China warns South Korea against politicising trade before Japan talks

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China warned South Korea against politicising economic issues as the two countries agreed to restart trade talks ahead of their first three-way summit with Japan in almost five years.

Chinese Premier Li Qiang, Xi Jinping’s top-ranking official, met South Korean President Yoon Suk Yeol in Seoul on Sunday as Beijing pushes back against snowballing US controls on chip sales to Chinese companies and Joe Biden’s rising tariffs on Chinese clean-tech exports.

Japan and South Korea are central to US efforts to restrict Chinese access to cutting-edge semiconductors and related technologies, with Tokyo and Seoul both facing pressure from Washington in recent months to tighten restrictions on exports of chipmaking equipment to China.

Li said on Sunday that the supply chains of China and South Korea were “deeply intertwined” and added that the two sides should “oppose turning economic and trade issues into political or security issues”, according to a report from Xinhua, China’s state news agency.

On Monday, leaders from China, Japan and South Korea will hold their first three-way meeting in more than four years as the east Asian countries seek to improve economic ties amid rising military tensions in the Indo-Pacific region.

Leaders from the three countries last met in late 2019 amid tensions between Japan and South Korea over historical issues relating to Japan’s 20th-century occupation of the Korean peninsula.

While bilateral ties between Tokyo and Seoul have improved since then, the two US allies’ relations with China have suffered as the rivalry between Beijing and Washington intensifies.

China has also opposed intensifying military co-operation between Seoul, Tokyo and Washington. At a trilateral summit with the US last year, Japan and South Korea agreed to strengthen military co-operation to boost their deterrence against China and North Korea.

South Korea’s principal deputy national security adviser, Kim Tae-hyo, told reporters last week that items on the trilateral summit’s agenda would include economy and trade, science and technology, and people-to-people exchanges.

“The summit will serve as a turning point for fully restoring and normalising the trilateral co-operation system among South Korea, Japan and China,” said Kim.

But the agenda does not include contentious security-related topics such as North Korea’s burgeoning nuclear weapons programme or the issue of Taiwan.

Yoon provoked outrage in Beijing last year when he blamed tensions over Taiwan on China’s “attempts to change the status quo by force”. Last week, Beijing summoned South Korean and Japanese diplomats to lodge an official protest over the attendance of lawmakers from the two countries at the inauguration of Taiwan’s new president Lai Ching-te.

People close to the talks said the official announcement of the three-way meeting had been pushed back until just three days before the arrival in Seoul of Li and Japan’s Prime Minister Fumio Kishida because of sensitivities over Taiwan. Beijing regards Taiwan as part of its territory and threatens to annex it with force if Taipei refuses indefinitely to submit to its control.

Following separate meetings with Premier Li and President Yoon on Sunday, Kishida said: “We emphasised [to China] that ensuring the peace and stability of the Taiwan Strait is extremely important for the international community, including Japan.”

Jaewoo Choo, head of the China Center at the Korea Research Institute for National Security think-tank in Seoul, said Beijing is also unhappy over greater military co-operation among the US allies, including an agreement sealed last year to share real-time information on North Korean missile launches.

He added that the original purpose of the China-Japan-South Korea summits was to work towards a trilateral free trade agreement (FTA), but that the chances of substantive progress this week were remote.

“Before the coronavirus pandemic, South Korea was pushing hard for an FTA but China was not ready to open up its services sector,” said Choo.

“Now China wants it, but Seoul is reluctant because Korean companies have lost so much competitiveness against their Chinese rivals in recent years.”

A Japanese official conceded that chances of a breakthrough on free trade talks were low, stressing that “the most important thing is to make sure that tensions [in the region] will not escalate”.

Another Japanese official said it was possible the three-way summit would not even produce a joint statement, although the leaders are expected to discuss security issues to some extent. “It will be considered progress if the three countries can resume trilateral talks and agree to hold them regularly,” the official said.

A Chinese scholar with knowledge of the talks said it was “very important” to restart the dialogue after five years.

Beijing feared the development of a new cold war and did not want to see the formation of a bloc in north-east Asia with China, North Korea and Moscow facing off against South Korea and Japan backed by the US, the scholar said.

Although Chinese officials probably expected little progress on these security issues or on trade agreements at this week’s talks, simply agreeing to resume the annual dialogue would be positive and “contribute to trilateral co-operation”, he added.