US sets up missile defence in South Korea amid tensions

South Korea says it's made progress on setting up the Terminal High-Altitude Area Defence system, or THAAD, as the North displayed its military power.

South Korea has made progress on setting up the THAAD as the North displayed its military power. (AAP)

In a defiant bit of timing, South Korea has announced that key parts of a contentious US missile defence system have been installed a day after rival North Korea showed off its military power.

The South's trumpeting of progress on setting up the Terminal High-Altitude Area Defence system, or THAAD, comes as high-powered US military assets converge on the Korean Peninsula and as a combative North Korea signals possible nuclear and missile testing.

North Korea conducted live-fire artillery drills on Tuesday, the 85th anniversary of the founding of its million-person strong Korean People's Army.

On the same day, a US guided-missile submarine docked in South Korea, and the USS Carl Vinson aircraft carrier is headed toward the peninsula for a joint exercise with South Korea.

The moves to set up THAAD within this year have angered not only North Korea, but also China, the country that the Trump administration hopes to work with to rid the North of nuclear weapons.

China, which has grown increasingly frustrated with its ally Pyongyang, and Russia see the system's powerful radars as a security threat.

South Korea said in a statement on Wednesday that unspecified parts of THAAD were installed and Yonhap news agency reported the parts include two or three launchers, intercept missiles and at least one radar.

The statement said that Seoul and Washington have been pushing to get THAAD quickly working to cope with North Korea's advancing nuclear and missile threats.

On Tuesday, North Korea conducted live-fire drills near the east coast city of Wonsan that involved 300 to 400 artillery pieces, Yonhap reported. An official from Seoul's Defence Ministry couldn't confirm those specific details.

North Korea's official media said early Wednesday that leader Kim Jong Un personally observed the exercises.

This photo distributed by the North Korean government, shows the military celebrations. Source: KCNA via KNS

The drills reportedly included submarine torpedo attacks on mock enemy warships "while fighters and bombers made zero feet flight above the sea to drop bombs on the targets," the Korean Central News Agency said.

President Donald Trump has sent more US military assets to the region in a show of force while leaning on China to exert economic pressure on its wayward ally.

Chinese President Xi Jinping, who spoke to Trump on Monday, is urging restraint from both Pyongyang and Washington where top administration officials are due to brief the entire US Senate on Wednesday.