China calls on Japan and South Korea to reject ‘protectionism’

China on Monday urged Japan and South Korea to reject “protectionism” and uphold free trade as leaders of the countries met in a trilateral summit in Seoul.

Chinese Premier Li Qiang said he opposed turning economic and trade issues into “political games or security matters,” Chinese state media reported, as he met Japanese Prime Minister Fumio Kishida and South Korean President Yoon Suk-yeol.

Li said the three countries should see one another as “partners and opportunities for development,” Xinhua reported.

This is the ninth such trilateral summit between China, Japan and South Korea, but their first in more than four years as they seek to reinvigorate economic and security ties.

In a joint statement released after the summit, the three leaders agreed to “institutionalize” three-way cooperation by regularly holding the trilateral summit and ministerial meetings.

They also agreed to continue talks for “speeding up negotiations” for a free trade agreement aimed at being “fair, comprehensive, high-quality, and mutually beneficial.”

The summit was critical to stabilize relations between the three countries even if it doesn’t “transfer into some kind of concrete initiative,” said Stephen Nagy, a professor at International Christian University in Tokyo.

China wants to lure both South Korea and Japan away from the initiatives that the United States has put on the table, he told CNBC’s “Capital Connection” on Monday.

“Under President Biden, there’s been tremendous success in terms of bringing Seoul, Tokyo and Washington together through the Camp David principles,” he said, adding China is wary of this cooperation and wants to drive a “wedge” between the U.S. South Korea and Japan.

The summit comes at a time where regional security is at the forefront, amid nuclear and missile threats from North Korea. Just ahead of the summit, Pyongyang announced plans to launch a rocket.

The three countries jointly called for the denuclearization of the Korean Peninsula and pledged to “make positive efforts for the political settlement ” of the issue.

Both Japan and South Korea realize that China has “very little leverage when it comes to North Korea,” according to Nagy.

“If there’s going to be any kind of cooperation in stemming weapons proliferation from North Korea, it’s not going to come from specifically working from China,” but from cooperating with each other and with the United States, he added.

On the economic front, the countries agreed to ensure a global level playing field that was transparent for trade and investment.

“We share the need to continue communication in the field of export control,” they said in the statement.

China is a huge market for both countries to ignore, said Tobias Harris, deputy director of the Asia Program at German Marshall Fund of the United States.

“It’s a big market, I don’t think any of them are in a position to give up on China as a market to sell things to,” he told CNBC’s “Squawk Box Asia” ahead of meeting on Monday, adding this was going to be a challenge going forward.

On the eve of the summit, Li held bilateral talks with both the leaders of South Korea and Japan. He also called on both countries to maintain an unimpeded supply chain and safeguard the global free trade system.

Japan’s Kishida said he expressed “serious concern” to Li in their talks over the weekend about issues such as the situation in the South China Sea.

He also stated that Japan was closely monitoring relevant developments in Taiwan, including China’s military activities near the island. The Japanese prime minister underlined that peace and stability across the Taiwan Strait is extremely important for the international community, including Japan.

Both Beijing and Tokyo will want to try to find a way to keep their relationship stable, said Harris.

But the security environment, given that Japan has moved closer to supporting Taiwan and working with the United States makes it “very hard to insulate Japan-China economic relationship from all of those developments,” he added.