Beijing Review - 29.08.2019

22 BEIJING REVIEW AUGUST 29, 2019 http://www.bjreview.com

WORLD

T

he value chain, along which there are

already escalating trade frictions and

conflicts, will be the center of global

competition in the future. The Asia-Pacific

value chain, particularly the East Asian one, is

critical for global trade, being a major driver of

global growth. However, the new trade frictions

between China and the U.S. as well as between

Japan and the Republic of Korea (ROK) are caus-

ing structural damage to the chain, which may

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ing a country’s global status in science and

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global economy and trade.

The first salvo in this dispute was fired on

July 1 when Japan announced restrictions on

the sale of Japanese chemicals essential to the

ROK’s electronic industry. It said exports of the

key materials used to make semiconductors

and digital displays would have to be approved

by its Ministry of Economy, Trade and Industry

on a contract-by-contract basis.

Leading ROK electronic companies such

as Samsung, LG and SK Group have been

highly dependent on Japanese chemicals for

manufacturing products like television sets and

cellphones. The semiconductor industry of the

ROK, a pillar industry accounting for 20 percent

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not only lead to its contraction and stagnation

in trade growth, but also have a long-term and

far-reaching impact on regional economic inte-

gration, including trade agreements such as the

Regional Comprehensive Economic Partnership

(RCEP) and the China-Japan-ROK Free Trade

Agreement (FTA).

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On August 2, Japan’s cabinet decided to remove

the ROK from its whitelist of preferential trade

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the ROK also dropped Japan from its whitelist

the same day. The trade friction, which partly

stems from the continuing disputes on his-

torical issues between the two neighbors, also

demonstrates the rivalry for dominance of the

hi-tech sector led by 5G communication, quan-

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more than bilateral ties By Zhang Monan

Storm After Sunshine

XINHUA

Consumers select products made in the Republic of Korea at a store in Tokyo, Japan, on August 2

The author is a senior

researcher with China

Center for International

Economic Exchanges