China takes aim at Korea’s Lotte after missile move

10-Dec-2016 Intellasia | FT | 6:00 AM Print This Post

Series of probes follows Lotte’s surrender of golf club to host US-made Thaad shield

A series of Chinese probes into one of South Korea’s largest companies has renewed fears that Beijing is taking aim at Korean business interests after Seoul’s decision to host a US-made missile shield.

Lotte, South Korea’s fifth-biggest conglomerate, struck a deal last month to relinquish one of its golf courses to make way for the advanced anti-missile system.

Seoul says the Terminal High Altitude Area Defence platform will defend it against attacks from North Korea, which has this year tested two nuclear weapons and about 30 ballistic missiles. But the move has outraged China, which says Thaad undermines its nuclear deterrent and fears the US will use the platform’s powerful radar to peer deep into its territory.

Authorities have in the past week launched co-ordinated regulatory investigations into Lotte operations in Shanghai, Beijing, Shenyang and Chengdu.

Lotte confirmed its affiliates in China had received “fire, safety or tax investigations from the Chinese government” but denied that all its businesses were being probed.

“We don’t know the reason or the purpose of this investigation, so it is not appropriate for us to comment on it,” it said.

Analysts, however, suggest Beijing’s clampdown is a response to the missile shield move.

“When you consider the timing and targeting, there are plenty of reasons to think this all-out investigation of Lotte affiliates is an act of political vengeance,” said Kim Han-kwon, a professor at Korea National Diplomatic Academy.

“Even if the Chinese authorities did not deliver any official instructions to local governments, provincial party officials will be trying to please the central government” ahead of a crucial Communist party congress next year.

Lotte has 150 stores and facilities in China, where its business interests range from confectionery and chemicals to supermarkets and department stores.

It is not the first time suggestions have been made that Beijing is taking out its anger with South Korea over the missile shield on the country’s business interests in China.

Korean popular culture has already felt the pinch. Shortly after Seoul revealed plans to host Thaad in July, the country’s actors and pop stars found themselves unwelcome in China almost overnight, with promotional events axed and television appearances cancelled.

For Scott Harold, an expert on Asian security affairs at the Rand Corporation, the apparent clampdown “is about making neighbours realise there is no low-cost way to cross China. It is about imposing a cost on any behaviour that runs counter to China’s interests.”

Analysts fear that sanctions by stealth could bode badly for Korea’s economy. While China is easily South Korea’s largest trading partner, Korean exports to China are in decline, down 11 per cent in October on the same month last year – the 16th consecutive month of year-on-year falls.

South Korea’s foreign ministry said it was watching the situation, while the state-run Yonhap news agency reported that Seoul was considering voicing concern over the matter.

China has made no official comment but an article in the Global Times, a hawkish Communist party-owned newspaper, said the probes were “legitimate and are common to foreign companies operating in the Chinese market”.

Yang Xiyu, a former top Chinese diplomat, told a seminar in South Korea last month that Beijing was preparing all means of response to the Thaad deployment, including diplomatic and military measures, without elaborating further.

Meanwhile, a regional summit this month aimed at defusing tensions between the two nations, as well as Japan, looks set to be nixed as a result of a sprawling corruption scandal in Seoul that is poised to topple President Park Geun-hye


Category: China

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