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Time for a wise response

May 24,2019
The war between the United States and China for dominance in technology is intensifying. Following a decision last week to ban Huawei from buying U.S. electronic components, Washington demands its allies take similar action. Google, Intel, Qualcomm and ARM of Britain, as well as Japan’s Panasonic, have declared a suspension of trading with the Chinese IT giant. The United States also called on Korea to follow suit, citing the case of LG U+, the smallest of South Korea’s carriers.

U.S. sanctions on Huawei appear to be part of its retaliation on China after the rupture of their trade negotiations. Huawei manufactures all kinds of high-tech products, ranging from smartphones to network equipment, although its sales of $107 billion last year were only half of Samsung Electronics’. Analysts say Washington wants to draw concessions from China’s major IT company by pressuring it. But viewing the battle from an economic perspective alone is short-sighted.

Information technology is the core of today’s industrial nations. Controlling that technology is indispensable for maintaining the independence of a nation. Since the end of World War II, the United States has dominated the market with its cutting-edge IT companies like IBM and Apple.

Yet China’s IT industry has gained remarkable competitiveness. Industry insiders say Huawei’s prices are 30 percent cheaper and its products 30 percent better than its U.S. rivals. U.S. President Donald Trump is eager to get rid of such an economic and security risk to the United States.
Korea is nearly helpless in a battle between such giants. Yet it must minimize the fallout from a protracted war. Analysts forecast that the battle will hurt our economy in the long run. If the trade war is prolonged, free trade will drastically decline as tariff and nontariff barriers are raised further.

That’s a worst-case scenario for Korea, which has seen its exports continue to decline over the past six months since the breakout of the Sino-U.S trade war. Our domestic conditions are not solid either, as seen in the simultaneous reduction of production, investment and consumption and a more than 40-percent decrease in revenues of companies in our 10 largest business groups.

Korea must respond to this crisis wisely. At sensitive times like this, we should not rush to take sides with one of the two giants. The government must protect our national interests no matter what. Otherwise, we may see a repetition of what we suffered after the conflict over the missile shield deployment two years ago.

JoongAng Ilbo, May 24, Page 30