Is Gov't Prepared to Tackle U.S.-China Trade War?

      May 24, 2019 13:45

      South Korea is now feeling the full-fledged ripple effects of the U.S.-China trade war. The U.S. has pressured it repeatedly not to use Huawei communications equipment, and the Foreign Ministry here said Thursday, "The U.S. stressed the importance of security involving 5G equipment." Washington has placed Huawei at the top of its list of Chinese targets in the trade war. More fervent U.S. allies -- Japan and Australia -- have already complied and stopped using Huawei equipment. Japan's Soft Bank and Panasonic, as well as ARM of the U.K., which handles 70 percent of global computer chip design, all have recently decided to stop doing business with Huawei.

      But South Korea is not in the same position as Japan, Australia or the U.K. It exports more products to China than to the U.S., EU and Japan combined, and China accounted for a quarter of South Korea's 2017 exports of US$142.1 billion even though there was an unofficial boycott going on. Huawei alone bought $5.1 billion worth of South Korean products and ranks among the top five clients of Samsung Electronics. The Chinese giant may compete with Samsung in the smartphone market, but is also a major client of South Korean-made displays and semiconductors. South Korea therefore stands to be targeted for major retaliatory measures if it refuses to do business with Huawei, and China may well take out its fury on South Korea if it feels that the U.S., EU and Japan are difficult to take on directly.

      The Trump administration has set itself a clear objective not to allow China to rise further in power. The anti-Huawei campaign is part of that bigger conflict. Now that the U.S. and China have taken their gloves off, South Korea's traditional strategy of siding with the U.S. in terms of security and with China for trade no longer works. The U.S. imposed sanctions on Huawei by claiming the Chinese company poses a security threat. If South Korea defends Huawei, it may very well find itself classed as a threat to the U.S.' national security as well.

      The first rumblings came when the Huawei founder's daughter was arrested in Canada late last year, and it did not take a genius to guess that South Korea would probably be asked to take sides. Yet the South Korean government has refused to even talk about this issue until now. Now that the prediction has become a reality, it appears that the government once again finds itself between a rock and a hard place. Will the Moon Jae-in administration commit another mistake by burying its head in the sand?

      South Korea does not have much room to maneuver, stuck as it is between much bigger powers. But it is the duty and responsibility of the government to find a way. The Moon government needs to put as much effort into solving this problem as it has done in setting up feel-good summits with North Korean leader Kim Jong-un.

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