Issue Supply-chain participation choice pressure on Korea from US and Chinese controls

Summary

Because Korea is closely tied to both powers economically and diplomatically, it is likely to face pressure from one side or the other on specific issues as their conflict deepens. Tighter US and Chinese controls on overseas production and re-exports could hurt domestic industries and limit Korea's participation in global supply chains. The report warns that if Korea joins US sanctions on China actively, Beijing is likely to step up pressure on Korean firms. It calls for thorough management of whether US or Chinese technologies and products are embedded across components, equipment, facilities and finished goods, including a system to trace inputs of Chinese rare earths. Korea should also use supply-chain channels with China to prevent export licences from being delayed on the grounds of its close economic security ties with the US.