President Lee Jae-myung officially launched South Korea's National AI Strategy Committee on September 8 at Seoul Square, declaring artificial intelligence as "national competitiveness and economic power" while outlining ambitious plans to establish the country among the world's top three AI superpowers. For American readers unfamiliar with South Korea's political structure, this represents a significant government restructuring similar to how the Biden administration elevated climate change to a cabinet-level priority through the creation of new coordinating bodies.
Expanded AI Governance Structure with Enhanced Authority
The newly established National AI Strategy Committee represents a substantial upgrade from the previous administration's approach, expanding from 45 to 50 members and increasing vice-chairpersons from one to three. The committee structure mirrors the executive coordination approach seen in U.S. agencies like the National Security Council, but with a specific focus on AI policy implementation across all government ministries.
Lim Moon-young, chairman of the Democratic Party's Digital Special Committee, serves as the dedicated vice-chairman, while the Ministers of Science and ICT and Strategy and Finance serve as non-standing vice-chairs. Most significantly for implementation purposes, the committee has established AI Chief Officers at the vice-ministerial level within each government department – a structure comparable to how the U.S. federal government has Chief Information Officers across agencies.
During its inaugural meeting, the committee addressed critical agenda items including the "Republic of Korea AI Action Plan" implementation direction, the "National AI Computing Center Promotion Plan for Building AI Highway," and "AI Basic Law Subordinate Legislation Direction." Unlike its predecessor, this committee has been granted budget review and decision-making authority, positioning it as the highest-level organization for inter-ministerial AI policy coordination.
Economic Context: AI as Growth Driver Amid Sluggish Performance
The AI strategy announcement comes against a backdrop of concerning economic indicators. The Korea Development Institute (KDI) maintains its 2025 economic growth forecast at just 0.8%, primarily due to sluggish construction investment, before recovering to 1.6% growth in 2026 as domestic demand gradually rebounds. For American readers, this growth rate is significantly lower than the U.S. economy's typical 2-3% annual growth, highlighting the urgency behind Korea's innovation push.
The economic challenges are multifaceted: construction investment is projected to decline by a dramatic 8.1% in 2025, while equipment investment is expected to grow modestly by 1.8% due to favorable semiconductor market conditions and declining interest rates. Consumer price inflation is expected to moderate to 2.0% in 2025 and 1.8% in 2026, down from 2.3% last year – levels that would be considered reasonable by current U.S. Federal Reserve standards.
In this context, the government's planned 100 trillion won (approximately $75 billion) investment in AI represents a strategic bet on technological innovation as a pathway out of low growth. This investment scale is comparable to the U.S. CHIPS Act's $52 billion commitment to semiconductor manufacturing, but focused specifically on artificial intelligence capabilities across the entire economy.
Housing Policy and Household Debt Management
Simultaneously with the AI initiative, the Lee administration is implementing housing market stabilization measures. Starting September 8, the government reduced and unified the loan limit for single homeowners' jeonse loans to 200 million won (approximately $150,000) in regulated areas including Seoul's affluent Gangnam districts and the greater metropolitan area. For American readers, jeonse is a uniquely Korean rental system where tenants pay a large lump-sum deposit (often 60-80% of property value) instead of monthly rent, making these loan limits particularly significant for housing accessibility.
Real estate and rental business operators can no longer receive housing-secured loans under the new regulations, representing a targeted effort to cool speculative investment in housing markets. The government's emphasis on Korea Land and Housing Corporation (LH) – the state-owned housing developer – parallels how some U.S. municipalities use public housing authorities, but on a national scale to accelerate affordable housing supply in the metropolitan area.
Bipartisan Cooperation and Business Community Engagement
President Lee held a luncheon meeting at the Blue House on September 8 with Democratic Party leader Jeong Cheong-rae and People Power Party leader Jang Dong-hyuk, marking the first meeting of ruling and opposition party leaders in 78 days since June 22. For American readers, this kind of regular bipartisan leadership meeting is somewhat comparable to congressional leadership meetings with the U.S. President, though the Korean system's parliamentary elements make such cooperation more crucial for policy implementation.
The administration is also strengthening ties with the business community. Democratic Party leader Jeong Cheong-rae met with Korea Chamber of Commerce Chairman Choi Tae-won on September 8, proposing regular quarterly meetings and promising quick feedback on business community deregulation requests. This approach reflects the close government-business coordination that has historically characterized Korea's economic development model, similar to Japan's approach but distinct from the more arms-length relationship typical in the United States.
Economic Challenges Across Sectors
The auto insurance industry exemplifies broader economic difficulties, with loss ratios exceeding 80% in the first half of 2025, significantly worsening insurers' profitability. With declining sales and deteriorating loss ratios, insurance profits have shrunk to one-tenth of last year's levels. This pattern of sectoral stress is reminiscent of challenges faced during economic transitions, where traditional industries struggle while new growth sectors emerge.
These economic headwinds underscore why the AI strategy represents more than just technological advancement – it's positioned as economic survival strategy. As President Lee stated at the launch ceremony: "South Korea stands at a massive historical inflection point that will determine whether we become stragglers at risk of being left behind or pioneers enjoying infinite opportunities."
Global Implications and Strategic Positioning
Korea's "AI Big Three" ambitions place it in direct competition with the United States and China, the current leaders in artificial intelligence development. Unlike the U.S. approach, which relies heavily on private sector innovation with regulatory oversight, or China's state-directed model, Korea appears to be pursuing a hybrid approach combining government coordination with private sector capabilities.
The 100 trillion won investment commitment, if fully realized, would represent one of the largest national AI investments globally on a per-capita basis. For a country with roughly 52 million people, this level of commitment demonstrates the strategic importance the Lee administration places on AI competitiveness as both an economic and national security priority.
The success of Korea's AI strategy will likely depend on effective coordination between the expanded bureaucratic structure and the country's powerful technology conglomerates like Samsung and LG. Whether this ambitious vision translates into tangible economic growth and global AI leadership remains to be seen, but the comprehensive approach suggests serious commitment to transforming Korea's economic trajectory through technological innovation.
Original Korean article: https://trendy.storydot.kr/lee-government-ai-strategy-committee-economy-innovation-sep08/
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