How geopolitical risks surrounding US-China ties continue to disrupt the Asian market

Simmering tensions between Washington and Beijing have made businesses increasingly worried about geopolitical risks. While countries in Asia stand to benefit from improved ties to the West, they simultaneously are cautious about abandoning China.

From battery makers like LG Energy Solution and SK On to chip manufacturers like Samsung Electronics and SK Hynix, South Korean tech companies are increasing their reliance on the Western market. Meanwhile, India is becoming a prominent manufacturing hub for the West.

But China seems to be losing ground in the process. Its economy entered deflation for the first time in over two years, as prices dropped in July. Unemployment rates among the youth continue to reach worrying highs, hitting 21.3% in June.

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South Korea – A Key Battlefield In The Raging US-China Tech War

Still, there are a handful of products that can be sourced only in China. These include some processed rare earths and metals, such as the graphite and lithium used in electric-vehicle batteries and the germanium and gallium used in chip production.

The Biden administration is imposing new restrictions on US investments in particular advanced industries in China. Proponents of the move have described it as a necessary measure to protect national security. But the restrictions will draw fury from Beijing, undoubtedly.

At the same time, Washington is offering billions to lure in Korean technology. But the companies must limit partnerships with the ones in China. While South Korea plays a key role in the intensifying US-China tech war, it practices caution to avoid upsetting its biggest neighbour.