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    Exploring The Depths Of Simulation In Manufacturing Dynamics What stands in the way of a China-Japan-South Korea free-trade deal Exploring The Depths Of Simulation In Manufacturing Dynamics

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    By Winston Mok

    After a hiatus since 2019, the leaders of China, Japan and South Korea met in Seoul late last month. This complex trilateral relationship is one of the most important for these neighbours. Together, their gross domestic product is 30 per cent higher than the European Union’s. They are important trading partners to each other, focused on high-value, often hi-tech, goods.

    Beyond the Regional Comprehensive Economic Partnership (RCEP), the three economies are resuming negotiations on a free-trade area.

    They represent the most remarkable post-war economic successes – starting with Japan, followed by South Korea and culminating in China – reshaping the global map of production and technology. They now face common problems of low fertility, shrinking workforces and rapidly ageing populations.

    The competition for opportunities in education and the workplace is just as intense in South Korea as it is in China, giving rise respectively to the “N-po” generation and “lying flat” movement. While their parents have enjoyed the fruits of economic development, young people in these countries struggle with economic insecurity and an uncertain future.

    While all three started with labour-intensive manufacturing, they have successfully transitioned into technology powerhouses. In the World Intellectual Property Organisation’s latest global innovation index, the top five science and technology clusters are all occupied by the three East Asian countries.

    Last year, China, Japan and South Korea made 140,777 Patent Cooperation Treaty applications altogether, 2.5 times the US’ total, and more than three times what the next six countries in the top 10 submitted in all.

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    The semiconductor supply chain is centred in East Asia – a marvel of intricate interdependence and specialisation spanning mainland China, Taiwan, Japan and South Korea. This ecosystem relies on the seamless collaboration of these complementary players across stages of chip production to achieve efficiency and drive innovation.

    The United States is, however, moving to contain China’s technological rise, its long arm extending across both the Atlantic and the Pacific. From Nvidia to Samsung, from ASML to Tokyo Electron, the US has been relentless in its attempt to close off China’s access to high-end chips and advanced semiconductor equipment.

    Notwithstanding the strategic importance of the Chinese market, export-oriented Japan and South Korea are expected to subjugate their economic prosperity to the US geopolitical agenda. In undermining the semiconductor supply chain in East Asia for its selfish ends, the US is threatening global prosperity in the digital age, a time when semiconductors are embedded in almost everything, from cars to cameras.

    Japan and South Korea find themselves navigating a delicate balance between their deep economic ties with China and their security dependence on the US. As Washington rallies its allies to contain China’s technological ascent, Tokyo and Seoul are forced to confront the challenge of reconciling their economic prosperity with their geopolitical alignments.

    In this light, the trilateral summit in Seoul must be viewed in tandem with the latest Shangri-la Dialogue in Singapore, which took place just days later – underscoring the complex interplay of economic interdependence and security alliances in the region.

    American geopolitical influences are unfolding against much deeper historical dynamics among the three countries. Chinese and Korean national identities have been shaped by imperial Japan’s invasion and colonialism. Taiwan and Korea were both colonised by Japan until the end of the second world war.

    A resolution on the future of Taiwan – annexed by imperial Japan after the first Sino-Japanese war in 1895 – cannot be discussed in a historical vacuum framed by simplistic ideological labels.

    Sino-Korean relations go back a long way, from the Tang dynasty’s alliance with the Silla kingdom during Korea’s unification and the Ming dynasty’s support for Korea during the Imjin War against Japan to the involvement of the People’s Republic in the Korean war.

    After the normalisation of relations in 1992, South Korea and China saw warming economic and cultural ties, until they soured over South Korea’s deployment of the Terminal High Altitude Area Defence (THAAD) US missile defence system, which China responded to with sanctions.

    In the context of global geopolitics and domestic nationalism, China’s relations with Japan and South Korea are influenced by more than just economic logic. China must better manage how it is perceived by its neighbours. Japan and South Korea have often competed in various international surveys for the distinction of having the most negative perception of China.

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    Unlike Japan, South Korea does not have territorial disputes with China. However, South Koreans’ view of China has deteriorated precipitously over the last decade, while relations between Japan and South Korea have warmed recently. China could approach South Korea with tact and restraint, unlike the domineering dictates from across the Pacific.

    As they face common challenges among their youth and ageing populations, the three countries must draw deeply from their shared history in Confucian philosophy to build a better interdependent future for their peoples.

    The protracted negotiations for a free-trade agreement stem from an interplay of historical grievances and economic competition. But such a deal would significantly enhance supply chain integration beyond what the RCEP offers, strengthening regional resilience and collective competitiveness.

    While Japan and South Korea may reap immediate gains through enhanced market access for their advanced tech products, China stands to achieve substantial long-term strategic benefits. These include, for all three participants, better access to cutting-edge technologies, strengthened supply chain resilience and opportunities for greater collaboration in research and development.

    In this context, China would be wise to prioritise a farsighted approach over short-term calculations. In adopting a long-term strategic approach to the trilateral free-trade agreement, China may show a cosmopolitan magnanimity reminiscent of the enlightened statesmanship of the Tang era.

    Winston Mok, a private investor, was previously a private equity investor