By Josh Smith

SEOUL (Reuters) – South Korean officials said on Wednesday a proposed delay in military drills with the United States was aimed at ensuring a peaceful 2018 Winter Olympics, not ending the North Korean missile crisis, as relations with China suffered new setbacks.

South Korean President Moon Jae-in is seeking to soothe relations with North Korea, which is pursuing nuclear and missile programmes in defiance of U.N. sanctions, and with China, the North’s lone major ally, before the Games begin in South Korea in February.

China, which hosted years of on-again-off-again six-party talks to try to end the North Korea standoff, resumed some blocks on group tours to South Korea, industry sources said, and rebuked Seoul for firing warning shots at Chinese fishing boats

On Tuesday, Moon, who visited China last week, said he had proposed postponing major military drills with the United States until after the Games, a move his office said was designed to reassure athletes and spectators.

“This is confined to our efforts to host a peaceful Olympics,” an official from the presidential Blue House said. “We are only talking about the exercises which are supposed to take place during the Olympics and Paralympics.”

North Korea sees the regular joint exercises as preparation for war, while China is still angry about the deployment of a U.S. anti-missile system, commonly known as THAAD, by South Korea, whose powerful radar it fears could see deep inside its territory.

The South argues it needs THAAD to guard against the threat posed by North Korea, which regularly threatens to destroy South Korea, Japan and the United States.

For a graphic on North Korea’s missile launches, click http://tmsnrt.rs/2j2S5T3

The proposed delay in drills was discussed during a summit last week between Moon and Chinese President Xi Jinping, after the proposal had already been submitted to the Americans, the Blue House official said.

China and Russia have proposed a “freeze for freeze” arrangement under which North Korea would stop its nuclear and missile tests in exchange for a halt to the exercises. However, the official denied the proposed delay had anything to do with the freeze idea.

U.S. Secretary of State Rex Tillerson said in Ottawa on Tuesday he was unaware of any plans to “alter longstanding and scheduled and regular military exercises”.

North Korea has stepped up its missile and nuclear tests at an unprecedented rate this year, and any new provocation from the North would “inevitably have an impact” on the exercises, the Blue House official said.

“It is a display of the president’s strong message that North Korea must not conduct any provocation (during the Olympics),” the official told reporters.

“BIOLOGICAL EXPERIMENTS”

Japan’s Asahi newspaper reported on Wednesday, citing an unidentified person connected to South Korean intelligence, that North Korea was conducting biological experiments to test the possibility of loading anthrax-laden warheads on its intercontinental ballistic missiles.

The Asahi report said the U.S. government was aware of the tests, which were meant to ascertain whether the anthrax bacteria could survive the high temperatures that occur during warheads’ re-entry from space.

Reuters was unable to verify the report independently.

In a statement released by state media, North Korea’s Ministry of Foreign Affairs called reports it was developing biological weapons “nonsense” designed to provoke nuclear war.

The United States has given China a draft resolution for tougher U.N. sanctions on North Korea and is hoping for a quick vote on it by the U.N. Security Council, a Western diplomat said on Tuesday, however Beijing has yet to sign on.

When asked about the U.S. resolution at a press briefing on Wednesday, Chinese Foreign Ministry spokeswoman Hua Chunying would only say that China always takes a responsible and constructive attitude towards Security Council talks on North Korea.

The United States has also called on the Security Council to blacklist 10 ships for circumventing sanctions on North Korea. Hua said China had received the proposal from the United States.

WARNING SHOTS

China has resumed at least some restrictions on group tours into the South, South Korea’s inbound travel agency said. The restrictions were first in place last year as part of China’s retaliation over THAAD deployment.

“I was told from my boss this morning that our Chinese partners (based in Beijing and Shandong) said they won’t send group tourists to South Korea as of January,” the official from Naeil Tour Agency told Reuters by phone.

One source in China said the reason for reinstating the ban was to rein in overly aggressive tour operators who had been rolling out package deals to South Korea too quickly in the eyes of authorities.

Foreign ministry spokeswoman Hua told reporters she had not heard of a tourism ban, but she reiterated that Moon’s visit to Beijing was successful and that China has an open attitude towards exchanges and cooperation in all areas.

Beijing has never officially confirmed restrictions on tourism.

Three representatives at Beijing travel agencies told Reuters that they were not currently organising group tours to South Korea. One confirmed that the tourism administration had issued the notice, while a third said: “At the moment we have no group trips to South Korea.”

A travel agency in the northern province of Shandong also said it could not organise group trips. Three others said they could, but with restrictions such as on the number of people.

South Korea’s coast guard said on Wednesday it had fired around 250 warning shots on Tuesday to chase away a fleet of 44 Chinese boats fortified with iron bars and steel mesh that were fishing illegally in South Korean waters.

“The Chinese fishing boats sought to swarm around and collide with our patrol ship, ignoring the broadcast warnings,” the coast guard said in a statement.

China, which has in the past lodged diplomatic protests to South Korea over the use of force by its coast guard, expressed “serious concern” about the latest clash.

(For a graphic on rocket science, click http://tmsnrt.rs/2t6WEPL)

(Reporting by Dahee Kim, Hyonhee Shin, Heekyong Yang and Yuna Park in SEOUL, Tim Kelly in TOKYO, Adam Jourdan in SHANGHAI, and Pei Li, Gao Liangping and Ben Blanchard in BEIJING; Editing by Paul Tait and Nick Macfie)