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South Korea's Lee aims to balance ties with China

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Xi and Lee to discuss denuclearisation of Korean peninsula

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South Korea seeks easing of China's entertainment content

restrictions

(Adds Xi and Lee comments in paragraph 10, joint statement in

paragraph 11)

By Jihoon Lee and Ju-min Park

GYEONGJU, South Korea, Nov 1 (Reuters) - Chinese

President Xi Jinping will wrap up his three-day visit to South

Korea on Saturday with a state dinner and summit hosted by

President Lee Jae Myung, the newly elected U.S. ally who has

pledged to balance Seoul's ties with Beijing.

The stakes are high for Lee, who assumed office in June

following the ouster of his hawkish predecessor over a failed

attempt to impose martial law. Lee faces the dual challenge of

protecting South Korea's export-driven economy and lowering

tensions with North Korea amid rising China-U.S. competition.

Earlier this week, Lee also hosted U.S. President Donald

Trump for a rushed state visit, showering him with gifts and

praise before announcing a surprise trade deal aimed at lowering

U.S. tariffs in return for billions of dollars in South Korean

investment in the United States.

Lee is set to hold similar events for Xi on Saturday on the

sidelines of the Asia-Pacific Economic Cooperation (APEC) forum

in Gyeongju, including a summit meeting and state dinner. This

is Xi's first visit to South Korea in 11 years.

Seoul is a key U.S. military ally, hosting thousands of

American troops and relying on the U.S. nuclear umbrella for

protection from nuclear-armed North Korea. Yet its economy is

deeply entwined with not just the U.S., but also China, which

has grown increasingly challenging for South Korean companies

and wields influence over North Korea.

Lee's office has said that he and Xi will discuss the

denuclearisation of the Korean peninsula, a diplomatic phrase

used to refer to North Korea's nuclear weapons, which are banned

by United Nations Security Council resolutions.

Pyongyang, a military and economic ally of China, issued a

statement on Saturday dismissing the denuclearisation agenda as

an unrealisable "pipe dream".

Trump had offered to meet with North Korean leader Kim Jong

Un during his visit to South Korea, but Pyongyang did not make a

public response.

Trump met with Xi on Thursday ahead of the APEC summit,

striking a deal that includes lower U.S. tariffs on Chinese

goods in exchange for Beijing's crackdown on illicit fentanyl

trade, the resumption of U.S. soybean purchases and continued

flow of rare earths exports. The Chinese president also held

talks with the leaders of Japan, Canada, and Thailand.

In closing remarks at APEC on Saturday, Xi proposed the

establishment of a World Artificial Intelligence Cooperation

Organization, while Lee said he hoped for regional collaboration

on AI and demographic changes.

A source familiar with negotiations confirmed Chinese state

media reports on Saturday that member states had agreed on a

joint leaders' statement, as well as declarations on AI and

demographic change.

CHARM OFFENSIVE?

As Trump skipped this week's APEC leaders' summit, China

positioned itself as the predictable champion of free and open

trade, a role the U.S. has dominated for decades. China will

host APEC in Shenzhen next year, Xi announced.

John Delury, senior fellow at the Asia Society, said China

has yet to launch a charm offensive toward U.S. allies like

South Korea, amid pressure from Trump's tariffs and uncertainty

over U.S. military commitments.

"I think Beijing is in a phase one approach where they are

sitting back a little bit and letting the Trump administration

do damage on its own," he said.

"We have not seen China launching big charm offensives to

try to capitalize on some of that damage," he added.

A second phase could include more outreach, but it could

also see Beijing ramp up pressure of its own, he said.

South Korea has voiced concerns about the impact of China's

rare earth export controls and called for the removal of Chinese

sanctions on five U.S.-linked units of South Korean shipbuilder

Hanwha Ocean. Beijing said the sanctions were

related to security risks stemming from the company's

cooperation with U.S. investigations.

Seoul is also hoping that Xi's visit may lead to Beijing

relaxing years-long restrictions on South Korean entertainment

content, effectively banned after the 2017 deployment of the

U.S.-led Terminal High Altitude Area Defense (THAAD) missile

defence system in South Korea.

South Korea has also expressed concerns over structures

placed in disputed waters between the countries, which China

claims are for fishing purposes.