Vice Finance Minister of South Korea said that the pledge by South Korea to invest $350billion in strategic U.S. Industries as part a trade agreement with Washington will likely be led state policy institutions who will provide funding case-by-case.

In a July trade agreement to cap U.S. Tariffs at 15%, both countries agreed on a financial package that would support industries like shipbuilding, minerals, batteries and pharmaceuticals.

In an interview on Wednesday, Lee Hyoung Il said: "We look at $350 billion as the limit. It won't all be raised at once. Instead, we can provide tailored support to any situation that arises."

Lee declined to confirm if policy lender Korea Development Bank was orchestrating the operation.

An official from the KDB stated that "nothing has been decided" on the matter.

State-owned lenders, such as KDB, provide policy financing and manage money for public infrastructure.

Lee's remarks build on assurances given by other top Seoul officials, that the pledge of investment is intended to support commercially feasible U.S. based projects on an as-needed basis.

Both sides seem to have interpreted the fund in different ways at different times. Last month, a South Korean adviser to the president denied U.S. claims Washington would take 90 percent of the profits from the $350 billion investment.

Lee, in response to the global bond market collapse on Wednesday, downplayed fears that South Korea's foreign exchange and bond markets might be unstable due to concerns about debt sales and fiscal discipline.

South Korea is planning to issue record amounts of bonds in order to fund expenditures across sectors such as AI, semiconductors and research.

Lee said that authorities will continue to monitor the foreign exchange market and "act to stabilize markets if necessary" while holding talks with the U.S. Department of Treasury about the dollar-won markets.

He said the government would review whether trading hours in dollar won could be extended as part of Seoul’s push to include the developed market benchmarks MSCI.

Lee predicts that the recovery of the economy will accelerate in Asia's fourth largest economy next year, when it is projected to grow at a rate of 1.8%. This would be around its potential growth, compared to a projected expansion this year.

In response to a question about the possibility of Korean industries being hollowed-out due to U.S. commitments to invest, Lee stated that the government would channel its support towards AI in order to strengthen South Korea's position as a leading tech exporter while boosting growth.

"We must get on the AI wave in order to survive," said Lee. Citing a major interest from companies in physical AI which integrates AI with areas such as robots, cars and shipbuilding, Lee cited a high level of interest.

The 728 trillion won (522 billion dollars) budget for 2026 is a follow-up to some of the pledges made by President Lee Jae Myung on the campaign trail in order to help bolster an economy that has been hit hard by U.S. Tariffs and demographic challenges.

(source: Reuters)