Home China China Tightens Banking Screws on North Korea, but Rejects Trump's Talk of Total Ban
China Tightens Banking Screws on North Korea, but Rejects Trump's Talk of Total Ban

China Tightens Banking Screws on North Korea, but Rejects Trump's Talk of Total Ban

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BEIJING — China has tightened the financial screws on North Korea, imposing and enforcing United Nations sanctions to an unprecedented level, experts say. But Beijing remains unwilling to completely isolate the regime and has not completely cut all financial ties.

Given that China accounts for nearly 90 percent of North Korea’s trade, its cooperation is vital to Trump’s efforts to isolate and pressure the regime.

On Thursday, Trump said Chinese President Xi Jinping had ordered Chinese banks to cease conducting business with North Korean entities. Praising Xi, he called the move “very bold” and “somewhat unexpected.”

But on Friday, China’s foreign ministry spokesman denied Beijing had agreed to go that far.

“As far as I know, what you have mentioned just now is not consistent with the facts,” spokesman Lu Kang told a regular news conference in response to a question about Trump’s comments.

Experts said Chinese banks had previously been told not to let North Korean individuals or companies open new accounts.

Indeed, the Reuters news agency reported that China’s central bank had issued a formal, written order to banks this week ordering them to strictly implement United Nations sanctions. It said banks had been told to turn new customers away and wind down loans with existing customers.

Yet the executive order issued by Trump goes much further, threatening sanctions on any foreign financial institution that knowingly conducts or facilitates “any significant transaction in connection with trade with North Korea.” It also bans planes and ships from entering the United States if they have traveled to North Korea in the past 180 days.

Those measures would go beyond sanctions imposed by the U.N. Security Council, experts said, and appear to move in the direction of a complete trade embargo on North Korea. That’s something that neither China nor Russia would agree to.

“This is potentially significant,” said Bruce Klingner at the Heritage Foundation in Washington. “Past executive orders went after people who were committing crimes. This gives them the authority to go after anyone who is just trading with North Korea.”

At Friday’s regular foreign ministry briefing, Lu repeated Beijing’s familiar talking points: that China “comprehensively and strictly” implements U.N. resolutions, but opposes unilateral sanctions imposed outside the U.N. framework.

“China’s stance on this is clear and consistent,” he said.

Experts said Beijing was largely honoring its commitments and was putting pressure on Pyongyang — but would not cut the regime’s economic lifeline.

“My impression is that China is implementing the sanctions with unprecedented rigor and determination,” said Michael Kovrig, senior adviser for Northeast Asia for the International Crisis Group, adding that significant pressure had been placed on provincial and local officials in the border region.

“But does that mean everything is being followed through completely? Not necessarily.”

China has an 880-mile border with North Korea, and smugglers continue to defy U.N. sanctions and law enforcement efforts, by bringing banned goods across, experts say. Similarly, the latest banking moves will add to pressure on the regime, but not completely isolate it.

For one thing, Pyongyang has a long history of working around financial sanctions, working through intermediaries and underground banks and setting up dummy accounts and shell companies.

Ahead of Trump’s announcement, Treasury officials had shared with their Chinese counterparts a list of 12 large banks that continued to do business with North Korea, according to one person who had discussions with the Chinese officials. While the Chinese were “grumpy” about being given the list, their eyes were opened, the person said.

Yet China is insistent on another point, reiterated by the foreign ministry’s Lu this week — that sanctions alone will never solve the problem.

“China has been very clear: Sanctions are meant to punish North Korea but not to corner it,” said Yanmei Xie, an expert on bilateral relations at Gavekal Dragonomics in Beijing.

“Another unspoken purpose is to placate Washington,” she added. “But China wants to ensure North Korea won’t be pushed to the brink of collapse.”

Shen Dingli, deputy dean of Fudan University’s Institute of International Studies in Shanghai, said North Korea had resolved to continue develop its nuclear and missile program whatever external pressure was applied.

“Sanctions, in my view, will not reverse North Korea’s resolute determination,” he said.

Cai Jian, a Korean Peninsula studies expert at Fudan University, added that relying on stiffer sanctions would only intensify the confrontation and undermine the chance of dialogue.

“Sanctions are not the end, but only the means to bring North Korea back to the negotiation table.” he said. “At the moment, the international community has placed too much importance on sanctions and putting pressure on. It’s not very balanced.”

On Friday, North Korean leader Kim Jong Un on Thursday reacted angrily to Trump’s remarks and actions, calling the president a “mentally deranged U.S. dotard” and his speech at the U.N. “unprecedented rude nonsense.”

Kim said that he was now thinking hard about how to respond, warning he would “tame” Trump “with fire.”

Trump responded Friday by calling Kim a “madman” whose regime would be “tested like never before.”

In another sign of rising anger on every side, North Korea’s state KCNA news agency rebuked its Chinese counterparts for threatening, insulting and undermining their country this week.

In a piece entitled “Rude Deed of Shameless Media,” it criticized China’s People’s Daily and Global Times newspapers.

“The Chinese media had better watch how the DPRK smashes the hostile forces’ arrogance and highhanded practices, rather than kowtowing to the ignorant acts of the Trump administration,” it wrote, referring to the country’s official name, the Democratic People’s Republic of Korea.

“They had better mind their own businesses, before impudently pointing an accusing finger at others.”

Chinese foreign ministry spokesman Lu declined to comment on the “personalized” comments between Trump and Kim, and, on the media criticism, said only that China was “objective and fair.”

He also, again, appealed for calm.

“What’s needed now is to implement the U.N. resolutions strictly, and positively explore channels to solve problems via talks, rather than provoking each other and adding oil to the fire.”

simon.denyer@washpost.com

anna.fifield@washpost.com

Fifield reported from Tokyo. Shirley Feng, Luna Lin and Liu Yang in Beijing contributed to this report.

 

This article was written by Simon Denyer and Anna Fifield from The Washington Post and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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