HomeContributorsFundamental AnalysisNorth Korea Raises US-China Tensions

North Korea Raises US-China Tensions

The US and China are facing many conflicts this year given the more hawkish stance from the Trump Administration. While the risk of a trade war has gained the most attention (see the box below right for some of our recent research), another area of tension has moved to the forefront recently – the threat from North Korea.

On Monday 6 March, North Korea fired four or five missiles into Japanese waters in a response to ongoing annual US-South Korea joint military exercises, code-named Foal Eagle. The actions of North Korea are raising tensions in many ways in the region, not least between the US and China. Former US President Barack Obama highlighted North Korea as the most pressing foreign policy issue for Donald Trump in a meeting following the presidential election.

THAAD adds to US-China tensions

The rising nuclear threat from North Korea has given the US and South Korea a stronger case for taking defensive measures. They have accelerated the deployment of a US missile defence system called THAAD (Terminal High Altitude Area Defense) in South Korea. THAAD is a system that can shoot down ballistic missiles in their terminal phase. While both the US and South Korea maintain it is only for defensive measures, China is strongly opposed to the deployment, as the radars could potentially cover large parts of Chinese territory as well. China is now boycotting South Korean department store chain Lotte, as the company made a land swap deal with the government for the area where THAAD is deployed. China is also banning tourism to South Korea to hit back at them. A spokesperson for the Chinese Foreign Ministry Geng Shuang stated that ‘we will take steps to maintain our security interests’ and urged the parties concerned to stop deployment and refrain from going too far along the wrong track.

Danske Bank
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