The South Korean president is urging Japan not to expand a trade row over chemicals crucial to the country's tech sector. Moon Jae-in says Japan is wrong to use Seoul's sanctions on its northern neighbor, the DPRK to justify its stricter controls on exports to South Korea. In a meeting with business leaders, Moon Jae-In said he was committed to finding a diplomatic solution, and urged Japan to be more open-minded. Our reporter Jack Barton has more from Seoul.

President Moon Jae-in meeting with the heads of South Korea's biggest conglomerates and business associations on Wednesday.

The meeting followed Japan's surprise move last week when it slapped export restrictions on three products critical for manufacturing semiconductors and displays, essentially the backbone of South Korean exports.

MOON JAE-IN SOUTH KOREAN PRESIDENT "We can't rule out the possibility that the situation will be prolonged, despite our diplomatic efforts to resolve the issue. It is a very regrettable situation, but we have no choice but to prepare for all possibilities."

Moon's government has labelled the restrictions "vengeful" retaliation for a supreme court ruling last year ordering some Japanese firms to pay compensation to Koreans forced into labor during Japan's colonial occupation of the peninsula.

JACK BARTON SEOUL "President Moon says his government will mobilize all available resources including tax breaks and financing to ensure that in the long run South Korea can produce its own high-tech materials."

In the short term, a global supply chain disruption is expected.

YANG JUNSOK ASSOCIATE PROFESSOR ECONOMICS, THE CATHOLIC UNIVERSITY OF KOREA "There will be a large disruption in global supplies of memory chips and displays, and it will affect not only South Korea, but the United States, China and Japan as well."

"Could this trade dispute escalate further?"

YANG JUNSOK ASSOCIATE PROFESSOR ECONOMICS, THE CATHOLIC UNIVERSITY OF KOREA "That's what Japan is threatening. They may decide to put more goods off the so-called white list where you are on an expedited procedure to get these items from Japan."

Seoul says it's seeking an economic, not an emotional response. Though the dispute has sparked protests in South Korea amid public calls for a boycott of goods and tourism to Japan. Jack Barton, CGTN, Seoul.