Xi Jinping warns Netherlands against technological ‘confrontation’

BEIJING (Reuters) – Creating technological barriers and breaking industrial supply chains would only lead to confrontation, Chinese President Xi Jinping warned on Wednesday during a meeting in Beijing with Dutch Prime Minister Mark Rutte .

New Dutch policies on semiconductor exports to China threaten to damage relations between the two countries.

Earlier this year, the Dutch government began revoking some export licenses for ASML, the semiconductor equipment maker, bowing to US demands.

“Decoupling and severing ties” leads nowhere and cooperation is the only option, Xi Jinping told the Dutch prime minister, according to Chinese state media.

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The Netherlands is also under pressure to protect its own economic interests, which include ASML, the country’s largest company.

ASML considers China its second market after Taiwan.

The question of export licenses to continue to maintain cutting-edge equipment worth several billion euros will be at the heart of discussions between Mark Rutte and Xi Jinping.

The Dutch government has already sold this equipment to Chinese customers, now subject to export restrictions when current licenses expire, for most of them, by December 31.

In the long term, if the Netherlands is seen as an unreliable trading partner, Chinese semiconductor makers could seek to replace their equipment with that of rivals such as Nikon and Canon.

Dutch Trade Minister Geoffrey van Leeuwen, who was also part of Mark Rutte’s delegation to Beijing, told Dutch business daily FD on Tuesday that defending ASML’s interests was his “number one” priority.

His remarks reflect the diplomatic tightrope the Dutch government must walk, with ASML now at the center of the “semiconductor war” between the United States and China.

(Reporting Ryan Woo; French version Stéphanie Hamel, editing by Kate Entringer)