Possible Korea Boon
Tony Blinken, the U.S. Secretary of State who is currently visiting China, has announced that he met with President Xi Jinping of China and reached an agreement on the stabilization of U.S.-China relations.
From June 18 to 19, Secretary Blinken had a two-day schedule during which he sequentially met Wang Yi, Minister of Foreign Affairs of China – also a member of the Central Political Bureau of the Communist Party of China and Director of the Office of the Central Foreign Affairs Commission – and President Xi. The meeting with President Xi was officially confirmed about an hour before it began.
This visit to China by Secretary Blinken is the first high-level visit by the Biden administration and the first by a U.S. Secretary of State in five years. In response, China welcomed the resumption of high-level diplomatic channels but hinted that there are still many issues to be resolved, such as U.S. hard-line policy toward China and the Taiwan issue. However, it is being evaluated as significant that the two countries have opened a dialogue. The possibility of a face-to-face summit between President Joe Biden of the United States and President Xi within this year is also believed to have increased.
Secretary Blinken had a meeting with President Xi Jinping of China at the Great Hall of the People in Beijing for about 35 minutes on June 19. At the meeting, both sides agreed that the intense competition between the United States and China should not escalate into a conflict, which is not in line with the “common interests.”
President Xi emphasized the need to improve bilateral relations, saying, “I believe that the two great powers can find a way to coexist peacefully and benefit each other,” and “the future and fate of humanity depends on whether the two countries can coexist properly.” He also made it clear that “China will respect the interests of the United States and will not challenge or replace the United States,” but emphasized that “the United States must also respect China and not harm its legitimate rights.”
In response, Secretary Blinken emphasized that “President Biden believes that it is in the interest of the United States, China, and the world for the U.S. and China to manage bilateral relations responsibly and dutifully,” and confirmed that “the United States does not seek to change China’s system, does not support ‘Taiwan independence,’ and does not intend to conflict with China.” In effect, he emphasized ‘responsibility and duty’ not to create conflict with China.
After the meeting with President Xi, at a press conference explaining the results of his visit to China, Secretary Blinken once again emphasized the need to “manage bilateral relations responsibly.” He also revealed that there was a discussion on China's role in North Korea’s missile launch and the cessation of the war in Ukraine. China also promised not to provide lethal weapons to Russia in relation to the war in Ukraine. However, he also expressed concern about China’s provocative behavior in the Taiwan Strait and the South China Sea.
Furthermore, Secretary Blinken addressed China’s nuclear power enhancement and hypersonic missile development, stating that “it is not in our interest to provide technology that could be used against us.” Recently, the United States has adopted a ‘de-risking’ strategy that aims to reduce the risk associated with economic and trade dependency on China, rather than a ‘decoupling’ approach, which would entail a complete separation from China in key industrial supply chains like advanced semiconductors. Despite this, the U.S. clearly expressed its intent not to overlook China’s ‘technological ambitions’ that are linked with military escalation.
At the press conference, Secretary Blinken distinguished between de-risking and decoupling. He reiterated that “as Treasury Secretary Janet Yellen testified in Congress last week, a complete trade and investment stop with China, or decoupling, would be disastrous for us.” He further added that “healthy and strong economic exchanges between the U.S. and China will benefit both countries,” thus confirming that severing trade relations with China, as implied by the term decoupling, is not an option for the U.S.
Secretary Blinken emphasized, “The U.S. supports de-risking and diversification,” and “we will strengthen the protection of key technologies to ensure that U.S. technology is not used against the U.S.” In this meeting, it was made clear to the Chinese side that the U.S. will continue targeted measures necessary for national security. For instance, providing China with certain technologies that could be used for opaque nuclear weapons programs, hypersonic missile development, and oppressive purposes is not in the interest of the U.S.
He explained, “The actions that the U.S. is taking, has already taken, and will continue to take as needed are carefully planned and focused on advancing and protecting national security. I believe this is a significant difference [between decoupling and de-risking].” In other words, while the U.S. will continue trade and investment with China, it strongly maintains that severance from China regarding technologies that could potentially enhance China’s military power and weaken U.S. security will be pursued.
Thus, the consensus is that the focus of de-risking will be advanced semiconductors. The U.S. has strongly expressed its will to prevent China from accessing the technology of the U.S. and its allies in the field of advanced semiconductors, which could be a game changer in narrowing the military gap between the U.S. and China by being used in artificial intelligence (AI) and precision weapons.
Expectations are high that the warming of U.S.-China relations sparked by this meeting could also have a positive impact on the domestic industry. As the U.S.-China relationship has recently been on a deteriorating path, South Korea has also been caught in a dilemma, with tensions with China escalating. Particularly, this could work favorably for Korean companies that have received a reprieve from U.S. export controls, extending the grace period for these companies.
Both the U.S. and China are expected to continue their dialogue not only in economic terms but also at a political level. If bilateral relations stabilize to a certain extent, there is a possibility of a second face-to-face summit between President Biden and President Xi Jinping, possibly coinciding with the Asia-Pacific Economic Cooperation Summit in San Francisco in November, which President Xi is expected to attend.