North Korea has repeatedly threatened to target Japan, which hosts around 54,000 US military personnel, as well as South Korea and the United States with its missiles.
The U.N. midterm report was compiled by the so-called panel of experts made up of representatives from the Security Council's five permanent members - Britain, China, France, Russia and the United States - and Japan, South Korea and South Africa. North Korea, for its part, threatened to launch missiles toward the American territory of Guam.
Since March 2, 2016, North Korea has registered almost 70 vessels - a 44 percent increase over 18 months.
Its ICBM tests triggered an intense warning by President Donald Trump that Washington could rain "fire and fury" on the North.
About 17,500 USA service members are participating in the exercise this month, down from 25,000 previous year, according to the Pentagon.
Still, the fact that the exercise has been scaled down from last year's, with fewer US soldiers joining this year's drill, raises concerns that there could be a different plan brewing within Washington.
It comes as the USA and South Korea joined forces today to take part in an annual 10-day exercise, known as Ulchi-Freedom Guardian, involving tens of thousands of troops.
US, South Korea begin military drill as North reacts
On the same day, Pyongyang also stepped back from its plan to strike Guam with four medium-range ballistic missiles. Air Force U-2 Dragon Lady takes part in a drill at Osan Air Base in Pyeongtaek, South Korea , August 21, 2017.
An editorial in North Korea's state newspaper Rodong Sinmun read: "The joint exercise is the most explicit expression of hostility against us, and no one can guarantee that the exercise won't evolve into actual fighting".
"The current situation on the Korean peninsula is highly sensitive and fragile, which requires the directly concerned parties including South Korea and USA to make joint efforts to ease the tensions", Chinese foreign ministry spokeswoman Hua Chunying said.
It's an annual joint drill between American and South Korean forces, but this year, it comes following a bitter back-and-forth between North Korea and U.S. President Donald Trump.
The allies' Ulchi Freedom Guardian (UFG) exercise will kick off on Monday and run until Aug 31.
'If the enemy provokes, (our military) will retaliate resolutely and strongly to make it regret bitterly, ' said General Jeong Kyeong-Doo, chairman of the Joint Chiefs of Staff, in his inauguration speech.
North and South Korea are still technically at war with the North after the Korean War ended with a truce, not a peace treaty.
Despite the defensive nature of the maneuvers, North Korea still criticises the operation every year and considers them as preparations for an attack of Pyongyang.
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China and Russian Federation back an idea known in shorthand as "freeze for freeze" - suggesting that the US and South Korea should suspend its large scale annual exercises in exchange for Pyongyang halting its nuclear and missile tests.
"North Korea will conduct a sixth nuclear test in order to bring the United States to negotiations", said Yoo Ho-yeol, professor of unification and diplomacy at Seoul's Korea University.
The North later said it was holding off firing towards Guam, while it waited to see what the United States would do next.
There's media speculation that the allies might try to keep this year's drills low-key by not dispatching long-range bombers and other USA strategic assets to the region.
Impoverished North Korea hates the drills in part because it must frequently respond with its own expensive displays of military might.
North Korea is a useful buffer state for China between it and USA forces based in South Korea, and also across the sea in Japan.
It's nearly certain that this year's drills will trigger some kind of reaction from North Korea.
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