China halts work on Lotte project amid Thaad tensions

Lotte's planned theme park in Shenyang, China. The South Korean firm has run into trouble in China over Seoul's decision to deploy a US defence system in the country despite Beijing's objections. A golf course in South Korea belonging to Lotte, on wh
Lotte's planned theme park in Shenyang, China. The South Korean firm has run into trouble in China over Seoul's decision to deploy a US defence system in the country despite Beijing's objections. PHOTO: LOTTE GROUP
Lotte's planned theme park in Shenyang, China. The South Korean firm has run into trouble in China over Seoul's decision to deploy a US defence system in the country despite Beijing's objections. A golf course in South Korea belonging to Lotte, on wh
A golf course in South Korea belonging to Lotte, on which Seoul plans to deploy Thaad.PHOTO: LOTTE GROUP

South Korean firm hit by Seoul's move to deploy US missile shield

SEOUL • South Korea's Lotte Group said the Chinese authorities have halted construction at its multibillion-dollar real estate project in the north-eastern city of Shenyang after a fire inspection.

The government order to suspend the Shenyang development came in December but the group says it expects to get approvals to restart construction next month, Bloomberg reported yesterday.

Lotte says there had been no major disruptions so far as there is little construction during the winter. Its spokesman Song No Hyun declined to comment on media reports about the motives of the Chinese authorities, reported Reuters.

Lotte and other South Korean companies have borne the brunt of their government's decision last July to deploy the US' Terminal High Altitude Area Defence (Thaad) system in the country. Thaad is to be stationed on a Lotte golf course.

In the face of China's retaliation against its businesses, Lotte Group has been delaying final approval of a land swop deal to free up the golf course for Thaad's deployment, reported JoongAng Ilbo.

Beijing strongly opposes the Thaad deployment, fearing the US will use the powerful radar to penetrate deep into Chinese territory.

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

  • China opposes possible deployment of US stealth destroyer to S. Korea

  • SEOUL • China has voiced its opposition to the possible deployment of the United States' most advanced warship to waters off the Korean peninsula.

    "We've noticed related reports," Foreign Ministry spokesman Lu Kang said at a daily news briefing in Beijing on Tuesday.

    "We will pay close attention to the interaction between any other countries, if it impacts regional peace, security and stability."

    He noted that such military cooperation should aim to maintain regional peace and stability, instead of aggravating tensions.

    "If the interaction affects China's security interests, of course, we are firmly opposed to it," he said.

    Mr Zhao Xiaozhuo, director of the Centre on China-US Defence Relations at the People's Liberation Army's Academy of Military Science, said stationing the warship in South Korea would pose a direct threat to China, given the short distance between China and the proposed bases .

    "This will help the US Navy increase its emergency response capability in North-east Asia," he told the China Daily.

    Commissioned in October, the US$4.4 billion (S$6.3 billion) USS Zumwalt is armed with stealth capabilities as well as state-of-the-art anti-submarine and other weapons, including SM-6 ship-to- air missiles and the Tomahawk long-range cruise missiles.

    Admiral Harry Harris, commander of the US Pacific Command, floated the idea of stationing the USS Zumwalt at Jeju island or Jinhae during a meeting with South Korean lawmakers in Hawaii last month, Seoul's Defence Ministry said on Monday.

    Mr Moon Sang Gyun, a spokesman for the ministry, said the proposal was in response to a request from lawmakers for a permanent stationing of US strategic assets in the country to help counter threats from North Korea.

    But the ministry has not yet received an official offer, Mr Moon added.

    Washington is expected to send the B-1B strategic bomber and Nimitz-class supercarrier USS Carl Vinson Strike Group to South Korea for the Key Resolve military exercise next month.

    In the Key Resolve and Foal Eagle exercises, the allies may carry out a command post-based exercise on the basis that the Terminal High Altitude Area Defence is operational, a ministry official told Yonhap news agency.

    CHINA DAILY/ASIA NEWS NETWORK,
    KOREA HERALD/ASIA NEWS NETWORK

On Monday, Lotte said it was shutting down three branches near Beijing as part of "ongoing business restructuring", The Financial Times reported. The company said deteriorating bilateral relations due to the Thaad deployment influenced its decision.

Lotte has 99 big outlets and 16 Lotte Super stores in China, and analysts estimate the group has invested more than 10 trillion won (S$12 billion) since entering the country in 1994. Lotte has 26,000 employees across its China businesses - from confectionery and chemicals to supermarkets and department stores - FT reported.

Seven of its units are involved in the "Lotte Town" project in Shenyang, with plans to invest about three trillion won, Lotte said.

The 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.

China's Foreign Ministry spokesman Lu Kang, when asked at a daily news briefing if Thaad had an impact on the Lotte project, said he had no understanding of the status of the specific project.

"On principle, I can say China welcomes foreign enterprises to invest. At the same time, relevant companies operating in China must abide by laws and regulations," Mr Lu said. He added that China's opposition to the Thaad deployment was clear.

The South Korean government last month said it will look to improve communication and cooperation with China to resolve difficulties faced by its companies there, reported Reuters.

Meanwhile, Hyundai Motor yesterday said it will launch its first plug-in hybrid model in China only next year, against the original plan to launch it this year.

South Korea's biggest carmaker said it may procure electric vehicle batteries from Chinese companies for the planned China model after South Korean battery makers failed to make a list of approved vendors last year.

Beijing has blocked imports of high-tech bidets and some cosmetics, cancelled music concerts by South Koreans and restricted Chinese flights and tourism to Korea.

"The chilling effect on Korean consumer goods will be unavoidable... as long as Seoul sticks to the Thaad plan," Mr Michael Na, strategist at Nomura, told FT.

China is South Korea's biggest trading partner, buying one quarter of its exports. Exports account for about half of South Korea's gross domestic product.

A version of this article appeared in the print edition of The Straits Times on February 09, 2017, with the headline 'China halts work on Lotte project amid Thaad tensions'. Print Edition | Subscribe