Following US Rules Can Breach Chinese Law, Raising ‘Dual Compliance’ Risk for Korean Firms

A summit between President Donald Trump and Chinese President Xi Jinping in Beijing on May 14-15 is increasingly being viewed as more than an effort to patch up bilateral tensions. It marked a turning point that fundamentally altered the structure of US-China negotiations. Trump captured that shift in an interview aboard Air Force One after the meeting, saying, “This is the G-2.”

According to the legal industry on May 19, South Korean law firm Jipyong said in a newsletter analyzing the summit that the meeting was “a turning point where a fundamental change in the US-China bargaining structure became visible” and “a new starting line” requiring Korean companies to reset their global strategies. The term G-2 is one US diplomats have largely avoided since the Obama administration because it implies sidelining allies while elevating China. It is also central to Xi’s “new model of major-country relations,” a framework he has pursued since 2013. Jipyong wrote that Trump’s voluntary use of the phrase had the effect of aligning the US president with Xi’s push for “equal status.” In the firm’s view, Xi achieved a substantial portion of his objectives at the summit.

Summit Ends Without Joint Statement

The meeting ended without either a joint statement or a joint press conference. The US highlighted tangible transactional outcomes, including China’s pledge to buy about 200 Boeing aircraft and increase purchases of agricultural products and energy. China, meanwhile, put forward its vision of redefining ties around “constructive strategic stability” and prominently warned on Taiwan.

Jipyong said that pointed to different messaging goals for domestic audiences on each side. Boeing shares fell about 4% after the 200-plane purchase was announced because the figure was far short of the 500 aircraft discussed in negotiations. Semiconductor export controls were not even included on the agenda.

China Built Retaliation Tools Over Seven Years

If negotiations during Trump’s first term from 2017 to 2020 were defined by one-sided US pressure and China’s managed concessions, Beijing has spent the past seven years systematically building tools to change that structure. It gradually institutionalized export controls on critical minerals, covering gallium and germanium in 2023, antimony and graphite in 2024, and a rare earth licensing regime in 2025. It also completed a legal shield through the Anti-Foreign Sanctions Law in 2021, revisions to the Foreign Trade Law in March 2026, and State Council Decrees No. 834 and 835 in April 2026.

Jipyong said China is no longer dealing with the US through concessions alone. Instead, it is confronting Washington on more equal terms with retaliatory capacity and a broader range of policy tools. The summit made that new balance of power visible to the world.

Trump invited Xi to the White House on Sept. 24. The date coincides with the expiration of a one-year truce agreed at the APEC summit in Busan in October 2025. Another variable is whether the US moves ahead with a planned $1.4 billion arms sale to Taiwan. Jipyong concluded that US-China tensions are unlikely to ease in the near term and are more likely to harden into a system of managed competition across sectors. The summit looked less like the end of a conflict than the start of a phase in which both sides compete while managing the risk of direct confrontation.

Three Takeaways for Korean Companies

Jipyong said the key message for Korean companies after the summit is not easing tensions but the need for more complex compliance management and a strategic reset. It laid out three main tasks.

The most urgent is “dual compliance” risk. Measures taken to comply with US sanctions — including halting transactions, restricting supplies or ending technical support — could be treated under Chinese law as cooperation with foreign sanctions or enforcement of unfair extraterritorial regulations. That means a structural conflict is becoming reality, with compliance under one legal regime potentially amounting to a violation under another. Jipyong said companies should design decision-making structures in advance on the assumption that such scenarios will become a routine part of business operations, investment decisions and internal controls.

Reworking supply chains and operating structures is another core task. Korean companies no longer face a simple binary choice of whether to remain in China or leave. Jipyong said a new standard is emerging in which businesses are redesigned around multiple hubs: headquarters and production bases in China, relay hubs in Singapore and Southeast Asia, and US-facing entities, with each location handling compliance obligations tied to different jurisdictions. The firm also said preemptive data-governance planning has become essential. As China tightens controls on cross-border data transfers, more Korean parent companies are finding themselves unable to access data from Chinese subsidiaries, leaving them unable to submit documents in response to US investigations.

US-China tensions also present opportunity as well as risk. Jipyong said expanding global investment in artificial intelligence, more US-centered data center construction, the reshaping of LNG and nuclear power supply chains, and rising global defense demand are creating new markets and investment opportunities for Korean companies. It identified strategic areas that require early positioning, including US MRO cooperation in shipbuilding and defense, a replacement supply-chain role in bio CDMO, and expanded local battery production in North America.

Jipyong said US-China tensions are moving beyond tariffs and trade into an interconnected structure linking regulation across technology, security, data, energy, finance and the environment. The priority, it said, is to build an integrated response system combining legal, trade, industrial, financial and policy analysis.

Heo Ran, Hankyung.com reporter why@hankyung.com