President Biden signs executive order to reduce imports from China…
In solidarity with allies, the United States has stepped forward to lower its dependence on China for core materials and components such as semiconductors, batteries, rare earths, and medical products. It is a plan to establish a supply chain for these major items, excluding China. In particular, if China uses rare earth as a weapon and presses against various disputes in the future, it is expected that the damage will be great, and it is interpreted that it has hurried to prepare. In addition, there seems to be a meaning to secure supply stability as domestic automakers have recently stopped some lines due to a lack of supply of semiconductors for vehicles.
According to local media, US President Joe Biden issued an executive order on the 24th (local time) to conduct a 100-day review of the supply chain of four key items, including semiconductor chips, large-capacity batteries for electric vehicles, rare earths, and pharmaceuticals. Signed. In addition to the four items, the executive order also requires a one-year review of the supply chain for six industries, including defense, health, information and communication technology, energy, transportation, and agricultural products and food. Specific cooperation measures with allied countries are known to include ▲ sharing supply chain information of major products among allied countries ▲ reviewing plans to support each other quickly in an emergency situation ▲ consultation on the establishment of stockpile and surplus productivity ▲ mutual supplementation of production items.
Prior to the signing of the executive order, President Biden called in about 10 opposition members of the Senate and House of Representatives to the White House to request bipartisan cooperation. At the signing ceremony, President Biden emphasized the semiconductor industry in particular, saying, “The short supply of semiconductor chips has delayed the production of automobiles and reduced working hours for American workers.” President Biden spoke before signing the day, listening to semiconductor chips and emphasizing the importance of semiconductors. In addition, he said, “We should not rely on the supply chain in a country that does not share our interests and values. It is not enough to solve a problem in the semiconductor supply chain after a problem occurs, and we need to increase the manufacturing base by focusing on research and development like the 1960s. He emphasized. President Biden also expressed his intention to pursue a bill to fund semiconductors.
The US currently imports about 80% of its rare earth usage from China. It is expected that these rare earth importers will be diverted to import from Australia and other Asian countries instead of China. This is because there is a concern that China will weaponize its materials and parts in a situation where the US-China trade war intensifies since 2018. In fact, China once restricted the export of rare earths to Japan, which had a territorial dispute over the Senkaku Islands (Chinese name Diaoyudao) in 2010.
Semiconductors are also considered as representative items that China can weaponize. There are about five countries with major semiconductor manufacturers: Korea, Taiwan, China, Japan, and the United States, and China’s market share is increasing. Last year, Taiwan and Korea ranked first and second with 22% and 21% respectively. China’s market share is 3rd with 15%, but it is expected to increase to 24% by 2030 and become the world’s No. 1 market. The U.S. is concerned that the national security may be shaken if trade restrictions are placed after neglecting dependence on China for semiconductors.
As the Biden administration starts to check the public like this, interest is also drawn to the gains and losses that will affect Korea. This is because it includes semiconductor chips and vehicle batteries that Korea has a technological advantage in the global market, and can affect the domestic industry according to the results of the review.
At first glance, it may be helpful for Samsung Electronics to invest in the expansion of US semiconductor production lines, but it is analyzed that it may be hit in the Chinese market, which accounts for the overwhelming export share of domestic companies. The result may be toward fostering own companies or attracting foreign companies by focusing on increasing the production of these items in the US. In addition, if South Korea is passive about its security strategy to besiege China while the US is pressing its allies with the rein of its semiconductor supply chain, the US may choose Japan and Taiwan as partners for semiconductor cooperation. In addition, this executive order could lead to a new phase in the conflict between Korea and Japan, which ignited in Japan’s’regulation on the export of semiconductor materials. This is because the U.S. can actively mediate the conflict between the two countries in a situation where the United States is using its allies to stabilize its supply chain.
White House officials said the executive order was not aimed at China, but more focused on supply diversification, but said that over-reliance on China and hostile countries for major items is a key risk to be resolved.
China is critical of this executive order. Chinese Foreign Ministry spokesman Zhao Li Zhen said in a regular briefing on the 25th, “It is impractical to artificially promote industrial transfer and decoupling (decoupling), and to forcefully change economic rules with political power, and cannot solve the problems faced by the country concerned.” “It also hurts the global industrial network and supply chain,” he said. He added, “I hope the United States will respect market rules and free trade rules and protect industrial and supply chain stability.”