Beijing official tours companies in Seoul to say business will suffer if Thaad deployed

January 5, 2017
by: Charles Clover in Beijing and Song Jung-a in Seoul

China has threatened some of South Korea’s largest companies over Seoul’s decision to deploy a US ballistic missile shield, according to several people briefed on the conversations.

Samsung and Lotte Group were among companies warned by a foreign ministry official during a visit to Seoul last week that their China business could suffer because of the Korean stance.

South Korean officials labelled a visit by Chen Hai, the ministry’s deputy director-general of the department of Asian affairs, as “highly irregular”. They said he ignored requests to postpone the trip until the new year and did not pay a courtesy call to his counterparts at the foreign ministry in Seoul.

Asked about Mr Chen’s visit, China’s foreign ministry responded that he had “widely exchanged opinions on China-Korea relations, bilateral communication and co-operation, with people from all circles in Korea”.

Samsung and Lotte said they were unaware of any meetings with Mr Chen.

South Korean companies have borne the brunt of Seoul’s decision last July to host the US Terminal High Altitude Area Defence system as North Korea steps up its military posturing, conducting two nuclear tests and about 30 ballistic missile launches last year.

Seoul said the Thaad platform would defend it against attacks from the north. But the move has outraged China, which said Thaad undermined its nuclear deterrent and could allow the US to use the platform’s powerful radar to peer deep into its territory. In a newspaper column on Monday, Wang Yi, China’s foreign minister, identified objection to the Thaad deployment as one of the ministry’s key policies for this year.

Korean observers said Mr Chen’s visit appeared to be aimed at scaring the country’s biggest conglomerates into lobbying Seoul against Thaad deployment.

Yoo Il-ho, Korea’s finance minister, told reporters this week there had been “several suspected cases of non-tariff barriers” since last July and that Seoul should determine China’s “real intention”.

Cai Jian of the Center for Korean Studies at Fudan University in Shanghai said China considered Korean companies to be a significant pressure point.

“The Korean economy relies heavily on exports to China,” he said. “Up till now the penalties are still very small scale and most have not been publicised, but they will increasingly strengthen the penalty measures. If they do not change course, Beijing will have them pay the price.”

Lotte Group has faced a series of regulatory probes in China since selling the government a golf course as a base for the Thaad system in November.

Korea’s popular culture and tourism sectors are also feeling the pinch. Actors and pop stars have found themselves unwelcome in China, with promotional events axed and television appearances cancelled. Several Chinese newspapers have called for boycotts of all South Korean entertainers in China.

China also rejected applications by Korean carriers to add charter flights between the two countries for January and February — a peak travel season including the Chinese lunar new year holiday. The Chinese government has told Korean tour agencies of plans to cut tourism from China by 20 per cent and limit shopping days on tours, according to South Korean officials.

In response to such moves, Yun Byung-se, South Korean foreign minister, said the government was considering countermeasures, although he reaffirmed that the planned Thaad deployment was a matter of national security.

A group of seven opposition lawmakers landed in Beijing on Wednesday for a three-day trip to meet Chinese officials including Mr Wang to express their concerns over China’s recent economic measures deemed retaliatory by Seoul.

Conservatives in Seoul criticised their visit as an “irresponsible” move that could be used for Beijing’s aggressive campaign to derail the Thaad deployment. But Moon Jae-in, former head of the opposition party and a frontrunner to become South Korean president, said last month the Thaad deployment should be decided by the next administration, holding out the possibility of renegotiating the agreement with Washington.