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

BEIJING: 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), opens new tab, 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), opens new tab and Canon (7751.T), opens new tab.