President Donald Trump and Chinese President Xi Jinping are set to hold their first summit in about six months since their meeting in Busan last October, amid growing expectations that South Korean companies will gain some benefits from expanded trade between the two nations.
According to industry sources on May 13, Trump indicated that a key agenda item for the U.S.-China summit on May 14 will be expanding trade between the two countries. He stated on Truth Social, "I will ask President Xi Jinping to open up China."
Trump's delegation for the trip to China includes prominent business leaders such as Elon Musk, CEO of Tesla and SpaceX; Jensen Huang, CEO of NVIDIA; Tim Cook, CEO of Apple; Kelly Ortberg, CEO of Boeing; and Larry Fink, CEO of BlackRock, all of whom have significant business interests in China or have invested heavily in Chinese companies.
Given his social media comments and the composition of his delegation, it is likely that Trump will directly or indirectly request Xi to open the tightly restricted Chinese market to U.S. companies following the imposition of mutual tariffs.
Experts believe that to partially lift the "bamboo curtain," the U.S. may have to offer concessions, such as easing export restrictions on China. A notable example is the semiconductor sector, where predictions suggest that the U.S. will relax some of its restrictions on exporting semiconductor equipment to China.
The U.S. has consistently blocked the export of advanced semiconductor equipment to China since the Trump administration, continuing under President Biden, in an effort to curb China's semiconductor ambitions.
However, the tightening of these export regulations has significantly impacted South Korean companies like Samsung Electronics and SK Hynix, which operate semiconductor fabs in China.
There is a strong possibility that China will demand the easing of restrictions on semiconductor equipment imports needed by companies like CXMT (Changxin Memory Technologies) and YMTC (Yangtze Memory Technologies) in exchange for allowing the import of U.S.-made GPUs. This could accelerate the modernization of Samsung and SK Hynix's fabs in China, presenting potential benefits for these companies.
If negotiations between the two sides are successful, it is likely that the export volumes of rare earths and battery materials, such as anode and cathode materials, desired by companies like Boeing and Tesla, will increase. Following the export restrictions on semiconductor equipment, China designated rare earths—key materials for advanced industries like semiconductors, automotive, and defense—as subject to an "export licensing system."
Easing restrictions on rare earth exports would facilitate the procurement of critical minerals needed for domestic semiconductor equipment and defense manufacturing, enhancing the competitiveness of related industries in line with ongoing supply chain diversification efforts.
While the supply chain for battery anode materials has diversified, reducing dependence on Chinese sources, the reliance on Chinese materials for cathodes remains significant. The U.S. International Trade Commission (ITC) recently determined that the quality of Chinese cathode materials is superior to that of U.S. alternatives, suggesting that the high tariffs of around 160% on Chinese cathodes may not be necessary.
If regulations on Chinese cathode materials are relaxed, domestic companies like LG Energy Solution, which manufacture batteries in the U.S., are expected to accelerate their procurement of raw materials, boosting their electric vehicle (EV) and energy storage system (ESS) businesses.
Kim Tae-hwang, a professor of international trade at Myongji University, stated, "Amid increasing global uncertainty due to the Iran war, we hope that the U.S. and China can alleviate economic and trade volatility and uncertainty through this summit. However, similar to the meeting in October last year, it is unlikely that we will see significant improvements in bilateral relations; rather, we should view this as a turning point for reducing uncertainty."
* This article has been translated by AI.
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