Chinese authorities have closed nearly two dozen retail stores of South Korea's Lotte Group following inspections, ramping up pressure on the conglomerate amid a diplomatic standoff that has cast a chill over business ties between the two nations. Lotte said on Monday that 23 of its China supermarket stores had been shut, reaching from Dandong on China's North Korean border to the wealthy east coast and southern Changzhou, marking a wide clamp-down on the group in its biggest overseas market. A Lotte Mart spokesman could not provide further details, but workers at three stores said the closures - which they said were temporary - were fire-safety related. The three people asked not be identified due to the sensitivity of the issue. The Anhui fire department said in a post on its Sina Weibo microblog account on Monday it had temporarily shut two Lotte Mart stores due to fire risks, part of a broader regional sweep over the last month that had led to the closure of 30 stores belonging to a range of companies including Lotte. The Lotte closures are the latest in a series of incidents affecting South Korean companies in China after cyber attacks and a ban on sales of travel tours to South Korea. Lotte Mart had 115 stores in China as of January contributing to group sales there of over 3 trillion won ($2.6 billion) in 2015. The incidents come after Lotte approved a land swap outside Seoul last week that will allow South Korea to install the U.S. Terminal High Altitude Area Defense (THAAD) system, in response to missile threat from North Korea. South Korea's military earlier on Monday said North Korea fired four ballistic missiles into the sea prompting acting president Hwang Kyo-ahn to call for THAAD's swift installation. But China's government has objected to the deployment of THAAD, saying it has a radar capable of penetrating its territory, while state media has called for a boycott of South Korean goods and services.
"DECLARED WAR" On Chinese social media on Monday, photos and videos circulated of protests outside Lotte stores, while others showed Lotte outlets with their steel grates pulled shut. Outside one store, a red banner with large white characters read: "South Korea's Lotte has declared war on China. Lotte supports THAAD. Get the hell out of China".
The protests come days after Lotte Duty Free on Thursday said a cyber attack using Chinese internet protocol (IP) addresses had crashed its website. It is currently back online. Political risk experts say the chill facing South Korean firms demonstrates Beijing's playbook for hitting back at the corporate interests of trade partners it disagrees with through state media and tightening regulations. The Lotte Group in a statement on Sunday said it was seeking assistance from the South Korean government regarding the issues it was facing in China, where it employs around 20,000 people - a third of its overseas staff. On Monday, shares in Lotte Shopping Co Ltd (023530. KS), of which Lotte Mart is a business division, fell as much as 4 percent compared with a near-flat benchmark share price index . KS11. The stock regained some ground in afternoon trading.
Lotte's troubles expanded to other South Korean firms on Thursday as China's tourism ministry instructed tour operators in Beijing to stop selling trips to South Korea from March 15. The order has since spread to other regions across the mainland, an official at Korea Tourism Organization said on Monday. The moves have prompted backlash from South Korea, whose trade minister Joo Hyung-hwan said on Sunday he had "deep concerns over a series of actions in China". China's foreign ministry said on Monday it welcomed South Korean companies to invest and operate in China, but added these firms "must operate in accordance with the law and compliance".
President Donald Trump is seeking what he called a "historic" increase in defense spending, but ran into immediate opposition from Republicans in Congress who must approve his plan and said it was not enough to meet the military's needs. The proposed rise in the Pentagon budget to $603 billion comes as the United States has wound down major wars in Iraq and Afghanistan and remains the world's strongest military power. The plan came under fire from Democratic lawmakers, who said cuts being proposed to pay for the additional military spending would cripple important domestic programs such as environmental protection and education. A White House budget official, who outlined the plan on a conference call with reporters, said the administration would propose "increasing defense by $54 billion or 10 percent." That represents the magnitude of the increase over budget caps Congress put in place in 2011. But Mick Mulvaney, the White House budget director, said the plan would bring the Pentagon's budget to $603 billion in total, just 3 percent more than the $584 billion the agency spent in the most recent fiscal year, which ended on Sept. 30, 2016. The rise would be slightly higher than the country's current 2.5 percent rate of inflation."President Trump intends to submit a defense budget that is a mere 3 percent above President (Barack) Obama’s defense budget, which has left our military underfunded, undersized, and unready to confront threats to our national security," John McCain, the Republican chairman of the Senate Armed Services Committee, said in a statement. The defense boost would be balanced by slashing the same amount from non-defense spending, including a large reduction in foreign aid, the White House budget official said. Trump does not have the final say on federal spending. His plan for the military is part of a budget proposal to Congress, which, although it is controlled by his fellow Republicans, will not necessarily follow his plans. Budget negotiations with lawmakers can take months. McCain told reporters he would not vote for a budget with the slight military increase and thought it would face opposition in the Senate.
Trump told state governors at the White House his budget plan included a "historic increase in defense spending to rebuild the depleted military of the United States of America."He said his proposal was a "landmark event" and would send a message of "American strength, security and resolve" to other countries. BIG CUTS TO STATE DEPARTMENT Officials familiar with Trump's budget blueprint said the plan would call for cuts to agencies including the State Department and the Environmental Protection Agency. One official familiar with discussions over State's budget said the agency could see spending cut by as much as 30 percent, which would force a major department restructuring and elimination of programs.
The United States spends about $50 billion annually on the State Department and foreign assistance. More than 120 retired U.S. generals and admirals urged Congress on Monday to fully fund U.S. diplomacy and foreign aid, saying such programs "are critical to keeping America safe."Trump has vowed to spare middle-class social programs such as Social Security and Medicare from any cuts. Nancy Pelosi, the top Democrat in the House of Representatives, said Trump’s plan to slash funding for federal agencies to free up money for the Pentagon showed he was not putting American working families first."A $54 billion cut will do far-reaching and long-lasting damage to our ability to meet the needs of the American people and win the jobs of the future," Pelosi said. "The president is surrendering America’s leadership in innovation, education, science and clean energy."
SHORING UP 'CHOKE POINTS' An official familiar with the proposal said Trump's request for the Pentagon included more money for shipbuilding, military aircraft and establishing "a more robust presence in key international waterways and choke points" such as the Strait of Hormuz and South China Sea. That could put Washington at odds with Iran and China. The United States already has the world's most powerful fighting force and it spends far more than any other country on defense. About one-sixth of the federal budget goes to military spending. Trump has said previously he would expand the Army to 540,000 active-duty troops from its current 480,000, increase the Marine Corps to 36 battalions from 23 – or as many as 10,000 more Marines – boost the Navy to 350 ships and submarines from 276, and raise the number of Air Force tactical aircraft to 1,200 from 1,100. He has not said where he would place the extra hardware and forces or made clear what they would be used for. The United States has been shutting some of its military bases in recent years. Trump has also said he would bolster the development of missile defenses and cyber capabilities. Last week, he told Reuters the United States had "fallen behind on nuclear weapon capacity." He pledged to ensure that "we're going to be at the top of the pack."