China's Xi warns against tech 'confrontation' in talks with Dutch PM (updated)

CANON

27/03/2024 11:15

(Recasts with comments from Xi in meeting with Rutte)
       BEIJING, March 27 (Reuters) - Creating technological
barriers and severing industrial supply chains would only lead
to confrontation, Chinese President Xi Jinping warned on
Wednesday, as new Dutch policies on chip exports to China
threaten to strain bilateral ties. 
    "Decoupling and breaking links" led to nowhere and
cooperation was the only option, Xi told Dutch Prime Minister
Mark Rutte during a meeting in Beijing, according to Chinese
state media.
    Earlier this year, the Dutch government began denying
licences for ASML  ASML.AS , the biggest supplier of lithography
equipment to global computer chip makers, to export advanced
"DUV" tool lines to China, bowing to demands from the United
States. 
    At the same time, the Netherlands is under pressure to
protect its own economic interests, which include ASML. The
country's biggest company counts China as its second-largest
market after Taiwan.
    "Artificially creating technological barriers and cutting
off industrial and supply chains will only lead to division and
confrontation," Xi told Rutte. 
    "The Chinese people also have the legitimate right to
development, and no force can stop China's scientific and
technological development and progress."
    Rutte's talks in Beijing were expected to centre on whether
ASML would receive Dutch government licences to continue
maintaining billions of euros worth of advanced equipment it has
already sold to Chinese customers that now falls under export
restrictions when current licences expire, many of them by Dec.
31.
    The export curbs so far have had only a modest impact on the
financial performance of ASML, which dominates the global market
for lithography systems - tools vital in helping to create the
circuitry of computer chips.
    But in the longer term if the Netherlands is seen as an
unreliable business partner, Chinese chipmakers may seek to
replace its equipment with that of rivals such as Nikon  7731.T 
and Canon  7751.T . 
    Dutch Trade Minister Geoffrey van Leeuwen, who was also in
Beijing as part of Rutte's delegation, told Dutch business daily
FD on Tuesday that defending the interests of ASML was his
"number one" priority.
    His remarks reflect the diplomatic tightrope on which the
Dutch government must walk, with ASML now a focus in the
U.S-China "chip war". 
    China was willing to expand the import of "high-quality"
goods from the Netherlands, state media cited Xi as telling
Rutte, without giving details.
    More broadly, China was willing to continue developing an
open and pragmatic cooperative partnership with the Netherlands,
Xi said.

 (Reporting by Ryan Woo; Editing by Michael Perry and Alex
Richardson)
 ((Ryan.Woo@thomsonreuters.com;))