Large-scale real estate developments funded by Chinese investors on South Korea's resort island are struggling to move forward amid deepening diplomatic tension between China and Korea over the deployment of a US anti-missile defense system.
A subcontractor for the development of a resort hotel on Jeju Island, led by Shanghai-based Greenland Holdings Corp., pulled all their construction equipment from the site last week in protest of overdue payments.
An image depicting the real estate market in Korea. (Yonhap)
"Greenland is refusing to pay 30 billion won ($26.1 million) as agreed and now the construction has come to a virtual halt since China began retaliation on Korea over the THAAD," an official for the subcontractor claimed.
Beijing has ratcheted up attacks against South Korean companies and goods since Seoul and Washington agreed in July last year to station the Terminal High Altitude Area Defense as a deterrent to North Korea's nuclear and missile threats.
The Chinese government has slammed the deployment, saying that THAAD's high-power radar system is capable of spying on its military.
POSCO Engineering & Construction Co., a South Korean builder in partnership with Greenland for the project, said it is only being delayed for a limited period of time for reasons that it refused to disclose due to the sensitivity of the matter.
Greenland Holdings' development project off the southern tip of the Korean peninsula includes plans to build a resort, condos, hospital and research facilities with the entire investment to reach 1 trillion won in total.
The developer is 46 percent owned by the Shanghai Government.
China's retail firm Benma Group has withdrawn from investing in another development project to build the Jeju Iholand resort complex on the island, spurring speculation that the decision was made due to the THAAD deployment.
According to the Jeju provincial government, 80 percent of foreign investors whose investment topped 5 billion won were Chinese as of end-2016. They have together invested a total of 15.6 trillion won so far, about four times the annual budget of the island. (Yonahp)