Dragoman Digest

Northeast Asia’s shrinking workforces collide with political resistance to foreign labour

South Korea and Japan need foreign workers but face electorates hostile to permanent migration

South Korea tripled its quota of temporary visas for low-skilled workers to a record 165,000 in 2024, up from 56,000 in 2020. This comes as the country recorded the world’s lowest fertility rate as of 2023. Government projections suggest the workforce will halve over the next four decades. Foreign workers fill minimum-wage manufacturing, farming, and fisheries roles that Koreans increasingly shun. Yet the legal framework governing these workers offers no pathway to permanent residency, caps total stays at under a decade, and requires employer consent for contract extensions or job changes. This system has enabled widespread abuse.

Japan faces similar tensions. The number of births hit a tenth consecutive record low in 2025, falling to a level that 2023 government projections had not expected until 2042. However, Prime Minister Sanae Takaichi won a historic general election victory on a platform sceptical of immigration. Her government has moved to tighten multiple entry and residency pathways. Business Manager visa applicants – a popular pathway for Chinese middle-class emigrants – must now demonstrate ¥30 million (US$200,000) in capital, six times the previous threshold. Language proficiency requirements are also being introduced for permanent residency and the residency requirement for naturalisation doubled to ten years. Foreign residents who failed to meet the new requirements have already been forced to leave.

The politics of immigration in both countries harms their economies. South Korea’s visa structure ties workers to a single employer for the duration of their stay, then cycles them out of the country before businesses can build long-term capability. Japan’s restrictions have driven companies toward high-skill visa categories as a workaround (the paperwork is simpler than blue-collar pathways). This has left 45 percent of these visa holders earning less than the average new graduate wage, while the intended technical intern route shrinks. Without a shift in political attitudes, the gap between the labour both economies require and what their immigration systems are designed to permit will only widen.

European generals sound alarm on push to cut US tech ties

Senior commanders caution that breaking Washington’s digital bonds risks operational paralysis

US President Donald Trump’s threats toward Greenland and his oscillating commitment to NATO have prompted calls from European capitals to accelerate sovereign defence and technology capabilities. French President Emmanuel Macron has been the most vocal, specifically citing AI and cloud computing as areas requiring greater independence. The European Commission will present a “tech sovereignty package” in the first half of this year targeting the bloc’s reliance on US cloud providers.

The scale of existing dependencies is a major complication to that ambition. European armies rely on US technology not just for weapons platforms, but for the communications, intelligence-gathering, and data infrastructure underpinning day-to-day operations. Lockheed Martin’s Aegis missile detection and targeting system, for instance, is embedded in Norwegian, Spanish, and other European navies, and Germany’s forthcoming F127 air defence frigate will depend on it too. These are just some of the many dependencies running through all levels of European armed forces. Senior European military officials pushed back on sovereignty rhetoric at the Munich Security Conference last month, warning that sudden decoupling would produce immediate capability gaps. Europe has emerging defence tech firms, but none capable of replacing US cloud, communications, and data infrastructure in the near-term. One senior official was blunt: “It’s just not possible.”

With Russia looming on Europe’s eastern flank, any self-imposed capability degradation would leave the continent more exposed at a moment of acute security pressure. Technology companies have moved to offer reassurances: 15 firms, including US tech giants Microsoft, Amazon, and Google, launched a “trusted tech alliance” at Munich, pledging adherence to common security and data protection standards regardless of a supplier’s nationality. Whether such assurances will satisfy European publics increasingly uneasy about their vulnerability to Washington’s shifting priorities remains an open question.

South Korean shipbuilders ride tailwind of US policy to capture market share from China

Despite delayed US fee regimes on Chinese ships, Trump’s shipbuilding agenda is reshaping the global market away from China

South Korean shipbuilders bucked a global shipbuilding downturn of 27 percent in 2025, recording a robust eight percent growth in orders. South Korea’s gain stemmed from China’s loss. Proportionally, South Korea’s share of global orders increased by seven percentage points, while China’s share declined by eight percentage points. South Korea secured 21 percent of global orders in 2025 compared to China’s 63 percent, up from 14 percent in 2024. South Korea retains a technological advantage over China in more advanced builds like LNG carriers, and dual-fuel and cruise ships.

The broader catalyst for this shift is the US’ shipbuilding agenda. After the Biden administration raised concerns about China’s dominant position in global shipbuilding in 2024, the Trump administration issued an Executive Order in April 2025 on ‘Restoring America’s Maritime Dominance’. The order outlined a series of fees targeting global shippers operating Chinese-owned, operated, or built vessels. The fees came into effect in October 2025, but were suspended just 26 days later as part of a Trump-Xi trade deal, with resumption not expected until November 2026.

Despite their fleeting implementation, the fees have demonstrably politicised the shipbuilding industry and created an incentive for companies to shift orders. The more lasting impact from this agenda will be South Korea’s ‘Make American Shipbuilding Great Again’ (MASGA) investment pitch to the US, involving a proposed US$150 billion investment in US shipbuilding from Korean shipbuilders Hanwha Ocean, HD Hyundai, and Samsung Heavy Industries. South Korea’s recent market share gain is not just a story of US restrictions but also of savvy political manoeuvring – culminating in Seoul securing notional agreement from Washington to build nuclear submarines using US nuclear technology. Japan – once the world’s largest shipbuilding nation – continues to languish, with its share of global shipbuilding orders falling by nearly three percentage points last year to five percent.

Taiwan’s high-tech export boom delivers record economic growth

A trade deal with Washington cements the island’s rapid pivot away from China

Taiwan’s economy grew 8.63 percent in 2025, its fastest pace in 15 years, driven by strong demand for semiconductors and consumer electronics. Information, communication, and audio-video products – many reliant on chips fabricated by TSMC, the world’s largest contract chipmaker – comprised 77 percent of Taiwan’s exports to the US. The US has overtaken China as Taiwan’s largest export destination, absorbing 31 percent of total exports. China’s share, by contrast, plunged from 44 percent in 2020 to 27 percent in 2025. A bilateral Taiwan-US trade deal signed in February 2026 has formalised that shift, lowering tariffs on Taiwanese goods from 20 to 15 percent in exchange for billions in investment commitments in US energy and technology projects, including semiconductor fabrication. Taipei has more than doubled its 2026 growth forecast from 3.54 to 7.71 percent, with GDP expected to surpass US$1 trillion for the first time. If realised, consecutive years of growth above seven percent would mark the first such run since the late 1980s.

Taipei’s upgraded forecasts reflect stronger-than-expected AI infrastructure investment globally. TSMC derived 58 percent of its 2025 revenue from high-performance computing – the processing capacity underpinning AI applications – with demand driven by US firms including Alphabet, Meta, and Amazon. Indeed, 75 percent of TSMC’s revenue came from North America last year. The boom is also generating spillover demand for Taiwanese suppliers of chip packaging, substrates, memory, and power components, with leading firms planning record capital expenditure for 2026. Meanwhile, China’s overcapacity in sectors from automobiles to solar panels has eroded demand for Taiwanese industrial goods. US export controls have further curtailed advanced chip sales to China, extending in 2025 to more mature 16-nanometre technology, though Chinese demand for Taiwanese legacy chips remains steady.

Beyond semiconductors, the picture is less assured. Non-tech exports – plastics, steel, textiles, and transportation equipment – continue to wane under pressure from Chinese competition and Taiwan’s exclusion from regional FTAs. Private consumption is forecast to grow just 2.51 percent in 2026, underscoring how narrowly the gains are distributed. The semiconductor sector itself faces constraints, with bottlenecks in power and cooling infrastructure at data centres threatening to delay orders. The concentration of Taiwan’s success in a single sector and market leaves limited margin for disruption.