China calls on S. Korea as it ratchets up chip war with US

Posted on : 2022-12-14 15:52 KST Modified on : 2022-12-14 15:52 KST
China has filed a dispute with the international body over Washington’s recently enacted export measures for advanced technology

The Chinese government has filed a dispute with the World Trade Organization (WTO) against the United States, claiming that export measures imposed by Washington two months ago for advanced semiconductor manufacturing equipment and supercomputer technology violate trade rules.

China has also appealed to Korea to jointly respond to what it claims is repeated market-disturbing behavior by the United States in the name of reorganizing supply chains in high-tech industries like semiconductors.

In a statement posted to its homepage on Monday night, China’s Ministry of Commerce accused the United States of violating WTO rules by misusing protectionist measures, and that it decided to file a dispute with the WTO to resolve its concerns and protect what it called its “legitimate rights and interests.”

The statement also characterized US export controls as “threatening the stability of global supply chains and causing chaos in the global economy,” and called on Washington to “abandon its zero-sum thinking and correct its mistakes.”

Prior to this, the United States slapped powerful export controls on China on Oct. 7, claiming that China’s advanced semiconductor technology could improve the capabilities of Chinese weapons and pose a risk to US national security, and that China’s semiconductor and computer industries could be put to work violating the human rights of ethnic minorities in China.

Accordingly, US companies or companies using US original technology may not, in principle, sell China equipment to manufacture DRAM chips 18nm and below, NAND chips with 128 layers or more, or logic chips 14 nm and below.

The suit comes just after the WTO's adjudicating panel — the first hearing in the body's dispute resolution process — found Washington in violation of trade rules for high tariffs imposed in 2018 on steel and aluminum imports from China and elsewhere.

The US Trade Representative has expressed an unwillingness to accept the decision, however, declaring that matters pertaining to national security are not subject to WTO deliberations.

Given that Washington contends that its export controls on semiconductor equipment likewise pertain to national security, it's unlikely to accept an unfavorable WTO decision.

Moreover, the WTO Appellate Body, which delivers the organization's final decisions, is currently inactive, unable to fill the committee's three-person minimum. Accordingly, it's practically impossible for Beijing to change Washington's decision through its suit.

Meanwhile, Foreign Minister Wang Yi of China, who also serves on the Chinese Communist Party’s Politburo, slammed US industrial policy during a virtual meeting with his Korean counterpart on Monday, while asking for Seoul's support.

According to a Chinese Foreign Ministry statement, Wang told Korean Foreign Minister Park Jin during the meeting that Washington's refusal to accept WTO rulings on the so-called CHIPS and Science Act and Inflation Reduction Act were harming the “legitimate interests of all nations, including China and Korea.”

He said this showed the United States to be the “saboteurs rather than builders” of international rules, not the builder,” and called on “all nations to oppose this outdated thinking that runs counter to globalization, and the unilateral torment, and jointly protect and practice true multilateralism.”

In its own statement, Korea’s Ministry of Foreign Affairs said that “the two ministers agreed to actively cooperate to achieve tangible results in practical cooperation in areas such as expanding dialogue for stable management of the supply chain, the follow-up negotiations on Korea-China FTA in the service and investment sectors, increasing direct flights between the two countries, and enhancing people-to-people and cultural contents exchanges.”

However, it made no mention of Wang’s harsh criticism of the United States.

Meanwhile, Bloomberg — quoting anonymous sources — reported that Japan and the Netherlands have agreed in principle to suspend sales of advanced semiconductor manufacturing equipment to China.

Washington has been working to persuade the two countries to join its export controls, fearing that if Japan — a leader in semiconductor equipment and materials — and the Netherlands — home to ASML, the world’s sole supplier of extreme ultraviolet lithography photolithography machines — refused to sign up, Washington’s own export controls would be less effective.

With the decision, China’s semiconductor industry will likely take a major hit with no way to import the EUV machines it needs to produce advanced semiconductors under 7 ㎚.

By Lee Bon-young, Washington correspondent; Choi Hyun-june, Beijing correspondent

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