US-China Tech Tensions: South Korea Breathes Sigh of Relief as Damage from US Regulation Deemed Limited

Domestic industries also say, “Conflict between the US and China is routine”… Public-private cooperation is needed to respond to detailed legislation

Regarding the U.S. government’s announcement of an administrative rule restricting domestic capital’s investment in China in the high-tech sector, the government believes that the regulation will not have a significant impact on the Korean economy.

The Ministry of Trade, Industry and Energy issued an explanatory document on the 29th and said, “Considering those obligated to comply and those subject to investment restrictions, the direct impact on our economy is expected to be limited.”

The purpose of this regulation is to prevent a situation where overseas investment by Americans (companies) in cutting-edge technology threatens American security by strengthening China’s military, intelligence, surveillance, and cyber capabilities.

The government said, “We plan to analyze the future impact on our economy from various angles and actively seek response measures while communicating closely with domestic industries and experts.”

The domestic industry is of the position that this announcement from the United States is not new. An industry insider said, “The U.S. sanctions against China are not a recent occurrence,” and added, “We are investing in diversifying the supply chain, so I don’t think there will be any immediate problems.” However, as the United States controls the export of semiconductor equipment and semiconductor chips and also restricts Chinese investment in cutting-edge technologies including these fields, the conflict between the United States and China over core technologies for national security is expected to intensify and have greater ramifications.

Kim Jong-deok, head of the Trade, Trade and Security Office at the Korea Institute for International Economic Policy, said, “I think we will have to wait and see how the regulations will be concreted through detailed legislation. In the long term, as discussions on reorganization of the entire supply chain are needed, government monitoring and the public-private sector for supply chain diversification are needed.” “This is a time when cooperation is most important.”