[CEONEWS=Chief Reporter Lee Jae-hoon] December 2025. The engine of the South Korean economy has begun to roar once again. This is because the government has stepped up as an active 'player,' investing capital directly to foster future industries, moving beyond its traditional role as a mere referee or supporter.
The 'National Growth Fund,' announced at the Ministers’ Meeting on Enhancing Industrial Competitiveness presided over by Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol, amounts to a staggering 150 trillion won over five years. This is more than a simple economic stimulus package; it is a 'survival strategy' and a massive bet for South Korea to survive the global competition for hegemony.
As the 27th installment of the Policonomy (Politics + Economy) planning series, this publication provides an in-depth analysis of the economic and political implications, background, and future impact of the National Growth Fund on the Korean economy.
■ Too Urgent to Rely Solely on the 'Invisible Hand'
In a free-market economy, excessive government intervention has long been considered taboo. However, now past the mid-2020s, the global economic landscape is rapidly reverting to an era of 'Neo-State Capitalism.'
The United States is blatantly protecting its industries through the CHIPS Act and the Inflation Reduction Act (IRA), while China is pouring astronomical sovereign wealth funds into its 'AI Rise,' moving beyond 'Made in China 2025.' The European Union has also moved to expand regional production through its own Chips Act.
Under these circumstances, the prevailing assessment is that Korean companies have reached a limit in competing with global giants on their own. The creation of the 150 trillion won National Growth Fund stems from this very sense of crisis. Deputy Prime Minister Koo’s statement that the government will "concentrate on fostering next-generation growth engines, including a 6 trillion won investment in the AI Great Transformation," reveals the government's desperate realization that it can no longer wait for the market's autonomous capital allocation.
Ultimately, this fund represents a highly political decision that transcends economic logic—a shift to a 'Wartime Economic System' for national survival. It reflects the judgment that the government can no longer remain a bystander in a situation where global technological hegemony competitions are unfolding as total wars between nations.
■ All-In on AI and Semiconductors: A 'Surefire Future'
A breakdown of the fund's allocation plan clearly reveals the government's strategic direction. Out of the total 150 trillion won over five years, the largest portion, 30 trillion won (20%), is allocated to the AI (Artificial Intelligence) sector. This is followed by semiconductors (20.9 trillion won) and mobility (15.4 trillion won). This demonstrates a clear shift away from the past 'department store style' (scattershot) support to a strategy of 'Selection and Concentration.'
In particular, the plan to inject 6 trillion won into AI and 4.2 trillion won into semiconductors in 2026 alone suggests that next year is set as the 'Golden Time' for leaping into the AI G3 (Global Top 3). The rationale is that now is the critical moment for Korea to establish itself as the third pillar while the U.S. and China are fiercely battling for AI supremacy.
The method of support is also noteworthy. The diversification into equity investment (3 trillion won), indirect investment (7 trillion won), infrastructure investment/loans (10 trillion won), and ultra-low interest loans (10 trillion won) is a result of precisely considering companies' financial situations and risk tolerance. It contains the calculation that government funds will act as 'pump-priming' (ma-jung-mul) through complex financing to induce follow-up private investment, rather than simple subsidy handouts.
■ The Entry of Seo Jung-jin and Park Hyeon-joo: Emphasizing 'Market Logic'
The most notable aspect of this fund is its governance structure. It is distinctly different from past methods where bureaucrats decided everything from their desks. Seo Jung-jin, Chairman of Celltrion Group, and Park Hyeon-joo, Chairman of Mirae Asset Group, have been appointed as co-chairs of the Strategic Committee, the advisory body for the National Growth Fund.
Putting Seo, the protagonist of the bio-industry myth, and Park, known as the field commander of the Korean capital market, at the forefront sends a clear message: While government money is used, investment decisions will be strictly based on 'market logic' and 'entrepreneurship.'
This is interpreted as an institutional safety device to fundamentally block the inefficiency and moral hazard controversies that past government-controlled funds suffered. The participation of these two tycoons is expected to have another effect: fostering trust among private investors that "this fund is operated by market principles, not political logic," thereby accelerating additional private capital inflows. The fact that investment demand submitted for this fund has already exceeded 153 trillion won is proof of the high interest from the private sector.
■ 600 Billion Won Citizen Participation Fund: An Experiment in 'Profit Sharing'
The creation of a 600 billion won 'Citizen Participation Fund' is a point where political shrewdness stands out. It is a 'profit-sharing' model designed to secure a support base for the policy by ensuring that the fruits of high-tech industry growth are not solely attributed to large corporations or specific capitalists, but are returned to the general public who subscribe to the fund in the form of dividends.
This is an attempt to solve the two challenges of growth and distribution simultaneously. Considering that past government-led industrial policies could not escape criticism for favoring large conglomerates, a structure where ordinary citizens participate as direct investors and share the fruits of growth carries significant political meaning. It can be cited as a typical example of 'Policonomy,' aiming to catch two birds with one stone: resolving polarization and increasing national assets.
■ Beyond Technology: 'Economic Security' and 'Soft Power'
The government's gaze is not limited to hardware technology. The expansion of the K-Content Fund (430 billion won) and the creation of a Global Logistics Supply Chain Fund (2 trillion won) are moves that consider both the expansion of economic territory and security.
Supporting the acquisition of port terminals in major overseas hubs and logistics companies amidst global logistics disruptions and supply chain blockalization is an essential infrastructure investment to prevent "arteriosclerosis" in Korea, an export-driven nation. The experience of severe difficulties due to supply chain disruptions during the COVID-19 pandemic serves as the background for this strategic judgment.
Support for the overseas expansion of K-Bio and Digital Healthcare is also an expression of the will to preoccupy new growth engines in the post-COVID era. If semiconductors and AI are the current sustenance, bio-healthcare is a preemptive investment to secure future sustenance.
■ Beware the 'Winner's Curse' and Guarantee the 'Right to Fail'
When a mammoth fund of 150 trillion won is released into the market, immediate reactions will follow. Rising stock prices of related companies, revitalization of R&D, and job creation are predictable positive scenarios. However, there are concerns.
First is the 'Crowding-out Effect.' Massive government funds could ironically dampen the private sector's spontaneous will to invest or prolong the life of zombie companies that should exit the market. This is why the roles of Co-chairs Seo Jung-jin and Park Hyeon-joo are crucial; a cold-hearted "separating of the wheat from the chaff" is essential.
Second is the 'Trap of Speed.' Just because investment demand exceeded 153 trillion won does not mean the budget should be exhausted in haste. In selecting mega-projects, political influence must be strictly excluded, and rigorous feasibility studies must precede action.
Finally, there is the issue of 'Tolerating Failure.' High-tech industries like AI and Bio are inherently High Risk, High Return structures. If unconditional success is forced just because government money was injected, or if the Board of Audit and Inspection wields its blade upon failure, innovative investment is bound to shrink. True innovation is only possible when a culture and institutional mechanisms that tolerate failure are supported.
The National Growth Fund may be the last boarding pass for the Korean economy to leap from a Fast Follower to a First Mover. The die is cast. What matters now is not the number 150 trillion itself, but the details of execution—how efficiently and transparently this capital is used to sprout the seeds of the future. In 2026, South Korea will receive the first report card of this massive bet.
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