China and the World

In a whole Lotte of trouble

South Korean giant’s $2.6 billion project torpedoed by THAAD tension

Korean leader Kim Jong Un visits the Kumsusan Palace of the Sun

The real root of the trouble

On Monday North Korea blipped red once more on the diplomatic radar after it tested another ballistic missile, which officials from South Korea said flew for 500 kilometres before landing in the Sea of Japan.

The response to the launch was predictable. South Korea and Japan condemned it, as did the United States, reaffirming its commitments to defending its Asian allies.

And once again, Beijing was called upon to do more to rein in its recalcitrant neighbour.

For its part, Beijing offered a weaker rebuff and criticised the US for antagonising the renegade nation.

A spokesman for the Foreign Ministry said during a regular press briefing, “Under current circumstances, relevant sides should not provoke each other or take actions that would escalate tensions on the Korean Peninsula… As I have pointed out repeatedly in the past, the root cause to the North Korea nuclear missile issue are conflicts between North Korea and the United States, as well as between North and South Korea.”

In Beijing’s reasoning, one of the provocations from the Americans is their plan to deploy a Terminal High Altitude Area Defence (THAAD) anti-ballistic missile system in South Korea. The nationalist Chinese newspaper the Global Times has argued that “meeting an arms threat with a threat of arms is no means to unravel the nuclear issue in the Korean Peninsula… On the contrary, such a move would further alienate Pyongyang”. But China’s other concern about THAAD is that – if it were deployed in South Korea – its powerful radar might be used to spy into Chinese territory or that it could be used to shoot down Chinese missiles (see WiC316).

To dissuade the South Koreans from welcoming THAAD, the Chinese have been doling out unofficial punishments, such as the cancellation of performances by South Korean pop stars in China and a significant reduction in South Korean programming on Chinese television (see WiC336).

More recently the rebukes have reached South Korea’s fifth largest conglomerate, Lotte, after a company golf course in North Gyeongsang province was selected as the site for THAAD’s deployment.

According to the Korea Times, Lotte wasn’t consulted on the decision and it isn’t in much of a position to oppose it, because some of its high-level executives are under investigation for “breach of trust”, embezzlement and “other irregularities”. But Lotte’s helplessness has done little to soothe Chinese scorn and last December the Financial Times reported that company projects in Beijing, Shanghai, Shenyang and Chengdu had come under “fire, safety or tax investigations from the Chinese government” since the firm’s golf course was highlighted as a potential base for THAAD.

On Wednesday last week Lotte revealed that construction work on a $2.6 billion entertainment-and-retail project in Shenyang – its largest project in China – had been suspended. According to English-language Korean news site The Hankyoreh, the Shenyang government cited fire safety concerns, but the timing seems suspect.

A spokeswoman for Lotte told AFP: “Many people talk about potential links with the THAAD deployment over the construction suspension, but we don’t know about such things.” But international media has been readier to make the connection, with a decision by Beijing last year to deny certification for LG and Samsung’s electric car batteries also suspected of being in retaliation for THAAD.

Back in Seoul the Koreans are trying not to lose their cool, as Finance Minister Yoo Il-ho explained last Thursday.

“If China officially takes unfair action against South Korea we would openly move against it, but as long as China says its moves are not related to THAAD… the South Korean government cannot accuse China of retaliating,” Yoo said.


Keeping track: Beijing openly attacked South Korean conglomerate Lotte this week (starting February 20). Xinhua lambasted the company for its involvement in THAAD: “The Chinese people will not support a company complicit in damaging China’s interests. The proposed deployment of a US defence system in the Republic of Korea is a threat to regional security and Lotte Group is one decision away from becoming an accessory to the act.” Xinhua promised Lotte will lose Chinese customers and “a very large slice out of their business pie”.

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