Chinese ambassador warns Dutch government against restricting ASML supplies

AMSTERDAM (Reuters) - Trade relations between China and the Netherlands would be damaged if Dutch semiconductor equipment supplier ASML <ASML.AS> is not allowed to ship its newest machines to China, Beijing's ambassador to the Netherlands was quoted as saying on Wednesday.

Reuters reported last week that the Netherlands had withheld the licence ASML needs to export its newest machines to China following pressure from the U.S. government..

ASML, one of the Netherlands' largest companies, is a near monopolist in lithography, an essential step in the manufacture of computer chips. China has invested billions to develop its burgeoning semiconductor industry, but needs ASML equipment if its chipmakers are to 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 was quoted as saying in the Het Financieele Dagblad newspaper.

"If this movement continues it will of course negatively affect bilateral relations."

After a lengthy 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 spokeswoman for the Chinese embassy confirmed Xu had been interviewed by the newspaper, and said the embassy would publish a complete transcript later on Wednesday.

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 worth of Chinese goods, two-thirds of which was exported on to other countries.

ASML, which is due to report full-year earnings next week, has said it can't ship its newest machines without a licence, as they are considered "dual use" goods with potential military applications. It says an export request is under consideration.

Prime Minister Mark Rutte told reporters on Friday the government treated dual use export requests on a case by case basis and he would not comment on individual cases.

Foreign Ministry spokeswoman Irene Gerritsen said on Wednesday the government did not have any new response in light of Xu's remarks.

"When deciding whether to issue an export license, the Dutch government weighs both the economic and security interests," she said in an emailed statement.

(Reporting by Toby Sterling and Anthony Deutsch; Editing by Mark Potter)