This article was originally published by Pacific Forum. It is republished with permission.
Sparks flying from Japanese and South Korean shipyards capture how the region’s industrial powerhouses are repositioning their economies to balance risk and trade.
With tensions between Washington and Beijing setting the tone for this week’s Asia-Pacific Economic Cooperation (APEC) summit, South Korea finds itself hosting the most closely watched diplomatic gathering in years. For Japan, South Korea and the United States, the question is whether new investment in production capacity, beginning with shipbuilding, can anchor a more resilient global supply chain.
That question sits squarely at the heart of APEC’s 2025 agenda, centered on sustainable growth and supply-chain stability. The post-pandemic recovery has exposed the vulnerabilities created by offshoring and just-in-time production, while surging freight costs have tightened financial conditions across the region.
For APEC members, demonstrating progress toward reindustrialization and diversified trade networks will be as important as any communiqué on tariffs or investment liberalization. The industrial frameworks now emerging among major Pacific economies could provide a roadmap for others seeking to combine efficiency with resilience.
Tokyo’s new trade accord with Washington, which includes a $550 billion strategic investment framework, shows how Japan is turning diplomacy into industrial leverage. The agreement channels Japanese capital into US shipbuilding, semiconductors, and energy projects while securing predictable returns and long-term supply-chain access. For investors, it signals that the world once again treats Japan’s manufacturing expertise as a global asset and that economic security is shifting from policy debate to measurable action.
Seoul is pursuing a similar path, although on different terms. About $150 billion of its $350 billion US trade deal commitment will fund Make America Shipbuilding Great Again investments to upgrade US yards with South Korean capital and digital shipbuilding know-how. The rest targets energy, semiconductors, and other strategic sectors.
South Korea’s exposure is heavier than Japan’s because its reserves are smaller and its currency less liquid. President Lee Jae Myung has warned that withdrawing large sums without a dollar-swap line could strain the won and revive memories of 1997-style volatility. Even so, Seoul views the plan as vital for tariff relief.
Japan and South Korea are moving in parallel toward deeper industrial partnerships with Washington. Their investment frameworks cover shipbuilding, semiconductors, energy and other strategic sectors, reflecting a shared emphasis on rebuilding production capacity after years of offshoring.
Shipbuilding stands out because Chinese yards now produce more than half of global output and dominate commercial exports by value, shaping freight costs and vessel availability across global trade.
The United States, by contrast, has only a few major yards remaining. Expanding that capacity with allied capital and expertise could help steady shipping costs, ease bottlenecks and strengthen resilience in global supply chains.
If these investments materialize, their influence will extend well beyond the three partner nations. Southeast Asian economies are already expanding port infrastructure to accommodate new shipping capacity, while Australia is deepening maritime cooperation under its own shipbuilding programs.
Allied financing could open opportunities for regional ship-component suppliers and logistics firms, especially if standards for transparency and sustainability are aligned.
For the broader Indo-Pacific, where energy transport and commercial shipping underpin nearly every trade route, stronger allied production networks could serve as a stabilizing counterweight to market volatility.
As both agreements move ahead, they could redefine how capital, technology and talent flow through Asia’s high-end manufacturing networks. For lenders and investors, the projects show that supply-chain resilience is becoming a tangible source of value.
Japan’s participation gives its trading houses and banks deeper exposure to US industrial assets, while South Korea’s role reinforces demand for its advanced engineering and digital-production systems. Together, these developments highlight how Asia’s leading shipbuilders, already second and third globally (behind China), are extending their strengths into new markets and proving that industrial cooperation can be an engine of regional stability.
For policymakers, the coming APEC meetings will test whether these bilateral industrial frameworks can inspire a broader multilateral approach.
Beyond funding, governments will need to align standards for workforce development, technology transfer and compliance. Establishing a transparent mechanism to track outcomes, from shipyard productivity to export performance, could help convert political commitments into measurable progress. These are practical steps that fit APEC’s tradition of voluntary cooperation while addressing the region’s pressing need for economic security.
As leaders prepare to meet at APEC, attention will turn to how nations translate economic partnerships into practical results. For Japan and South Korea, progress on their new investment frameworks would mean capital flowing into US shipyards, facilities breaking ground and early gains in throughput, workforce training and technology transfer.
Expanding shipbuilding and related industries offers a model for steady growth built on technology, finance and trust. The message from APEC is simple: Shared investment can still drive shared prosperity.
Jeffrey M. Voth (jeff.voth@jlha.com) is an engineering and technology executive focused on strengthening the US defense industrial base and allied cooperation. He has written extensively on the strategic, economic and business implications of spending across the aerospace and defense sectors in publications ranging from World Politics Review and Breaking Defense to the Journal of Business Strategy.
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