The 17th South Korea-China Meeting on Economic Cooperation is held virtually on August 27, 2022. Photo:Official website of NDRC

 China and South Korea have signed a memorandum of understanding (MOU) on supply chains and agreed to further strengthen economic cooperation in a ministerial meeting, which experts said benefits steady bilateral relations highlighted in the 30th anniversary of the establishment of diplomatic ties and showed Seoul was keen to maintain mutual trust with Beijing prior to its potential joining of a US-led semiconductor alliance that is believed to target China. 

The MOU was signed during the 17th South Korea-China Meeting on Economic Cooperation that was held virtually between He Lifeng, head of the National Development and Reform Commission (NDRC), China's top economic planner, and Choo Kyung-ho, South Korea's Finance Minister on Saturday. 

During the meeting, the two sides agreed to boost cooperation in the industrial chain and supply chain, and strengthen policy exchanges on carbon dioxide emissions peak and carbon neutrality, according to a statement the NDRC issued Saturday. 

Under the MOU, a new director-level entity on supply chains is expected to be set up between the two countries, with the aim of discussing related issues in the event of any supply disruptions and to enhance policy consultations, reported Yonhap News Agency, citing Seoul's finance ministry. 

It is the first MOU of its kind signed by the two countries, it reported. 

The two sides also agreed to deepen cooperation on key projects in the third market and vowed to foster new areas of growth in bilateral cooperation and take the strategic cooperative partnership to a new level under the China-Korea economic ministerial meeting mechanism, said the NDRC's statement. 

Experts said the fruitful results from Saturday's meeting, especially the signing of the first MOU on supply chain cooperation, benefit the steady development of bilateral economic ties in today's complex international situation and show that Seoul wants to maintain mutual trust with Beijing before its potential joining of a US-led semiconductor alliance known as the "Chip 4," which is widely believed to be another geopolitical gambit from the US against China. 

Dong Xiangrong, a senior fellow at the National Institute of International Strategy at the Chinese Academy of Social Sciences, told the Global Times on Sunday that the agreements signify that both China and South Korea have a high expectation for steady supply chains - South Korea needs a stable Chinese market to export its key products and China also needs South Korea for industrial development. 

Signing the first MOU on supply chain cooperation and setting up the new director-level group on this field is of great practical significance to accelerating the addressing of emerging incidents, such as supply chain disruptions in various fields between the two countries during the pandemic, said Dong. 

Media reports said South Korea had previously suffered from a shortage of urea water solution, a raw material used in vehicle emissions reductions, as China tightened urea exports, which had triggered panic buying among South Korean drivers. 

South Korea has decided to join a preliminary meeting of the "Chip 4," an envisioned alliance in the field of semiconductors involving the US, South Korea, Japan and China's Taiwan island. The meeting is expected to take place at the end of August or in early September, reported Yonhap News Agency. 

 "Through Saturday's MOU, Seoul showed it wanted to maintain mutual trust and steady cooperation with Beijing in industrial chains and supply chains in the face of pressure by the US from the 'Chip 4'," Da Zhigang, director of the Institute of Northeast Asian Studies at Heilongjiang Provincial Academy of Social Sciences, told the Global Times on Sunday. 

Da noted that South Korea is still trying to strike a balance between its ally US and China - a significant chip trade partner which accounted for 60 percent of the country's chip exports in 2021 alone, to maximize its own interests.

"Although the latest agreements are highly promising for solidifying bilateral cooperation in supply chains and seem to assure China that there are no misunderstandings regarding its possible participation in the US-led chip alliance, we still need to wait and see the real actions of South Korea," he said. 

Experts also noted that practical economic cooperation agreed in the ministerial meeting also implements the spirit of recent remarks made by leaders of the two countries on the occasion of the 30th anniversary of the establishment of diplomatic ties between China and South Korea on Wednesday. 

At the ministerial meeting, He Lifeng said that China and South Korea, as beneficiaries and builders of the global free trade system, need to jointly safeguard the security, stability and smooth flow of the industrial and supply chains of the two countries and the world.

It is hoped that China and South Korea can continue in-depth exchanges, share opportunities and join hands in development at the new starting point of the 30th anniversary of the establishment of diplomatic ties between the two countries, said the head of NDRC. 

The South Korea-China Meeting on Economic Cooperation is a regular high-level dialogue and exchange mechanism between China and South Korea in the economic field. Since its establishment in 1999, the mechanism has been successfully held 16 times, which has greatly promoted exchanges in the field of macroeconomic policies between the two countries.

The two sides have signed several MOUs on cooperation covering third-party markets, the online Silk Road and innovation and entrepreneurship. The next ministerial meeting will be held in South Korea in 2023.