US Urges Beijing To Impose First Round Of Sanctions Against Chinese Firms Trading With North Korea

The Trump administration has asked Beijing to impose what would be the first round of sanctions against nearly 10 Chinese companies and individuals that trade with North Korea, part of a strategy to starve, and ultimately shut down, Kim's nuclear program, the WSJ reports

Recall that while U.S. sanctions on North Korea target virtually the nation’s entire economy; U.N. sanctions are less stringent and still allow for significant nonmilitary trade, especially between the isolated nation and its biggest trading partner, China. While there is no firm deadline, senior US officials cited as sources by WSJ indicated that the Treasury Department could impose unilateral sanctions on some of these entities before the end of the summer if Beijing doesn’t act.

The Journal did not name the entities being targeted, however clues to their identities can be found in a report released Monday by a Washington-based nonpartisan research group, C4ADS, that identifies several Chinese entities of concern in the hopes of exposing illicit trading networks. Those include a Chinese businessman and his sister said to be connected to a ship intercepted by Egypt last year while smuggling 30,000 North Korean rocket-propelled grenades. US officials told WSJ that the report reflects part of its strategy towards North Korea.

While thousands of Chinese firms trade with North Korea, many are interconnected through parent companies or shared ownership. Shutting down even a handful of these connected networks would make it harder for North Korean leader Kim Jong Un to finance and supply his nuclear program, or so the thinking goes.

Meanwhile, the reason for the urgency is that as noted above, Pyongyang conducts roughly 90% of its recorded foreign trade through China, per Chinese trade data.

We’ve told the Chinese we hope they’ll act against certain companies and people,” said a senior U.S. official briefed on North Korea policy.


“But we’ve also said that we’re prepared to act alone and can reach North Korea if we choose.” 

Beijing has said repeatedly that while it implements United Nations sanctions on North Korea, it is opposed to unilateral action and favors a negotiated solution.

C4ADS said Chinese corporate and trade records show 5,233 local companies traded with North Korea between 2013 and 2016. Many of them share Chinese owners, addresses or other identifying features, it said.

“You need to deny these networks access to Chinese markets and more broadly the international financial system,” David Thompson, author of the C4ADS report, told the Journal.

Conceding that much of China’s trade with North Korea is legal, the report identified several Chinese companies exporting potential “dual use” items that could be used either for civilian purposes or in North Korea’s missile programs.  C4ADS said Dandong Dongyuan Industrial Co., one firm suspected to be on the government’s list, was the biggest exporter of potential “dual use” items in its sample and that last year they included navigational apparatus in a category that could be used in vehicles or in ballistic missile guidance systems.

“Once charted, not only do links between top firms become more apparent, but it becomes much more apparent that a very small number of key executives control a disproportionate share of the trade [with North Korea],” said C4ADS.

The owner of that company, Chinese businessman Sun Sihong, had agreed to meet with a Journal reporter, but soon afterward a dozen of his staff pulled over the reporter’s taxi, boxed it in with their vehicles and called local police, who briefly detained the reporter.

WSJ said that Mr. Sun and his staff then came to the police station and answered a few questions in the presence of several officers before leaving with his entourage. He denied doing any trade with North Korea.

Dandong Dongyuan reported that it was exporting to North Korea in corporate filings from 2010 on but removed the reference in November 2016. From 2011 to 2016, it had approval to export trucks and in 2015 it was allowed to join a trade exhibition in Pyongyang, according to Chinese government notices.

The Trump administration has been seeking in recent months to increase economic pressure on North Korea beyond just China. This has included dispatching top diplomats on missions to Europe, the Middle East, Southeast Asia, and Africa, all places where the North Koreans have conducted trade.

“When countries are under extended sanctions…they look for the cracks and seams,” said a senior U.S. diplomat involved in North Korea policy. “So everything goes to unlikely spots in the world where they are less likely to be tracked down.

Juding by the now weekly provocative launches of North Korean ballistic missiles, which either explode on launch or splash into the sea and are mostly innocuous, and remain an embarrassing thorn in Trump's side, any so-called economic pressure has so far failed to yield any results.  What will be more interesting is how China responds to this first intervention by the US into Beijing's domestic affairs. For the answer, keep refreshing the front page of the Global Times. We expect China's reaction will be quite angry.