“Korea-China trade meeting in US: Cooperation on raw materials and parts amidst US-China semiconductor conflict”

The meeting between Korea and China’s trade managers held in the United States on the 26th (local time) attracted attention in that it took place amid the height of the US-China semiconductor conflict. The Chinese announcement included cooperation with South Korea in the semiconductor field, but the Korean announcement did not mention semiconductors, but contained a request for cooperation in raw materials and parts from China. On the 27th, the Ministry of Trade, Industry and Energy of Korea and the Ministry of Commerce of China met Deok-geun Ahn, Minister of Trade, Industry and Energy of the Ministry of Trade, Industry and Energy, and Minister of Commerce Wang Wentao-jung, who represented the two countries at the Asia-Pacific Economic Cooperation (APEC) Trade Ministers’ Meeting held in Detroit the previous day. The results were presented in the form of a brief press release. Although it was brief, the key requirements of the two countries were included in it. According to the data of the Ministry of Industry, Ahn asked the Chinese side for “interest and support for facilitating trade and stabilizing the supply and demand of key raw materials and parts,” and “asked for cooperation in creating a predictable business environment for our invested companies in China.” . It is a request for cooperation in a situation where Korea is dependent on China for major raw materials, such as battery materials. In fact, Korea imports lithium hydroxide, a key material for secondary batteries, from China, and the amount of imports between January and April this year was $2.2 billion, a 12-fold increase from the previous year. According to an investigation in 2021 when China’s export control caused a supply shortage of urea, there were 2,000 items with 50% or more dependence on imports from China, and 500 items with 90% or more. There are also predictions that China will be able to control exports of strategic materials such as rare earth elements in the face of the recent US semiconductor offensive. On the other hand, China’s Ministry of Commerce said in a document that “the two sides agreed to strengthen dialogue and cooperation in the semiconductor industry chain and supply chain area.” It was an announcement that the two countries “agreed on cooperation” by pinpointing the semiconductor, which was not included in the announcement on the Korean side. When China requested cooperation in the semiconductor field during a meeting with the South Korean trade representative, it is highly likely that South Korea gave a principled response. In a situation where the Chinese authorities have recently sanctioned the US semiconductor company Micron and the conflict between the US and China has escalated, China is hoping for South Korea’s cooperation, and the US criticizes China’s sanctions itself and sends a message to South Korea to “don’t cooperate with China” the situation of sending The Korean government has not recently taken an explicit position on this issue. Aside from semiconductors, South Korea asked China to cooperate with Korean companies in China. In a situation where Korean companies are struggling in the Chinese market, they requested that their business environment be predictable. On the other hand, China called for “maintaining the stability of the industrial supply chain and pushing bilateral, regional and multilateral economic and trade cooperation to a new level.” South Korea did not actively accept the US supply chain separation (decoupling) policy with China, and requested international trade cooperation in which China was not excluded. Beijing/Choi Hyun-joon Correspondent haojune@hani.co.kr