China halts work at major Lotte Group project amid tensions over US defence system

People walk outside an Intime Lotte department store in downtown Beijing, China on Jan 10, 2017.
People walk outside an Intime Lotte department store in downtown Beijing, China on Jan 10, 2017.PHOTO: REUTERS

SEOUL (REUTERS) - South Korea's Lotte Group said Chinese authorities have halted construction at a multi-billion-dollar real estate project in the north-eastern city of Shenyang after a fire inspection.

South Korean media have described a string of inspections at Lotte's Chinese ventures as retaliation over the government's decision to deploy the US Terminal High Altitude Area Defence (Thaad) system on land that is currently part of a golf course owned by Lotte.

Since December, Chinese authorities have conducted fire inspections, facility inspections or tax investigations at most of Lotte's business locations in China, including some 120 retail stores, a source with direct knowledge of the matter told Reuters.

The source was not authorised to discuss the matter with media and declined to be identified.

The Thaad system's powerful radar is capable of penetrating Chinese territory, and Beijing has said it threatens China's own security and will do nothing to ease tension on the Korean peninsula.

Worried that Beijing is punishing it over the Thaad plans, Seoul said last month it will look to improve communication and cooperation with China to resolve difficulties faced by South Korean companies there.

China's foreign ministry did not immediately reply to a request for comment on Wednesday (Feb 8).

Lotte said construction was halted in December and that it was working to address a matter that needed to be remedied, adding that there had been no major disruptions so far as little construction takes place during the winter.

Lotte Group spokesman Song No Hyun declined to comment on media reports about the motives of Chinese authorities.

The proposed land swap deal with the South Korean government for the Thaad site, located in the Seongju region, roughly 200km from Seoul, still needs to be approved by a board of a Lotte Trading Co unit.

Lotte's Shenyang project, which covers 1.45 million sq m of land, includes a department store and movie theatre that are already open. It plans to construct residential facilities and a theme park.