Kim Yong-beom: 'AI production revolution is rewriting South Korea's macroeconomic rules'

Kim Yong-beom, the presidential policy chief at Cheong Wa Dae, described the government-led wave of large-scale corporate investment projects as an "AI production revolution" Thursday, saying the country must rethink both its regional development strategy and the way it manages the broader economy.

President Lee Jae Myung's "Three Mega-Projects for South Korea's Great Leap Forward" — which Lee presided over last month — and the ongoing series of regional public briefings held across the country are the implementation phase of that vision, Kim said.

"AI is not merely a technological revolution — it is a production revolution," Kim wrote in a Facebook post Thursday. "Semiconductors, AI data centers and physical AI form a single circular structure, and when those connections are complete, South Korea can become the core hub supporting the entire AI supply chain."

Turning to the three mega-projects the government recently announced, Kim acknowledged the sticker shock the figures had caused. "A total of 4,755 trillion won ($3.06 trillion). Semiconductors: 800 trillion won. AI data centers: 573 trillion won. Numbers rarely seen in the Korean economy prompted a flood of questions — 'Is this really possible?' and 'Isn't this just a hastily staged event?' — and that reaction was entirely understandable," he wrote. "But those once-unfamiliar numbers are gradually becoming the language that defines an era. The announcement is only the starting point."

Kim said the transformation goes far beyond a regional investment story. "This is a macroeconomic issue for South Korea as a whole," he said, arguing that the production expansion, corporate investment and capital inflows generated by the AI revolution will create an economic environment unlike anything seen before.

He framed the challenge in terms of liquidity, reaching for a simple analogy. "Macroeconomics is surprisingly straightforward. Keep pouring water into a beaker and the water level rises," he wrote. "Right now, water is flowing into the South Korean economy at a scale that has no historical parallel."

"Corporate profits grow, investment expectations rise, and domestic and foreign capital pours into the market," he added. "That additional money will ultimately flow somewhere."

Kim said managing liquidity amid expanding production will itself become a new policy challenge, warning that if the additional capital rushes only into Greater Seoul real estate and speculative assets, it could undermine the balance of the broader economy.

He illustrated the risk with a childhood memory of holiday cooking. "When I was young, we would spend all day stoking a fire under a large pot to make yeotgireum syrup for the holidays," he wrote. "The floor closest to the furnace would get unbearably hot, and people would move to the far end of the room."

"Today's liquidity is the same," he said. "The hot end of the room is the Greater Seoul area."

"If the heat concentrates only in Greater Seoul real estate and speculative assets, the whole house does not warm up — only one side overheats," Kim said. "The solution is not to put out the fire. It is to channel the heat into other rooms."

Building semiconductor fabrication plants, AI data centers and industrial complexes in the regions, he said, "is not charity for the provinces — it is a national strategy to protect Greater Seoul."

The government's recent regional briefings, at which it has announced plans to nurture key industries in each area, reflect exactly that thinking, Kim said. The goal is to go beyond conventional regional development by spreading large-scale industrial investment nationwide, building a production base for the AI era and reducing the side effects of overconcentration in the capital region.

Kim also said the AI production revolution will affect not only real estate but also exchange rates and fiscal management.

"You cannot manage a large economy with the grammar of a small one," he said, arguing that foreign-exchange safeguards, fiscal governance and financial policy all need to be redesigned for the new environment.

"Production is not a choice — it is a precondition," he added. "In the age of the production revolution, it is not only the scale of production that must grow. The scale of the nation's thinking must grow with it."