South Korea Proposes a Record 820.9 Trillion Won Budget, Nearly Doubling Chip and AI Spending

Economic Warfare & Trade Policy › Trade & tariffs

South Korea's National Assembly building in Seoul (file photo). Photo: Cjb8293, Wikimedia Commons, CC BY-SA 4.0.

South Korean President Lee Jae Myung proposed the country’s largest-ever budget on Monday, raising 2027 spending 12.8% to 820.9 trillion won ($610.14 billion), including 21.3 trillion won for semiconductors, physical AI and AI data centers, nearly double the 2026 level, CNBC reported. A separate 4.7 trillion won is earmarked for developing a sovereign AI model with what Lee called the “world’s highest performance,” and the government plans to train 2,000 specialists in semiconductor design.

Key figures: 820.9T won south korea’s proposed 2027 budget · 12.8% increase over 2026 spending · $109.75 brent crude after a 3.2% drop

Lee told the National Assembly the government would “boldly invest in AI and future growth engines” and said the higher spending would result in “virtually no net increase in government debt,” with new bonds used to repay existing debt. Defense spending is set to rise 8.2% to 73.3 trillion won. “We will rapidly transform into a smart, elite, and powerful military by establishing a hybrid manned and unmanned system based on AI, robots, and drones,” Lee said. The budget follows South Korea’s $115.3 billion October export total, driven by chips.

Oil falls as Gulf diplomacy continues

Oil prices fell more than 3% early Monday as officials from Iran and Qatar held talks for a third straight day on a deal to end the war, Infobae reported. Brent crude fell 3.2% to $109.75 a barrel and U.S. West Texas Intermediate dropped 3.3% to $100.69, after Brent closed October at a six-month high. Tim Waterer, chief market analyst at KCM Trade, warned that the market remains alert to the possibility that rhetoric around Iran could push Brent toward $120 a barrel after the U.S. midterm elections.

Seven key members of the OPEC+ alliance, Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman, agreed on Sunday to keep December output unchanged for a third straight month, El Nacional reported, citing EFE. The group’s next meeting is set for Nov. 29, the same day as a ministerial conference of all 21 OPEC+ members.

LNG shipping under fire near Hormuz

Pakistan had coordinated with Iran to secure safe passage for the Qatari liquefied natural gas carrier Al Mayeda before the ship was attacked near the Strait of Hormuz on Friday, people with direct knowledge of the matter told Bloomberg, gCaptain reported. The Marshall Islands-flagged vessel was loaded with Qatari LNG and turned back into the Gulf after the attack. Without the cargo, Pakistan could be forced to buy on the spot market, where prices are more than three times pre-war levels. LNG flows through Hormuz held at about 30% of pre-war levels in October. “Qatar reserves its right to take all necessary measures, in accordance with international law and the UN Charter, to protect its assets,” Qatar’s Foreign Ministry said. The attack on Al Mayeda was first covered in our Nov. 1 report, and today’s Middle East report covers new tanker hits.

In the United States, Shell became the first customer to receive LNG under a long-term contract from Venture Global’s Plaquemines plant in Louisiana after the plant’s first phase moved to commercial operations, gCaptain reported, citing Reuters. The tanker Malaga Knutsen loaded the first commercial cargo. Other Phase 1 customers include Orlen, Sinopec, CNOOC Gas & Power and EDF. Spot prices were near 46-month highs of about $34 per million British thermal units at Europe’s TTF benchmark and $32 on Asia’s JKM benchmark.

China moves to steady markets

Chinese regulators announced measures Monday to boost liquidity, cut rates for share buyback loans and ease curbs on leveraged trading after the stock market’s worst monthly sell-off in a decade, the South China Morning Post reported. The details of the central bank’s reopened swap facility are in our earlier report on China’s stock rescue. The CSI 300 index rose 0.8% to 4,016.92, the Post reported. The central bank set the yuan’s daily fixing at 6.7146 per dollar, slightly weaker than Friday, after the offshore yuan strengthened to about 6.645, its strongest level since June 2022, the Post said.

China’s identified resources of rhenium, a metal used in aerospace, more than doubled after a nationwide reassessment, and a major zircon deposit was found, state media reported, according to the Post. BYD delivered 490,168 vehicles in October, up 11% from a year earlier, while Geely delivered 310,183, up 1%, the Post reported.

By the numbers

South Korea’s 2027 plan puts the biggest new sums into defense and technology. By The Boston Report’s calculation, 2026 spending was about 727.7 trillion won, so the proposal adds roughly 93 trillion won. Sanctions and trade measures are tracked on our economic warfare dashboard.

Watch for the National Assembly’s review of Seoul’s budget, the Nov. 29 OPEC+ meetings and whether Pakistan secures a replacement LNG cargo.

Sources

• CNBC: South Korea targets ‘world’s highest performance’ sovereign AI model in record new budget
• Infobae: El petróleo cae ante las expectativas de un acuerdo para poner fin a la guerra en Medio Oriente tras las negociaciones entre Irán y Qatar
• El Nacional: OPEP+ mantendrá congelada su oferta de petróleo por tercer mes consecutivo
• gCaptain: Pakistan LNG Cargo Attacked Near Hormuz Had Iranian Approval
• gCaptain: Venture Global Begins Supplying Plaquemines Customers Under Long-Term LNG Contracts
• South China Morning Post: Beijing launches US$15b asset swap to support China’s markets after sell-off
• South China Morning Post: Chinese stocks rebound on optimism PBOC set to expand US$45 billion relending facility
• South China Morning Post: Beijing trims yuan fixing, managing appreciation amid 4-year high for offshore currency
• South China Morning Post: China unearths new critical mineral deposit, bolstering supply chain security
• South China Morning Post: As BYD and Geely hit sales highs, pressure mounts on China’s smaller carmakers