Chinese ambassador warns Dutch government against restricting ASML supplies

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AMSTERDAM (Reuters) – Trade relations between China and the Netherlands would be undermined if Dutch supplier of semiconductor equipment ASML (ASML.AS) is not allowed to ship its latest machines to China, the Beijing ambassador to the Netherlands said on Wednesday.

FILE PHOTO: The ASML Holding logo is seen at the company's headquarters in Eindhoven, The Netherlands on January 23, 2019. REUTERS / Eva Plevier / File Photo

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Reuters reported last week that the Netherlands has withheld the license ASML needs to export its latest machines to China following pressure from the US government.

ASML, one of the largest companies in the Netherlands, is almost monopolistic in lithography, an essential step in making computer chips. China has invested billions to develop its growing semiconductor industry, but it needs ASML equipment so its chip makers can compete with the best in Taiwan, South Korea and the United States.

"We are concerned that the Netherlands is politicizing our trade relationship under American pressure," Chinese Ambassador Xu Hong told the Het Financieele Dagblad newspaper.

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"If this movement continues, it will certainly negatively affect bilateral relations."

After a long trade war, the United States and China are expected to announce a limited trade deal on Wednesday that will not resolve disputes over technology transfers.

A Chinese embassy spokeswoman confirmed that Xu had been interviewed by the newspaper and said the embassy would publish a full transcript later on Wednesday.

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In the interview, Xu noted that China was an important export market for the Netherlands.

In 2018, the Netherlands also imported 39.2 billion euros ($ 43.7 billion) in Chinese goods, two thirds of which were exported to other countries.

ASML, which is expected to report full-year earnings next week, said it could not ship its newer machines without a license because they are considered "dual-use" goods with potential military applications. He says an export request is being considered.

Prime Minister Mark Rutte told reporters on Friday that the government handled dual-use export requests on a case-by-case basis and he declined to comment on individual cases.

Foreign Ministry spokeswoman Irene Gerritsen said on Wednesday that the government had no new response in light of Xu's comments.

"In deciding to issue an export license, the Dutch government considers economic and security interests," she said in an e-mailed statement.

Report by Toby Sterling and Anthony Deutsch; Editing by Mark Potter

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