Japan Institute for National Fundamentals

　
A series of multilateral summit meetings were held in Asia from November 11, including summit meetings related to ASEAN (Association of Southeast Asian Nations), G20 Bali Summit and APEC (Asia-Pacific Economic Cooperation) Economic Leaders’ Meeting. Attracting attention were bilateral or trilateral summit talks such as Japan-U.S.-South Korea, U.S.-China, Japan-China, China-South Korea that took place on the sidelines of the multilateral meetings. The key word common to these talks was “supply chains.”

U.S. export controls to China becoming a focus of attention

As for the Japan-China summit, the Chinese Foreign Ministry quoted President Xi Jinping as telling Japanese Prime Minister Fumio Kishida that “stable and smooth supply chains should be maintained.” This remark is not found in the Japanese government’s announcement. Chinese reports also quoted Xi as telling South Korean President Yoon Suk Yeol that “the safety, stability and smooth flow of supply chains and global industrial networks should be guaranteed.” These Xi remarks indicate how China gives importance to the stability of supply chains.

This reflects China’s sense of crisis about the United States that has announced new restrictions on semiconductor exports to China and is trying to cooperate with allies in imposing them. In his political report to the Chinese Communist Party congress in October, Xi positioned supply chains as a pillar of national security, calling for enhancing the resilience and safety of supply chains.

Particularly, the Japan-U.S.-South Korea summit talks apparently have exerted a big impact on China. In addition to demonstrating their unity on North Korea, Japan and the United States involved South Korea in giving a clear warning to China and issued a first-ever joint statement. The statement featured the establishment of Japan-U.S.-South Korea economic security dialogue toward the enhancement of supply chains, which obviously bear in mind those for semiconductors.

Both superpowers testing South Korea’s loyalty

About 60% of South Korea’s semiconductor exports, a major source of its foreign currency revenue, are destined for China. Samsung Electronics Co. has a large plant for memory semiconductor production in Xian, China. The United States thinks it imperative to have China-leaning South Korea cooperate in the new semiconductor export restrictions and draw it into U.S.-led supply chains. Meanwhile, China sways and warns South Korea as it holds the key to China’s semiconductor supply chains.

The U.S. semiconductor export restrictions to China differ from earlier ones in quality. The restrictions cover the whole of exports to China featuring military-civil fusion, trying to block China from using cutting-edge semiconductors for artificial intelligence and supercomputers and leading to the military development. Japan will basically agree with the new export restrictions as it has been discussing the measure behind the scenes with the United States and Europe since last year. South Korea should be brought into the restriction regime. In the process, Japan will be required to think how to handle its export controls of semiconductor materials to South Korea tightened three years ago.

Masahiko Hosokawa is a professor at Meisei University and a former director-general of the Trade Control Department at Japan’s Ministry of Economy, Trade and Industry. He is also a Planning Committee member at the Japan Institute for National Fundamentals.