), etc.

 

[EarlyAdopter]

A shooting war in Korea would result in a stock market drop the likes of which we haven't seen since 9/11 or the collapse of Lehman Brothers. People under estimate the damage, loss of life, and the connection of South Korea to global supply chains and trade. You'd be looking at a massive economic implosion globally, with every major stock market crashing and probably 2 to 3 years of recession. And that's assuming no nukes were used...

 

[anticitizen13.7]

China is still very much Communist with long term territorial ambitions. Their core doctrine never changed.

Doesn't it puzzle anybody why China would continue to bolster NK, when NK is arming Islamic radicals, and China is now having their own problems in that area?

China has long abandoned any pretense of Communism. They could have kept at it, but I suspect that the Chinese government was smart enough to see that a future like Cuba would only weaken China's economy and prevent China's ability to grow into a global power.

The Chinese system today is best described as an authoritarian oligarchy that actively pushes policy to help domestic private enterprise. This involves things like trade policy favoritism and using state espionage to supply domestic companies with information about foreign competitors. People are free to make money, but not free to organize critical responses to the central government.

China bolsters North Korea for 2 major reasons. They do not want the North to collapse and send millions of refugees into northern China. They also don't want a unified Korea as this would put a major US ally on their doorstep. North Korea is a buffer zone.

 

[anticitizen13.7]

A shooting war in Korea would result in a stock market drop the likes of which we haven't seen since 9/11 or the collapse of Lehman Brothers. People under estimate the damage, loss of life, and the connection of South Korea to global supply chains and trade. You'd be looking at a massive economic implosion globally, with every major stock market crashing and probably 2 to 3 years of recession. And that's assuming no nukes were used...

I agree with all of this.

If nuclear weapons were used, some scientists believe that the detonation of a couple dozen nukes in a regional war could kick up enough dust to possibly cause crop failures worldwide over 2-3 year periods.

The hunger and starvation would be horrific, especially in devoping nations thst have high population density, low food production efficiency, and a lack of technological ability to adapt.

 

[Shock-On-T]

I agree with all of this.

If nuclear weapons were used, some scientists believe that the detonation of a couple dozen nukes in a regional war could kick up enough dust to possibly cause crop failures worldwide over 2-3 year periods.

The hunger and starvation would be horrific, especially in devoping nations thst have high population density, low food production efficiency, and a lack of technological ability to adapt.

Unlikely. There were hundreds of above ground tests in the 50s with no noticeable effect. The world is very big.

 

[thegruf]

succinctly ... everybody loses except for China who win in the long term.

Apply the above rationale, analyse current behaviors and extrapolate.
It is that extrapolation that is indeed very grave, as other will be making the same analysis and equally determined to make it (not) happen.

 

[wdolson]

A shooting war in Korea would result in a stock market drop the likes of which we haven't seen since 9/11 or the collapse of Lehman Brothers. People under estimate the damage, loss of life, and the connection of South Korea to global supply chains and trade. You'd be looking at a massive economic implosion globally, with every major stock market crashing and probably 2 to 3 years of recession. And that's assuming no nukes were used...

The last time industrialized countries were hit by war at home was World War II. The world markets weren't as tied together as they are now. Manufacturing was much more local then with all the parts for something usually only traveling a few hundred miles at most. These days manufacturing centers all over the world are dependent on parts made in South Korea, so a disruption there could idle factories in Germany, the US, and who knows where else?

It would be a mess, but if people were determined to put things back together again, the economy could be back on its feet in less than 10 years. Most of Europe was knocked flat by World War II and the west was mostly rebuilt within 10 years thanks to the Marshall Plan.

I agree with all of this.

If nuclear weapons were used, some scientists believe that the detonation of a couple dozen nukes in a regional war could kick up enough dust to possibly cause crop failures worldwide over 2-3 year periods.

The hunger and starvation would be horrific, especially in devoping nations thst have high population density, low food production efficiency, and a lack of technological ability to adapt.

From the sort of limited exchange likely in a Korean conflict, there wouldn't be enough dust kicked up for a nuclear winter, but the west coast of North America would get fallout (we had measurable increases in radiation from Fukoshima). The biggest concern would be the destruction of electronics from EMP. One nuke set off at altitude over the Sea of Japan would knock out the electrical and electronic infrastructure for 1 billion people or more. Hardened systems (like a lot of military systems) would survive, but the civilian infrastructure would be severely damaged and that could easily take a decade to replace.

The worst part is most of the manufacturing infrastructure needed to replace all those electronic devices that got fried would also be destroyed by the pulse because that region is the most intense electronics manufacturing region in the world. It would be good for chip plants in other parts of the world, but it would probably cause the worst famine in history. Some of the largest cities in the world would have no electricity and few vehicles would be able to move. Portable generators could probably keep the lights on here and there, but the refrigerators where most of the frozen and refrigerated food are stored would be damaged beyond easy repair by the pulse. Without any vehicles moving, there would be no way to get food into the cities. Other services would be out too. Imagine Tokyo without a functioning sewage system? The city would become unlivable within a few days, even if there was enough basics like water and survival rations to go around.

Economically the entire world's economy would have a massive hole blasted in it. There would be no new consumer electronics available for some time for anything. That would cripple lots of other industries that depend on electronics in their products like the automotive industry. Tesla is so vertically integrated, they would probably be back up and running before anyone else, but they might be making stripped down cars with less electronics for a while. They would probably be pressed into service to produce vehicles that could be used in the crisis. Shiploads of trucks would likely have to be sent to the region to just move essentials around. It may also create a refugee crisis as people in the affected zone flee to parts of the world that still have power.

That would be the worst case scenario though. I expect the Japanese, South Koreans, Chinese, and US all have some idea where North Korea has their missiles and/or nukes stored and those locations will be targeted almost immediately if war breaks out. The US has also installed an anti-ballistic missile system in South Korea. Those systems can get overwhelmed with a large scale missile strike, but they aren't too bad with a handful of missiles and I doubt North Korea could get a lot of ballistic missiles in the air before their launch sites were hit.

North Korea is one of the world's intractable problems. Nobody in the region really want them to get very strong, but the Chinese don't want the US or South Korea on their border and nobody wants the Chinese on South Korea's border. Personally I think the best solution for the people of North Korea would be to let South Korea absorb the North like Germany did when it reunited. South Korea would take a hit economically and the two cultures have grown further apart than the two Germanies had, but South Korea would be better for the peninsula than just about anyone else. The biggest trick would be to get the Chinese to accept that solution.

Realistically South Korea would have no interest in a war with China. They know they are a pipsqueak next to China, but the Chinese are a bit paranoid about their neighbors. They did have a large percentage of the country overrun by the Japanese in living memory.

If the Korean war does go hot again (and I think that probability has gone up sharply in the last 10 years), I don't think the North will do very well. South Korea is very strong today and they have strong allies. China might get involved if the North was getting overrun and it looked like the allies might not stop. They got involved in the Korean War the first time because they weren't sure the UN was going to stop, but the communication lines with China are better now than they were then and the rest of the world respects China a lot more. However, not all the world leaders who would be dealing with China in such a scenario are exactly competent at their job.

 

[ItsNotAboutTheMoney]

A shooting war in Korea would result in a stock market drop the likes of which we haven't seen since 9/11 or the collapse of Lehman Brothers. People under estimate the damage, loss of life, and the connection of South Korea to global supply chains and trade. You'd be looking at a massive economic implosion globally, with every major stock market crashing and probably 2 to 3 years of recession. And that's assuming no nukes were used...

What are the essential components manufactured in South Korea?
They make a lot of stuff, but as long as there are alternatives, it's no big deal. C.f. Fukushima.

Besides, I wouldn't expect any war to last long. China would be forced to move on North Korea very, very quickly because otherwise China would quickly end up with a united Korea on its borders. (International support for South Korea would be strong and rapid; North Korea would end up devastated like Iraq; Korea would assist the North and the country would be unified) China _really_ doesn't want that.

The only potential issue is if North Korea has decent working nukes that can't be destroyed before it can use them.

 

[electracity]

Parts would not be a problem, If a Korean war started the world would stop buying Teslas and other luxury goods.