China's Xi to host South Korea's Lee in New Year amid Japan tensions

The visit marks the second meeting between Xi and Lee in just two months, an unusually short interval that signals China's keen interest in reinforcing ties with Seoul and boosting economic collaboration and tourism, analysts say.

Relations between China and Japan are at their chilliest point in years after Japanese Prime Minister Sanae Takaichi suggested in November a hypothetical Chinese attack on Taiwan could trigger a military response from Tokyo.

Xi's invitation to Lee for a state visit from Sunday is a calculated move aimed at deepening bilateral relations especially before the South Korean leader visits Japan, analysts say.

"China wants to emphasize South Korea's importance slightly more than before," said Kang Jun-young, professor of political economics at Hankuk University of Foreign Studies.

"China appears to have strategically decided that it would be better to have (Lee) visit China before South Korea holds a summit with Japan again," he added.

The Lee administration has said it aims to "restore" ties with Beijing, acknowledging China is South Korea's largest trading partner.

The pivot follows the two countries' strained relations under Lee's predecessor Yoon Suk Yeol, due to his closer alignment with Washington and Tokyo, as well as criticism of China's handling of Taiwan.

Now, South Korea is trying to maintain balance but leaning towards cooperation with China to avoid being forced into any troubles that would threaten the Asian industrial powerhouse.

Lee said in December he wouldn't take sides in the diplomatic dispute between China and Japan.

U.S. ALLIANCE AND NORTH KOREA

Still, China and South Korea face complex issues as China challenges the U.S., South Korea's major ally in the region, and as nuclear-armed North Korea remains unpredictable.

China is North Korea's major ally and economic lifeline.

Shin Beom-chul, a former South Korean vice defence minister and a senior research fellow at the Sejong Institute, said Xi and Lee might discuss some contentious issues such as efforts to modernise the South Korea- U.S. alliance that apparently aim to curb China's dominance.

Currently, about 28,500 U.S. troops are based in South Korea to counter any threat from North Korea.

U.S. officials have signalled a plan to make those U.S. forces more flexible to respond to other threats, such as defending Taiwan and checking China's growing military reach.

"Korea is not simply responding to threats on the peninsula," General Xavier Brunson, commander of U.S. Forces Korea, said at a forum on Dec. 29. "Korea sits at the crossroads of broader regional dynamics that shape the balance of power across Northeast Asia." he said.

Lee's agenda with Xi includes persuading China to facilitate dialogue with North Korea, experts said.

North Korea has dismissed Lee's outreach, labelling him a "hypocrite" and "confrontational maniac".

Meanwhile, China and North Korea have been seeking closer coordination as North Korean leader Kim Jong Un stood shoulder to shoulder with Xi in September at a big military parade.

TECH, SUPPLY CHAINS AND K-POP

Lee's visit to Beijing is expected to address cooperation in areas including critical minerals, supply chain and green industries, his office said earlier.

Seoul sources nearly half of its supply of rare earth minerals, critical to semiconductor manufacturing, come from China. Beijing also accounts for a third of Seoul's annual chip exports, the largest market by far.

Last month, South Korean Industry Minister Kim Jung-kwan and Chinese Commerce Minister Wang Wentao agreed to work towards stable rare earth supplies, the South Korean industry ministry said.

The visit may also foster partnerships on artificial intelligence and advanced technologies, experts said.

China's Huawei Technologies plans to roll out the Ascend 950 AI chips in South Korea next year, aiming to provide an alternative to Nvidia for Korean firms, Huawei's South Korea CEO Balian Wang told a press conference last month.

Wang mentioned ongoing discussions with potential customers, without naming those clients.

Huawei did not address questions from Reuters about Wang's comments.

Another issue at stake is Beijing's effective ban on K-pop content since around the 2017 deployment of a U.S.-led missile defence system in South Korea.

The chief executive of SM Entertainment, a leading K-pop agency will join Lee's business delegation, according to local media.