At a meeting of G7 finance ministers at the U.S. Treasury on Oct. 19, Paulson took the lead in urging China to revaluate the yuan as a solution to the rapidly falling value of the dollar against the euro. He made little mention of the dollar-euro relationship, but persuaded the EU to hit China, which is not a member of the G7, broadside.

Paulson's China bashing, which is reminiscent of America's Japan bashing of the 1980s, is closely related to the weakening dollar, the biggest issue in the global economy in recent days. With the housing recession compounding worries over the massive size of the U.S. trade deficit, the dollar crisis turned from concern into reality this summer. The weakening dollar means the declining international status of the U.S. But Paulson seems tolerant of that for now, though he must have decided that the U.S. might face a real crisis if its trade deficit were to be tolerated any longer.

In light of the U.S. position, the dollar will likely remain weak for the time being. This will pose big challenges to South Korea, China, Japan and the EU. First of all, they will see their exports to the U.S. dwindle. Experts say that South Korea's case is more serious than that of any other country, considering that over the past years the won-dollar exchange rate has dropped far lower than that of rival countries -- or the value of the won has increased far higher than that of rival currencies.

Since 2004, the value of the won has risen more than 20 percent -- more than double that of the Chinese and Japanese currencies. In other words, the price competitiveness of South Korean exporters has worsened more than twice. An executive in charge of the American division of a large conglomerate sighed, "We're losing our market to Japan."

Because of this, the Roh administration once attempted to intervene in the foreign exchange market. But it gave up its attempt due to the increasing amount of money circulating in the market and the burden of increased interest rates. It was worried about the possibility of the economy, which is already in recession in the wake of its policy failures, further worsening as a result of increased interest rates. Belatedly, the government liberalized foreign exchange holdings, including the liberalization of purchases of real estate overseas. But soon afterwards, property prices in the U.S. dropped, hitting those who had bought into the market.

Foreign exchange experts are saying the government has failed to implement appropriate and timely foreign exchange policies, and that this has contributed to creating a unilateral trend in favor of increasing the value of the won in the exchange market. The government's policy failures have deepened the anxieties of small and medium-sized exporters. But the Roh administration, in the last months of its term, seems not to care because it apparently believes it can achieve an economic goal -- $20,000 per capita income -- thanks to the rising value of the won.

The biggest leverage with which to increase per capita income is the won-dollar exchange rate. But the Roh administration has exhausted the potential of the exchange market, leaving very little room for the next government to manage foreign exchange. It would be difficult for the next government to take advantage of the exchange rate again to achieve $30,000 per capita income.

If the value of the won is allowed to continue to rise as the Roh administration has done, all small and medium-sized exporters will go bankrupt. The Roh administration has neglected or worsened the problems of SMEs and the public livelihood, despite its claims of support for low-income people.

In the end, the next government will be burdened with the tough task of strengthening the country's economic health to revitalize the SMEs and galvanize the livelihood of low-income Koreans. While Roh's Participatory Government is popping the champagne in celebration of the era of the $20,000 per capita income, the problems of the poor and the current government's policy failures are being handed over to the next government.

This column was contributed by Kim Key-hoon, the Chosun Ilbo's correspondent in New York.