Korea opts out of G7 leaders’ supply chain declaration as Lee balances China ties

Korea signed onto seven of eight outcome documents adopted by world leaders at the Group of Seven (G7) summit in Evian, France, earlier this week.

The exception was the leaders’ declaration on securing critical minerals supply chains, a move that apparently kept China in mind as the G7 countries — Britain, Canada, France, Germany, Italy, Japan and the United States — aim for diversification and collective resilience.

Korea was a signatory of agreements covering issues such as a safer digital space for minors, more balanced and resilient growth and the fight against drug trafficking, with President Lee Jae Myung in attendance at the summit for a second consecutive year to represent a partner nation on Tuesday and Wednesday.

While the “G7 Leaders’ Declaration on Securing Supply Chains for Critical Minerals” doesn’t specifically mention China, it is inevitably aimed at the country’s rare earth monopoly as countries seek diversification.

In the document, the leaders expressed “grave concerns regarding the use of nonmarket policies and practices and economic coercion, including arbitrary export restrictions and retaliatory measures on critical minerals and their related dual-use items, all of which undermine economic security and resilience.”

They further pledged to “work together with partners to reduce critical dependencies and ensure that attempts or threats to weaponize economic dependencies fail,” while also vowing to “seek to deter and stand ready to take actions, where necessary in a coordinated manner, against economic coercion.”

The declaration calls for a significant reduction in “dependencies on a single supplier outside the G7 and partner countries for rare earths and permanent magnets” to under 60 percent by 2030, with an ambition to reach 50 percent “as soon as possible" in a veiled nod to China, which effectively monopolizes some 70 percent of global rare earth mining and over 90 percent of permanent magnet production.

Beijing notably introduced export controls on rare earths last year in response to U.S. tariffs.

The Blue House maintained a cautious stance on the matter and said it “supports the G7’s efforts to diversify critical minerals and build resilient supply chains.” The stance effectively reflects Seoul's intent to adhere to a pragmatic diplomatic strategy with consideration for relations with China.

Korea has a very high dependence on Chinese minerals and materials in key industries such as secondary batteries and semiconductors.

Analysts say that the decision to opt out of the supply chain declaration reflects concerns that signing on could inevitably lead to economic repercussions and possible trade retaliation measures from China.

Taking into consideration Seoul’s diplomatic and economic relations with Beijing, still recovering from retaliatory measures from a decade ago due to the deployment of the U.S.-led Terminal High Altitude Area Defense antiballistic missile defense system, commonly referred to as Thaad, Korea is in a different position from Western countries that have formalized the reduction of dependence on China for critical minerals.

Korea's dependence on Chinese imports for rare earth elements stood at 79.8 percent as of 2024, and over 90 percent for permanent magnets.

The only partner country to sign the declaration was Australia, home to around 5 percent of the world's rare earth reserves as the world's fourth-largest rare earth producer.

Lee has struck a delicate balance between diplomacy with the United States and China since he took office with ambitions for peace on the Korean Peninsula.

During the G7 gathering, Lee had several encounters with U.S. President Donald Trump, including at a gala dinner on Tuesday. Lee shared on his X account the following day that Trump had asked him to play golf with him during the 90-minute dinner and again at a working luncheon the next day.

Wrapping a 10-day tour of Europe that also took him to Belgium and Italy, Lee returned to Korea on Thursday.

The president was greeted by Prime Minister Kim Min-seok, liberal Democratic Party (DP) Chairman Jung Chung-rae, DP floor leader Han Byung-do and presidential aides at the Seoul Air Base in Seongnam, Gyeonggi.

The DP chief bowed deeply to the president and said, “Thank you for your hard work."

During Lee’s departure last week, Jung was not present to see the president off, which prompted much speculation as it came amid questions about whether Prime Minister Kim would step down to run for DP chief in a national convention set for August.

Lee is set to focus on domestic activities and hold a press conference on the outcome of his first Europe trip on Friday.

BY SARAH KIM [[email protected]]