China said it is ready to build better ties with South Korea, courting a key US ally and microchip producer, amid Washington’s campaign to curb Beijing’s access to advanced semiconductor technology.

China is “willing to work with South Korea to adhere to the general direction of good-neighbourliness and friendship”, while also strengthening “strategic communication”, Foreign Minister Wang Yi said in a video meeting with counterpart Park Jin on Monday (Dec 12). He said the two nations should “ensure safe and smooth production and supply chains, maintain the international free trade system, and strengthen cooperation on regional and global issues”, according to the Chinese Foreign Ministry.

While the Chinese readout didn’t mention partnership with South Korea on chips, Wang criticised the US’s Chips and Science Act and the Inflation Reduction Act, which have sought to secure American access to key technologies in Washington’s strategic competition with Beijing. The laws hurt both China and South Korea, Wang said, describing the US as “saboteurs rather than builders” of international rules.

The remarks hint at Chinese worries about the Biden administration’s campaign to curb the tech ambitions of the world’s No 2 economy. Japan and the Netherlands have agreed in principle to join Washington in tightening controls over the export of key chipmaking machinery to China, Bloomberg News reported on Tuesday. 

The US has also been pressuring South Korea to comply with the export controls. A US delegation that includes Assistant Secretary of State for East Asian and Pacific Affairs Daniel Kritenbrink is visiting South Korea and Japan this week. The group met Chinese officials in Langfang, near Beijing, on Sunday and Monday.

South Korea has increasingly found itself caught between its top security ally and biggest trader partner, as competition intensifies between the world’s largest economies. South Korean Trade Minister Ahn Duk-geun said in October that key chip producers Samsung Electronics Co and SK Hynix Inc had won approval from the US to keep operating in China, but that concerns remain over the impact of Washington’s sweeping restrictions.  

On Monday, China challenged the US’s chip curbs at the World Trade Organization (WTO), saying the restrictions threaten the stability of the global supply chain. Matt Murray, the US senior official for Asia-Pacific Economic Cooperation, sought to play down the dispute during an interview on Tuesday with Bloomberg News.

“The WTO is the kind of place to have those sorts of conversations about disputes,” Murray said. “We have disputes in the WTO with some of our closest friends, such as Canada. There’s going to be trade disputes that are brought to the WTO. That’s what it’s for.”

  - Bloomberg