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The issue of peace in North Korea and Asia

Giancarlo Elia Valori

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Much has already been decided in the best way for peace on the Korean peninsula and, indirectly, in the South Pacific region and even for the US power projection onto Asia.

In fact, after almost five years since the proclamation of his byungjin policy in March 2013, Kim Jong Un has announced “a new strategic policy line”.

It is worth recalling that, in Kim Jong Un’s thought, byungjin is the parallel development of the economy and military and strategic research and supremacy.

I make no secret of the fact that – as stated by the North Korea’s leadership in a letter sent to me – much has been done by me, who has tried to analyze the issue of North Korean nuclear and missile systems with the help of my long-standing friendship for North Korea and of the trust I have gained there over many years – trust that also many US friends have ensured to me.

However, I owe much to the free and friendly discussions I had on all the most important political and strategic issues with Kim Yong-Nam, the President of the Presidium of the Supreme People’s Assembly of North Korea – an extraordinary figure who was also North Korean Foreign Minister from 1983 to 1998, the year in which he was appointed to his current post.

Kim Yong Nam was, inter alia, the promoter of many North Korea’s openings to Africa – new strategic spaces that will be essential also in the upcoming talks between North Korea and the United States.

It is certainly not by mere coincidence that Kim Yong-Nam was present at the opening ceremony of the 2018 Winter Olympics. He is particularly trusted by the Supreme Leader, Kim Jong-Un, and national security – and hence North Korea’s positioning in the world – is currently the most important issue for the country.

If the byungjin policy “has been successful” – as Kim Jong-Un has recently stated – this is also due to the policy line that the North Korean leader has put in place since the beginning of his power, in 2012: reducing internal bureaucracy; renewing the country’s positioning in the world; making the most of the strategic threat of nuclear missiles to later achieve the eminently peaceful, political and economic goals of his policy “line”.

The core of the current “turning point” in North Korea’s policy line lies in Kim Jong-Un’s latest (and first) visit to China.

The Chinese President, Xi Jinping, wanted to know whether, pending a future meeting – already scheduled – between Kim Jong-Un and US President Trump, either of them could make improper moves that could create the conditions for a future war – something that China absolutely wants to avoid.

Therefore Kim Jong-Un reassured the Chinese President that North Korea wanted to negotiate in good faith, with a view to achieving a new equilibrium in the whole  South Asian ocean region.

China also wanted to check whether Kim Jong-Un’s moves against the United States were only a way to play for time or rather a real willingness to negotiate.

If this had not happened, China would have moved its pawns directly in the United States.

In this regard, however, Kim Jong-Un provided every credible guarantee.

Moreover, China wants North Korea’s greater bilateral openness with it – a North Korea which, over the last few years, has slowly put an end to its traditional links with the Chinese Communism of the “Four Modernizations” and beyond.

Xi Jinping’s guarantee helped also the United States to understand that the negotiations were realistic and that there was no danger of imminent war on the Korean peninsula – a military confrontation that China would have avoided anyway, for better or worse.

On the other hand, Kim Jong-Un has always pointed out – also to President Xi Jinping in his first, but not last trip to China -that he believed President Trump’s threats were fully credible and that any US attack on North Korea would create tough reactions in China.

China does not want to have military borders with the United States and also believes that the presence of North American forces in South Korea is also aimed at the containment of Communist China.

This is the strategic usefulness of North Korea for China, but this also applies to Russia.

In both cases, Russia and China would be greatly damaged by any military operation entailing confrontation with the North Korean forces – a clash which would inevitably enlarge to the Russian and Chinese borders with South Korea.

Kim Jong-Un has used his strategic position with great intelligence.

Moreover, the United States cannot really wage war against North Korea: 85% of North Korean nuclear facilities are less than 100 kilometers from the border with China and the latter has already deployed at least 160,000 soldiers in its border area with North Korea, who can move quickly to the clash region.

Hence any war between China and the United States on the Korean peninsula depends on whether the United States really wants to knock China out – and this would be a suicidal move for the United States.

This is the reason why China has always thought that the two countries, namely North Korea and the United States, should have started dealing with each other long time ago.

Even with the bilateral mechanism alone.

This is also the reason why the news of bilateral talks between Kim Jong-Un and President Trump was the best thing that China could expect.

Hence, over and above full autonomy for both countries, China would alsolike to sit at the negotiating table to prevent either country from harming Chinese interest or making bilateral peace at China’s expense.

Whatever the outcome of the talks between President Trump and Kim Jong-Un will be, if it does not harm China’s direct interest in the region, it will be welcome for China which will anyway have time to make this US Presidency come to an end and clarify the future balance of power in the region – balance that no future US President will later be in a position to undermine.

We also imagine that China has already prepared military plans if President Trump or even Kim Jong-Un (albeit this is far less likely) did not fulfil their obligations, thus creating tension or even a “limited war” on the Korean peninsula.

It is easy to think that President Xi Jinping has already prepared plans to control the region on his own, without the support of either of the two countries, namely the United States and North Korea.

It is precisely the new linkage between Kim Jong-Un and Xi Jinping that has set the pace for the future peace talks.

“The issue of denuclearization can be resolved if South Korea and the United States respond to our efforts with goodwill and create an atmosphere of peace and stability while taking coordinated, progressive and synchronized measures to achieve peace”.

It is a statement made by Kim Jong-Un, as reported by the New China News Agency.

Currently North Korea wants to make it clear to the United States and to the rest of the West that it wants only one thing: the slackening of the joint US and South Korean pressure on the country, as well as the start of credible economic development or its full involvement in theregional globalization of Southeast Asia.

In fact, this was the dual purpose of North Korea’snuclear and missile systems: to pose such a vast threat as to make North Korea find itself more in the spotlight and no longer remain in the twilight zone of the old Cold War, thus enabling it to hold tough and definitive negotiations – almost on an equal footing – leading to strategic autonomy and economic internationalization.

With specific reference to Japan, it is both tempted by the new phase and suspicious of the future negotiations between President Trump and Kim Jong-Un.

On the one hand, Prime Minister Shinzo Abe wants President Trump not to neglect – in the negotiations with Kim Jong-Un – the issue of short- and intermediate-range missiles, which can easily hit Japan.

In fact, in spite of Japan, new Secretary of State Mike Pompeo had recently made it clear that the talks between North Korea and the United States would be focused only on intercontinental ballistic missiles.

Moreover, in the future bilateral talks, Shinzo Abe wants the United States to raise the long-disputed issue of the Japanese citizens allegedly “kidnapped” by North Korea.

It is an always fundamental issue for Japanese propaganda, but central to Shinzo Abe’s career.

Therefore, instead of asking for a place at the negotiating table, Japan delegates the United States.

We do not believe this is a forward-looking policy.

If peace with North Korea were finally achieved, this could also have positive results for Shinzo Abe.

President Trump has promised to Japan he will do everything for achieving North Korea’s full denuclearization and for eliminating all weapons of mass destruction still existing in the Pyongyang area, as well as for improving the “strategic triangle” between South Korea, Japan and the United States.

Kim Jong-Un, however, will always deal on a very broad basis of topics, ranging from missile engines to carriers, from nuclear devices to chemical and bacteriological weapons.

A wide range of issues that Kim Jong-Un will tackle with the United States for as long as it takes, considering that the missiles themselves attracted the attention of the United States and its regional allies to hold effective negotiations that would have never taken place without weapons of mass destruction and ballistic launches.

In that case North Korea would have been a sort of irrelevant maritime Tibet, without strategic clout, without autonomy and even without the ability to hold serious talks with “friendly” States, namely China, Iran and the Russian Federation.

Hence the political usefulness of North Korea’s nuclear and missile system has been very high.

In fact, it is the level of political and military autonomy that will allow futurenegotiations with President Trump – probably not on an equal footing, but at least with similar strategic potentials and with a fully credible US attack-reaction capacity.

It was exactly what Kim Jong-Un had been looking for years, so as to make the best use of his military system, with a view to getting out of his currently-closed economy and enable North Korea to experience positive economic globalization, not linked to the dollar and regional raw materials cycles.

It was the Russian Federation that officially informed the United States of Kim Jong-Un’ readiness to deal withit, although Russia is currently not so optimistic about the results of future talks between Kim Jong-Un and President Trump.

Firstly, the Russian Federation views the sanctions against North Korea – never approved by the UN Security Council –  as serious obstacles to peace and as US illegal actions.

Moreover, Russia believes that North Korea’s nuclear and missile military system has a fully defensive nature and is mainly designed to avoid a regime change in North Korea itself, obviously sponsored by the United States and implemented starting from South Korea, which would also bear the most severe brunt.

Once again Russia is not fully convinced that the United States is credible, given its choice to continue military exercises with South Korea after a brief temporary stop  during the Peyongchang Winter Olympics.

In fact, in an official statement made on March 3 last, the North Korean government announced it would respond militarily to new joint exercises between South Korea and the United States.

Furthermore, if the peace talks between President Trump and Kim Jong-Un failed, the Russian Federation would create a multilateral network that should improve North Korea’ security and encourage less brutal negotiations by the United States.

For Iran the issue of North Korea-US bilateral talks is even more complex. In fact, while Iran had no official reaction when, on March 8 last, the White House announced it had accepted Kim Jong-Un’s invitation to hold new bilateral talks, it is mainly interested in the new configuration – if any – of the JCPOA, i.e. the Treaty on nuclear weapons and their production in the Shi’ite Islamic Republic.

In fact, Iran fears that if the North Korean negotiationsgo well for Trump, the US President could have many incentives not to renew the JCPOA.

Moreover, if the American strategy keeps on defining the axis between Iran, North Korea and Iraq as the “axis of evil”, Iran fears that peace with North Korea will make the US hawks’ attention focus only on Iran.

Hence the skepticism of the Iranian leaders, who do not believe that a “revanchist” US President and America First can really reach a true agreement with North Korea.

Iran wants the maximum opening of negotiations for the reduction of North Korea’s military, nuclear and missile potential with China, the Russian Federation, Japan and the European Union.

Certainly multilateral negotiations would be such as to guarantee everyone from the beginning, but we believe that success in the relations between the United States alone and  Kim Jong Un’s new policy line, will open up stable prospects for redesigning the whole Pacific region.

Moreover, we believe that never more than now Kim Jong-Un is both realistic and sincere in his willingness to negotiate with the United States.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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China & Nepal working towards a genuine good-neighbour tie

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Authors: Himal Neupane & Jamal Ait Laadam

Although China and Nepal are very different in terms of each territorial size, population, economic capacity, technological prowess and above all military power, the bilateral relations between them have been undergone consistently and significantly. Since 1955 when China and Nepal formally recognized each with, their bilateral relationship has been characterized by equality, harmonious coexistence, everlasting friendship and overall cooperation. Particularly during the past over 40 years, China and Nepal have undergone substantial developments in view of mutual understandings. For example, in 1996 the two sides for the first time agreed to build up a good-neighbour partnership of the 21st century.

In line with this spirit of mutual respect and equality, Chinese President Xi Jinping paid a state visit to Nepal on October 12-13, during which the heads of the two states formally announced that they elevated the China-Nepal Comprehensive Partnership of Cooperation to Strategic Partnership of Cooperation in light of their many common values to enhance cooperation It is reported that President Xi frankly said Nepal wouldn’t be a landlocked country in the future as the trans-Himalayan connectivity network ultimately will support sustainable development and stability of the entire South Asia region. This is not only a promise from a large neighbor, but also a sort of responsibility from a rising major power of the world, which aims along with other parties, either large or small,  to create an international community of shared future.

Accordingly, on October 12, Nepal and China signed 18 memorandums of understanding and two letters of exchange. The priority was laid down with a focus on the implementation of signed agreements and acknowledged policies. Besides, they also reaffirmed the commitment to broaden the level of cooperation under the spirit of the Belt and Road Initiative (BRI). Moreover, China and Nepal have agreed to enhance connectivity through ports, railways, roads, aviation and communications within the broad framework of the BRI and the Trans-Himalayan Multi-Dimensional Connectivity Network which are of strategic significance. As Chinese President Xi put it, “our two peoples have shared weal and woe, and set an example of friendly exchanges between neighboring countries, and we would act to carry forward the traditional friendship and take the bilateral relationship to a new and higher level via his state visit to Nepal.

For sure, nothing is free in the realm of international politics as the realists argue what China and Nepal need from each other are their common geopolitical and geo-economical interests? This kind of inquiry is sensible and also cynical. In fact, historically China and Nepal had been at good terms for a few centuries, and during the British colonial era, Nepal actually acted as a natural buffer state between imperial China and colonial India. Since 1949 when the People’s Republic of China was founded soon after the independence of India, Nepal ended its isolation and forged amicable ties with India and other countries. Initially, Nepal had close ties to India in terms of culture, ethnics and even military affair, but it never accepts external domination. In 1955 Nepal formally recognized Beijing as the legitimate government of China and since then, it has consistently supported China in foreign affairs. Meanwhile, China has offered economic aid to Nepali reconstruction in a gradual way.

However, since the 1980s, China has steadily transformed itself into the second largest economy of the world with its alarming manufacturing capability and progressive technologies. Due to this, China has provided more assistances to Nepal and other neighbours to share Chinese public goods, especially in terms of the infrastructure projects and alleviation of poverty. For example, President Xi announced in 2018, “In the coming three years, China will provide assistance worth RMB 60 billion to developing countries and international organizations participating in the Belt and Road Initiative, and contributing an additional RMB 100 billion to the Silk Road Fund.” As a developing country nestled in the heart of the Himalaya, Nepal surely needs to expand its infrastructure through involving itself into the BRI with the view to exploring and finally harnessing its huge potential sources —hydropower—for export.

Strategically speaking, China needs to maintain its border areas peaceful and stable in light of its “NEWS strategy” that means while China tries to consolidate its entente partnership with Russia on the North and pacifying its East coast, it necessarily aims to sustain the BRI projects to the West and the maritime silk route to the South. This is the core of the NEWS strategy initiated by the Chinese elite since President Xi took power. Consider Nepal’s strategic location and political stability, China is sure to promote the bilateral ties as the two previous MOUs were signed in Beijing including to rebuild Chinese—Nepali transit road network agreements. It will help northern Himalayan areas get an alternative transit route and also facilitate the local economics, as much important part of the BRI as the economic corridor between China and Pakistan. Moreover, since 2016, a freight rail line was even completed linking Lanzhou, a heavy industrial city in the West of China through Xigaze in Tibet, down to the capital of Nepal. This is a truly strategic pivot of the grand BRI project.

To that end, President Xi revealed to his Nepali counterpart Bidhya Devi Bhandari that the two sides should work closely to carry out the construction of a trans-Himalayan connectivity network, and expand exchanges and cooperation in various fields. For her part, Nepali President Bhandari graciously welcomed Xi’s state visit to Nepal and stressed that the rise of China backed up by its modernization drive will help bring benefits to Nepal and promote regional peace and prosperity. In light of this cordiality, the two governments issued a joint statement on Oct. 13, agreeing on more practical cooperation in the new phase of bilateral relations. For a few key points serve to inllustrate that first, the two sides agreed to take the BRI as an opportunity to deepen mutual benefits in arious fields including the Kathmandu-Pokhara-Lumbini Railway Project. Furthermore, cooperation will cover the Zhangmu/Khasa port, the Lizi/Nechung port, and the three North-South corridors in Nepal. Second, the two sides will hold comprehensive discussions to strengthen trade relations, including to take positive measures to increase Nepal’s exports to China and to facilitate Chinese banks to open their branches and other financial services in Nepal. Last, China promises to help Nepal shake off the status of being a least developed country and achieve the sustainable development goals in the next two decades.

Since states are committed to each other by the nature of the world in which they exist, any close cooperation between China and Nepal is never bilateral only, that means there is always local, regional and international concerns, suspicions and even hostilities towards either China or Nepal or both. Geopolitically, India is the first power, understandably, to feel uncomfortable if not angry. This is the reason why President Xi made his first trip to India prior to his state visit to Nepal, and held comprehensive talks with Indian Prime Minister Modi. Second, China and Nepal also need to coordinate each other deftly to convince other neighbours such as Sri Lanka and Bangladesh that any sort of their cooperation would never be exclusive but inclusive and open all others in the South Asia. Geo-economically, China has reiterated that it would not seek to use its economic or financial leverages to “dictate” the local affairs of the recipient countries. Meanwhile, Chinese companies also need to move in prudently and read the local laws and political norms before jumping into the businesses.

Xi has frequently said, China is the largest developing country and also a learning country all the time. In order to promote China’s strategy to link the countries involved, mutual respect and equality are the prior condition to the long-term cooperation. In light of this, it is expected that Xi’s state visit to Nepal, the first one by a president of China over the past 26 years, will unlock new strategic opportunities for bilateral relations, as well as positively promote their ties with India by understanding the prospects for trilateral cooperation. It is clear that Chinese-Nepali economic integration through BRI is unstoppable, so it is sensible for India and the others in the region to take the opportunity to extend the proposed high-speed railway between those two all the way south to the nearby West Bengal port of Kolkata to more closely tie the three together in a system of complex economic interdependence. This is a balanced approach to prevent an open rivalry between the key member states of the BRICS and the SCO over their common neighbors. Given this, Xi’s visit to both India and Nepal might be the very time to enhance the trilateral understanding among Nepal with its giant neighbor. To that end, Nepal, though a much smaller state compared to China and India, could play positively a role as the bridge for building a more trust-based relationship across this region.

China has showed its willingness to share with Nepal its development experiences, practices and inclusive economic governance approaches. In doing so, geopolitical factors should never be the obstacles for China-Nepal cooperation. Rather, Nepal could serve as a dynamic bridge between China and India, and China and South Asia.

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Semiconductor War between Japan and South Korea

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Authors: Gleb Toropchin and Anastasia Tolstukhina

In the summer of 2019, a trade conflict broke out between Tokyo and Seoul and the matter is about more than the history between the two countries. The two developed economies have long been locked in a competition on the global cutting-edge technologies market. At the same time, they are links in the same technological chain.

At first glance, the exchange of trade restrictions that is taking place against the background of mutual accusations is nobody’s business but Tokyo and Seoul’s. Nonetheless, the consequences of the confrontation between the two countries have a global nature. The present article analyses the causes of the disagreements and looks at how the situation may develop

Introducing Restrictions and Removal from the “White List”

Despite the events of the colonial past [1], as well as the current territorial disputes that are so typical of Asia’s international politics [2], South Korea is one of Japan’s three largest trade partners. Japan exports into South Korea up to $54 billion in goodsThe key commodities include semiconductors and materials for their manufacture

The dependence of South Korean companies on imports of fluorinated polyimides and photoresists exceeds 90 percent, and their dependence on imports of hydrogen fluoride is around 44 percent (although this figure has fallen gradually from 72 percent in 2010)

However, on July 1, 2019, the Government of Japan announced restrictions on the export of commodities to South Korea that are of critical importance for microelectronics, and on July 4, the changes to the procedure came into force

Given the long-established delivery mechanism, such a political step was a surprise for many. The restrictions mainly affected three key materials for the microelectronics industry: fluorinated polyimides, hydrogen fluoride, and photoresists (these materials are used in the manufacturing of semiconductors and display panels). This measure does not mean that deliveries of these materials to South Korea have been completely stopped; however, from now on, it may take up to 90 days to approve transactions. Additionally, Japan said it would be taking South Korea off its “white list” of trade partners. The list includes states that are believed to be safe from the point of view of exporting strategic commodities and that are granted trade preferences

Let us try to understand why the Government of Japan took such steps

Pressure from Taiwanese and South Korean competitors

In 1986, an agreement was signed between Tokyo and Washington that prohibited Japan from undercutting global semiconductor prices. This step was initially intended to make the United States more competitive. However, even in those circumstances, Japan managed to take a significant chunk of the global semiconductor market from the United States in the late 20th century and retain its high positions until the 2010s. However, as early as 2012, experts noted that pressure from Taiwanese and South Korean competitors resulted in semiconductor sales of Japan’s four chip-makers, Toshiba, Renesas, Sony and Fujitsu taking a marked dip

Samsung Electronics succeeded in mastering the subtleties of developing technologies just at the right time, while Japan began to lag behind in R&D due to problems with formal education, and its revenues from global sales of microelectronics were falling against the backdrop of falling prices and the high exchange rate of the Japanese yen. Among other causes of this phenomenon, Japanese experts cite the desire to create hi-tech goods without account for high costs, and lack of innovative ideas

Today, South Korea is the leading manufacturer of memory microchips. Samsung Electronics and SK Hynix hold two-thirds of the global market. Additionally, both the United States’ Apple and China’s Huawei depend on the products produced by South Korean companies. Integrated circuit units account for 17 percent of South Korea’s exports (the entire microelectronics sector accounts for nearly a quarter of its exports), compared to less than 4 percent for Japan

An analysis of the global microelectronics market demonstrates that, currently, the market particularly values dynamic random-access memory semiconductors (DRAMS) that hold tremendous significance for such cutting-edge technologies as artificial intelligence, the Internet of Things and robotics. South Korea holds impressive positions in this area as well: Samsung and SK Hynix control 72.8 percent of the DRAMS market and 46.8 percent of the global flash memory market

Reasons for Introducing Restrictive Measures

The East Asia Forum reports that Japan’s strategy of opposing Seoul was developed jointly by the country’s Ministry of Economy, Trade and Industry, Ministry of Foreign Affairs and Ministry of Agriculture, Forestry and Fisheries. The Cabinet of Ministers subsequently supported these measures, thereby making the key decision to transfer the issue into the political realm

It appears that Japan’s decision to impose restrictive measures was prompted by the fact that the country has clearly fallen behind technologically on the global microelectronic market, which negatively affects both the country’s economic indicators and its national security

According to the expert June Park, the Government of Japan decided to institute the restrictive measures out of concern for national security, since, in exporting rare materials to South Korea, Tokyo cannot be certain they will be used properly

The Japan Times notes that Tokyo justifies the introduction of increasingly strict export requirements by claiming that confidence in South Korea has been undermined. In particular, some media outlets report that between 2015 and March 2019, no fewer than 156 materials, including hydrogen fluoride, were smuggled out of South Korea. There were also reports of hydrogen fluoride being exported to countries that are under international sanctions (Iran, Syria and even North Korea). Another reason for the restrictions is Tokyo’s concerns that South Korea violates intellectual property rights

South Korea denies all accusations. Its arguments are logical: Iran and Syria are friends of North Korea, therefore, Seoul has no reasons to help their regimes. President of South Korea Moon Jae-in called for the differences to be resolved by diplomatic means. However, the talks held on July 12, 2019, in Tokyo did not yield any results. Consequently, Moon Jae-in instructed the relevant agencies to develop reciprocal measures. At about the same time, there were reports of South Korea possibly filing a grievance with the World Trade Organization. As a result, hearings on the issue were launched in Geneva on July 24, 2019

In late July 2019, news broke that Tokyo was considering further restrictions since Japan believes the re-selling of strategic materials by Seoul to be a violation of the non-proliferation regimes regarding both weapons of mass destruction and conventional weapons. In this case, the restrictions would extend to other types of commodities and materials. On August 2, the Cabinet of Japan approved the decision to take South Korea off its “white list” (where the Republic of Korea was the only Asian state), thereby depriving it of trade preferences in regard to the materials mentioned above. The full list exceeds 1100 items

Despite these events, several deliveries of these materials from Japan to South Korea were made in August. However, they did not result in a thaw in bilateral relations. Seoul reciprocated by putting Japan on a restrictive trade list and terminating the military intelligence-sharing pact with Tokyo

“Wu Wei” American Style

China holds leading positions in deposits of rare-earth metals. Moreover, approximately 90 percent of the world’s rare-earth magnets are manufactured in China. Japanese companies use China’s raw materials to manufacture fluorinated polyimides, hydrogen fluoride and photoresists that are subsequently supplied to South Korea, Taiwan and other countries to be used in manufacturing chips, displays, etc. The circle is complete when these commodities go back to China to be used in the manufacture of finished products (such as smartphones and tablets), creating a sort of a closed-loop. Thus, the manufacture of competitive hi-tech products today is impossible within a single economy, and Chinese companies depend on parts coming from other Asian countries

Tracing the entire technological chain, we can assume that the Japan–South Korea conflict is closely linked to the trade war between China and the United States. South Korea’s Samsung Electronics is hindered by the restrictions on deliveries of Huawei memory chips since the latter is under U.S. sanctions. In turn, interrupting the chain of semiconductors delivery from South Korea will slow down the development of artificial intelligence in China. And who benefits from this? This is a rhetorical question

It would seem that the United States should be interested in cordial relations between their allies in the region, allies that form a sort of counterbalance to China and are ideological antagonists to North Korea. The White House, however, intentionally or unintentionally, demonstrates adherence to the Taoist principle of inaction, or “wu wei” (无为 in simplified Chinese), which entails a conscious refusal to act and the assumption of a contemplative stance. From the outset of the confrontation in July 2019, the United States announced it would not interfere in the conflict. Despite individual experts calling upon the United States to act as an intermediary between the two Asian states, Washington did not change its position

We should also note here that the Japanese company Toshiba announced the construction of a facility for the production of NAND-type (from the English NOT-AND, that is, a binary logical element) flash memory devices in Iwate Prefecture in cooperation with U.S. chip manufacturer Western Digital. We can cautiously assume that the United States and Japan are progressing toward a “technological union” in order to defeat China in the race for domination of the semiconductor industry

Public Opinion

Speaking of the impact that the conflict has on public opinion in both countries, we can quote a survey conducted by Japan’s Asahi Shimbun in mid-September 2019. Overall, slightly less than one third (29 per cent) of respondents admitted that they had a negative opinion of South Korea. This was far more pronounced among older people, which can be linked to their conservative views and the “proximity aberration” phenomenon (put simply, the older generations remember the events of the 20th century well)

As for South Korea, an anti-Japanese “grassroots” campaign has been launched in addition to the “top-down” process. In the second half of the summer of 2019, slogans『 가지않습니다 사지않습니다 』 (Korean for “Do not visit, do not buy”) calling for boycotting trips to Japan and Japanese goods spread on Korean social networks. And it looks like they were successful to a degree. For instance, the Yonhap News Agency reports that the number of South Koreans travelling to Japan in August fell by 60 per cent compared to the same period last year

In the run-up to the 2020 Summer Olympics in Tokyo, the trade conflict has become a reason for manipulating public opinion in South Korea. Additionally, we cannot rule out the possibility that populists use the disagreements between Japan and South Korea to advance their domestic agenda on the eve of the elections to South Korea’s unicameral parliament scheduled for April 15, 2020

Forecast: Cloudy in the East

Losses from the Japan–South Korea trade war may exceed $80 billion. There has already been a drop in sales of South Korean semiconductors manufactured by Samsung Electronics and SK Hynix. Moreover, the conflict threatens to disrupt the entire global technological production chain in microelectronics. The expert Robert Farley described this conflict (and the U.S.–China trade war) as “weaponizing interdependence.” One of the analysts with The Economist Intelligence Unit called this situation “mutually assured destruction.”

The Yonhap News reports that the consequences of the trade conflict have had greater negative effect on the Japanese economy than on the South Korean economy. For instance, in July–August, South Korean exports to Japan have fallen by 3.5 per cent, while Japanese exports to South Korea have dropped 8.1 per cent

The South Korean economy has also suffered against the backdrop of these events. Here, Seoul has only two ways out of this predicament:

-Transitioning to domestic analogues, which LG Display and Samsung Electronics already did in September of this year. Additionally, the country earmarked 2.1 trillion South Korean won in the 2020 budget to overcome the dependence on the export of rare materials from Japan

-Searching for alternative sources of hydrogen fluoride and other rare materials for microelectronics. Media outlets have reported that Russia might be a potential supplier of high-purity hydrogen fluoride. The head of the Korea International Trade Association said that Moscow had offered to supply hydrogen fluoride to Seoul. However, it is not easy for South Korean companies to transition to Russian imports of this and other materials for microelectronics. The physical and chemical properties of the products must be tested for a rather lengthy period of time (upwards of six months)

Apparently, the status quo on the microelectronic market will continue in the short-term, and both parties will seek ways to minimize losses. And we can already see evidence of this. In September and October, the Government of Japan approved deliveries of hydrogen fluoride to Samsung Electronics and SK Hynix

At the same time, if Tokyo and Seoul fail to find common ground in the medium and long term, then the current global technological chain in microelectronics may be dismantled, which will, of course, negatively affect the growth rate of the global economy. However, so as not to end our study on a pessimistic note, let us note that, under the current circumstances, many hi-tech companies around the world, including those in Russia, now have the chance to become new links in the value chain and occupy its niche in microelectronics

From our partner RIAC

[1] In 1910, the Empire of Japan annexed the entire Korean peninsula. Korea essentially became a Japanese colony. The Japanese language and culture were forced onto the Korean people. Up to 200,000 ethnic Koreans served in the Imperial Japanese Army during World War II (including future president of South Korea and “father of the economic miracle” Park Chung-hee). Today, Japanese war crimes are a subject of talks between South Korea and Japan. In 2015, Minister of Foreign Affairs of Japan Fumio Kishida promised 1 billion yen to the victims of violence in compensation, and Prime Minister Shinzo Abe offered a public apology for Japan’s actions during the war.

[2] The dispute concerns the Liancourt Rocks, a group of small islets that the Koreans call Dokdo (“Solitary Islands”) and the Japanese call Takeshima (“Bamboo Islands”). Back in the early 20th century, Japan claimed sovereignty over these islands; however, following its defeat in World War II, it was forced to abandon its colonial acquisitions. On the other hand, the 1951 Treaty of San Francisco does not mention this territory, which gives Japan formal grounds to dispute the sovereignty of the islands where South Korea maintains military and civil infrastructure.

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Future Trends of China’s Diplomacy

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This year 2019 marked the 70th anniversary of the founding of the People’s Republic of China (PRC), and China’s diplomacy has also gone through a journey of 70 years. The 70-year history of the PRC can be divided into the first 30 years after its founding and the second 40 years since opening and reform were initiated in 1978. The characteristic of china diplomacy is a responsible nation, rational behavior and the confidence of great power.

China had a clear break with the old diplomacy of humiliation; established a new kind of diplomatic relations with other countries on the basis of equality and mutual benefit; secured an equal position and dignity on the global stage; gained diplomatic independence by safeguarding and strengthening national independence, and protecting national security and territorial integrity; settled the border disputes left  over from history with most neighbors by peaceful means, creating a stable neighborhood in general; established strong friendships with the vast majority of developing countries through mutual support; and set up a new diplomatic contingent for seeking the diplomacy of independence. The following are the future expectations of China diplomacy:

Firstly, Deng Xiaoping’s directive, “Don’t seek for leadership,” stays powerful in China’s new diplomacy, so China’s future diplomacy will keep on emphasizing on the management of the crisis, economic diplomacy, multilateral diplomacy, cultural diplomacy, cooperation, and accommodation while protecting the main national interest. Solving problems and managing crises will stay an important characteristic of China’s diplomacy, particularly in its ties with other major powers. Meanwhile, in cooperation with other major powers, China will appear to be more active in managing fundamental global issues at the strategic level.

Secondly, The Chinese government has repeatedly said that China does not have a plan of challenging the international system and has focused on the importance of being a “responsible member” of the universal society. As of late, China has developed new concepts for its foreign policy orientation, just as (1) “new security” emphasizing shared and cooperative security, (2) “peaceful development” focusing on non-violence commitment, (3) “win-win” cooperation denying a zero-sum comprehension of international affairs, and (4) building a “harmonious world” that promoting harmony with diversity, solving conflict through dialogue, and democratization of world governmental issues.

As these concepts demonstrate, China has no desire of being revolutionary in the international system, rather, it intends to be a responsible member of world affairs. Economic diplomacy will remain to be emphasized by china. While trade will keep on being a fundamental diplomatic focus, energy security and energy diplomacy will be given additional accentuation. Energy supply, energy shipment, and energy-saving cooperation will be fields where the diplomacy of china will move forward.

Lastly, Multilateral diplomacy will take on an even greater role in the future diplomacy of China. China will become more involved at the global level and in regional affairs at the United Nations. As the identity of China is more globally and regionally established, the current concept of multilateralism in the overall diplomatic strategy of china can be re-defined to realize national interests, address thorny issues, and provide governance in a complex world. More attempts will be created to improve regional integration between the SCO and East Asian. Finally, various needed diplomatic attempts may need to be further reinforced. China will keep on being cooperative, however, it will likewise be more active. All things considered; cultural diplomacy will be a new attribute of China’s diplomacy. Confucianism, an extremely cosmopolitan doctrine that promotes harmony and peace through human relations, will be an important component of cultural diplomacy, both to strengthen China’s soft power and to reduce the negative result of the China threat theory.

China has accumulated a wealth of experience over the past 70 years, understanding that China cannot develop without the world and that without China the world cannot prosper. China’s future and fate have been closely linked to the rest of the world. What is certain is that China will adhere to the path of peaceful development and that the people of China will join the people from all other countries in working to realize the lofty dream of a harmonious world.

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