The joint fact sheet announced by the South Korean and U.S. governments on November 14 outlined criteria for future win-win cooperation between the two countries in key strategic industries and advanced technology sectors. Rather than merely focusing on South Korean investment in U.S. industries, the document emphasized the need for follow-up work to organically connect supply chains, industrial bases, and ecosystems across major key industries. This reflects the expansion of the South Korea-U.S. alliance into a substantive cooperative relationship encompassing economic security.
During negotiations, South Korea made significant concessions but secured major gains. By signing a memorandum of understanding on strategic investments worth $350 billion, it secured mega deals such as the MASGA project for shipbuilding cooperation, approval for the introduction of nuclear-powered submarines, and the return of wartime operational control. As the scale and scope of exchanges between the two countries have grown, it is more critical than ever to proceed carefully with follow-up procedures. At the center of this lies the variable of China.
The expansion of cooperation in strategic industries and advanced technologies between South Korea and the U.S. has increased the likelihood of South Korea facing economic and political-diplomatic retaliation from China. Shipbuilding, a sector both countries are prioritizing, is also a key national strategic industry for China, which is closely monitoring developments. Earlier, China added five U.S.-based subsidiaries of Hanwha Ocean to a sanctions list, prohibiting transactions with Chinese companies, citing their cooperation with the U.S. Trade Representative's Section 301 investigation into trade with China. However, following an agreement between President Donald Trump and Chinese President Xi Jinping at the APEC Busan summit to refrain from escalating the trade war, these sanctions were suspended for one year.
The timing of the sanctions announced by the Chinese Ministry of Commerce against South Korean companies coincided with the date (October 14) when the U.S. Trade Representative announced the imposition of port usage fees on Chinese vessels entering U.S. ports. The fees, set to take effect on October 14, 2025, target ships owned or operated by Chinese companies and those built in China, with charges based on net tonnage and gradually increasing rates. This policy aims to strategically reduce China's share in the global maritime market and revitalize the U.S. shipbuilding industry.
According to the Financial Times, after the U.S. policy announcement, some shipping companies began avoiding contracts with Chinese financial institutions. There is an increasing trend of shipping companies attempting to procure vessels through non-Chinese financing or alter ownership structures. China also announced retaliatory measures on October 10, imposing port usage fees on U.S. vessels, and on October 9, it announced a significant tightening of rare earth export controls. These measures can be seen as part of a series of actions to use as negotiation cards ahead of the summit with the U.S. Both of these Chinese measures were also suspended for one year following the summit.
These retaliatory measures by China are not merely economic. They should be viewed as part of the U.S.-China competition, where strategic resources and industries are used as leverage to secure an advantage in global core industries and technology competition and enhance China's global standing. Therefore, the fact that South Korean companies were targeted by sanctions is evidence that China intends to use South Korea as leverage in its competition with the U.S. By taking retaliatory measures against South Korean companies, China aims to directly or indirectly affect not only the South Korea-U.S. alliance but also U.S. interests.
By taking retaliatory measures against South Korean companies, China aims to affect not only the South Korea-U.S. alliance but also U.S. interests.
Regarding the approval for the introduction of nuclear-powered submarines, China urged both countries to comply with international nuclear non-proliferation obligations and expressed concerns about regional security through diplomatic channels. While China's response so far has been relatively moderate, various retaliatory measures could be taken as South Korea and the U.S. implement the memorandum and proceed with follow-up steps. The damage could be greater than the widespread retaliatory measures China took when South Korea introduced the THAAD, high-altitude missile defense system. This is an inevitable result of the deepening cooperation between South Korea and the U.S. in key strategic industries, necessitating a joint response.
As South Korea and the U.S. have agreed to cooperate in key strategic and advanced technology industries such as shipbuilding, energy, semiconductors, rare earths, artificial intelligence, and quantum computing, they need to discuss potential Chinese retaliatory measures through working groups and prepare joint response strategies. They should specifically discuss what joint response measures can be taken if the one-year suspended measures take effect and what phased response methods can be applied if additional retaliatory measures are imposed in the future.
