South Korea's Lotte agrees to land swop for US missile system

SEOUL • South Korean conglomerate Lotte Group has agreed to provide land to host a controversial US missile defence system criticised by China, the Defence Ministry said yesterday.

Food and retail-focused Lotte, South Korea's fifth-biggest company, has come under growing pressure over the deal from China, a crucial market.

The plan by Washington and Seoul to install the Terminal High Altitude Area Defence (Thaad) missile system in response to threats from nuclear-armed North Korea has angered Beijing, which fears it will undermine its own ballistic capabilities.

The Chinese authorities have forced Lotte to suspend a US$2.6 billion (S$3.6 billion) theme park construction project in north-eastern China, and other South Korean businesses have also faced tougher regulatory hurdles from Beijing.

But the Lotte board yesterday voted to exchange one of its golf courses, in the southern county of Seongju, for a parcel of military- owned land near the capital Seoul, the Defence Ministry said.

"We received a message that the board approved the exchange of land for Thaad deployment," it said in a statement, without providing details. But it added that the ministry and Lotte are due to sign an agreement as early as today.

A Lotte Group spokesman declined to comment on the board decision, adding that the ministry was handling the matter.

Ahead of the announcement, shares in Lotte Shopping fell in anticipation that the board would approve the transaction.

Beijing has in recent months slapped a series of measures seen by Seoul as economic retaliation over Thaad, including the cancellation of visits by many South Korean celebrities popular in China.

Meanwhile, many South Korean companies have suffered falling sales in China - the South's top trading partner - due to tightened Customs screening of imports from Seoul, while Chinese tourist numbers reportedly have fallen.

South Korea's central bank this month said the number of Chinese tourists visiting the tourist island of Jeju had dropped 6.7 per cent over the Chinese New Year holiday from last year, partly because of China's "anti-South Korea measures due to the Thaad deployment decision".

In Beijing, Foreign Ministry spokesman Geng Shuang told reporters that Thaad "severely disrupts regional strategic balance and jeopardises the strategic security interests of regional countries including China".

Beijing "will definitely take necessary measures to safeguard its security interests", he told a regular press briefing, adding: "All the consequences entailed will be borne by the United States and the Republic of Korea", the South's official name.

Last year, the impoverished but nuclear-armed North Korea staged two atomic tests and a number of missile launches.

The most recent missile test, on Feb 12, showed some signs of progress in the North's missile capabilities, according to the South Korean military. The test was also the first since US President Donald Trump took office.

AGENCE FRANCE-PRESSE, REUTERS

A version of this article appeared in the print edition of The Straits Times on February 28, 2017, with the headline 'South Korea's Lotte agrees to land swop for US missile system'. Print Edition | Subscribe