[20th CPC National Congress②] Confrontation with the US Inevitable... Xi May Retaliate in Semiconductors

Low Likelihood of Military Taiwan Unification and US-China Military Conflict Scenario
Relations with South Korea, Allied with the US and 'Chip4' Alliance

[Image source=Yonhap News]

[Asia Economy Beijing=Special Correspondent Kim Hyun-jung] Chinese President Xi Jinping's lifetime presidency system signifies a prolonged 'strong versus strong' confrontation with the United States. At the 19th National Congress of the Communist Party (Party Congress), marking the start of his second term, President Xi raised his voice, saying, "Let us achieve victory in building a comprehensive Xiaokang (moderately prosperous) society and secure the great victory of socialism with Chinese characteristics in the new era." The Cold War system with the so-called 'symbol of capitalism,' the United States, is expected to intensify until 2035, which he defined as the period for 'socialist modernization.'

In particular, as China emphasizes territorial sovereignty as a 'core interest' and defends it as a mission, tensions between the U.S. and China over the Taiwan Strait are expected to escalate further. China appears unwilling to concede any regional dominance, at least in East Asia. Since adopting the Taiwan Relations Act in 2005, China has consistently demonstrated its intentions through measures such as establishing the Air Defense Identification Zone (CADIZ) in 2013, declaring the militarization of the South China Sea in 2015, and conducting large-scale military exercises in the Taiwan Strait last August.

[Image source=EPA Yonhap News]

◆Will China attempt unification of Taiwan by force? = There is an analysis that the third term of Xi Jinping is the opportune time for Taiwan unification. Having revived the title of Mao Zedong's leadership and established the framework for long-term rule, a clear and strong 'achievement' is needed. Moreover, 2027, when the third term ends, marks the 100th anniversary of the founding of the People's Liberation Army, and the completion of the first phase of the defense reform that President Xi has been vigorously promoting since 2015. Around this time, if China surpasses the U.S. in economic scale (Gross Domestic Product, GDP) and elevates its military power to a comparable level, an attempt at unification could occur. According to World Bank (WB) statistics, China's GDP in 2020 was $14.72 trillion (approximately 2,108.64 trillion KRW), reaching about 70% of the U.S. GDP ($20.94 trillion) during the same period.

However, given the strong anti-war sentiment in the Western world due to the Ukraine war and the complex alliance relationships in East Asia, this scenario is not highly likely. Unless the U.S. shows a defense commitment to Taiwan driven by internal political utility, mobilization of U.S. forces stationed in Japan and South Korea, along with alliances with these countries, could be involved simultaneously. Furthermore, if the China-Russia and North Korea-China alliances intervene, it could escalate into a full-scale war, potentially a catastrophic conflict on the scale of World War III. This argument is supported by projections that China's economic growth rate this year will fall significantly short of the 5.5% target and that the timing of surpassing the U.S. in economic scale will be delayed due to the faster-than-expected impacts of low birth rates and aging population.

[Image source=Yonhap News]

◆South Korea joins Chip 4 alliance... Where are Korea-China relations headed?= South Korea, focusing on the Korea-U.S. alliance, is expected to continue an uncomfortable and tense relationship with China. South Korea is already actively participating in the U.S.-led strategic framework. It is riding on the U.S.-led industrial and economic order represented by the 'Chip 4 alliance' and has clearly taken a stance of solidarity in security areas such as the Indo-Pacific strategy and 'Quad Plus (QUAD+).'

Among the policies mentioned as directions for Xi Jinping's third term, the 'dual circulation (Shuangxunhuan)' and 'Taiwan unification' policies, which are also connected to foreign strategy, are expected to affect South Korea. The policy directions for the third term are observed as strengthening 'the Communist Party's overall leadership' in politics, 'dual circulation' and 'common prosperity' in economy and society, realizing 'national reunification' with Taiwan and establishing a 'new type of international relations' and building a 'community with a shared future for mankind' in diplomacy. In fact, these are not significantly different from what was pursued during the first and second terms.

Among these, the dual circulation strategy, considered President Xi's response to U.S.-led containment of China, refers to economic development through expanding domestic demand and scientific and technological innovation, which is likely to conflict with the comprehensive strategic alliance with the U.S. chosen by the Yoon Suk-yeol administration.

In particular, depending on the response strategy President Xi announces after confirming his third term, significant repercussions are expected for South Korean industries and companies regarding the U.S.'s semiconductor export restrictions against China announced on the 7th. If China retaliates against the U.S. by leveraging critical mineral resources such as rare earth elements, South Korean companies could also be directly hit.

However, it seems unlikely that China will directly impose economic retaliation on South Korean companies such as Samsung Electronics and SK Hynix.

China has already used most possible cards to pressure South Korea since the deployment of the Terminal High Altitude Area Defense (THAAD) system. Before the THAAD deployment, the distribution, tourism, and cultural content industries in the Chinese market, which had experienced a renaissance, were cut off through indirect methods such as crackdowns and reviews without explicit regulations. Even amid this, there was no comprehensive retaliation against semiconductor companies. Samsung Electronics operates factories in Xi'an (NAND flash) and Suzhou (packaging) in China, while Hynix has factories in Wuxi (DRAM) and Dalian (NAND flash).

On the contrary, some opinions suggest that South Korea's geopolitical and geostrategic value may relatively improve. Professor Joo Jae-woo of Kyung Hee University emphasized, "China has limited options to check South Korea," adding, "If China imposes sanctions on South Korea due to participation in the Chip 4 alliance, it will inevitably disrupt China's semiconductor supply, which would be fatal to China's development of the Fourth Industrial Revolution." Professor Joo stressed, "We should take this as an opportunity to strengthen our leverage over China," and "To do so, we must promptly establish and implement our diplomatic principles toward China."

This content was produced with the assistance of AI translation services.