Wednesday April 24, 2019

U.S. SANCTIONS CHINESE COMPANIES SUPPORTING NORTH KOREA

August 30, 2017

Following UN Sanctions against North Korea, the U.S. Department of the Treasury’s Office of Foreign Assets Control issued additional sanctions against several Chinese companies and individuals on August 22, 2017 for assisting North Korea in evading the UN sanctions. Those sanctioned helped North Korea by: (1) assisting designated people who support Pyongyang’s nuclear and ballistic missiles program, (2) dealing in the North Korean energy trade, (3) facilitating the exportation of North Korean workers, and/or (4) enabling sanctioned North Koreans access to U.S. and International Financial systems. Six Chinese companies made the list, along with several Russian and Singaporean companies. Concurrently, Department of Justice prosecutors filed legal complaints seeking $11 million from two of the same Chinese companies: Mingzheng International Trading Limited and Dandong Zhicheng Metallic Material Co., Ltd. Prosecutors stated that these companies laundered money for the sanctioned North Koreans through accounts in the United States.

What did the United States hope to gain from imposing sanctions on these Chinese companies and Chinese individuals? Journalists argue that sanctions have worked in the past: in the case of Iran, the United States led the effort to economically isolate Iran’s nuclear development programs; eventually Tehran gave in to the sanctions and took a seat at the negotiation table. By the end of the negotiation, Iran agreed to intensive inspections and restrictions of its nuclear program.

These sanctions were not the first time the United States sanctioned Chinese individuals and companies for their ties to North Korea. Just two months earlier, the Trump administration issued sanctions against two Chinese individuals, a Chinese shipping company, and a Chinese bank for their contribution to North Korea’s nuclear development.

The Chinese government responded by calling the sanctions “punitive measures” and demanding the U.S. withdraw these new sanctions or risk damages to U.S.-China ties. China’s Foreign Ministry spokesperson Hua Chunying conveyed China’s stance clearly: “Measures taken by the United States are not helpful in solving the problem and unhelpful to mutual trust and cooperation. We ask the United States to stop the relevant wrong practice immediately.”

Similarly, back when the United States imposed sanctions on Chinese individuals and companies in June, the administration received a rebuke from the Chinese Foreign Ministry. The spokesperson stated, “We firmly oppose any unilateral sanctions outside of the [UN] Security Council and if there are any instances of wrongdoing, China stated that it would handle the matter itself within its own domestic legal system.”

China has continually stated that it opposes unilateral action against countries and generally advocates for non-intervention. Non-interference  in other countries’ affairs has been a principle China often evokes when discussing its foreign policy– along with mutual respect for sovereignty and territorial integrity, mutual non-aggression, equality and mutual benefit, and peaceful coexistence as part of China’s Five Principles of Peaceful Coexistence. These principles are often the rationale the Chinese government provides when expressing disapproval of other countries for taking action outside the purview of international organizations such as the UN.

In terms of China’s overall foreign policy, China prioritizes stability above all, whether it is the nation’s domestic stability or Asia’s regional stability. If anything were to happen in Pyongyang, China’s national stability would be in jeopardy, with likely outcomes including North Korean refugees flooding into China, or thousands of U.S. troops  occupying China’s border as the Koreas descend into conflict. While still advocating for the denuclearization of North Korea, these concerns make China’s priorities when dealing with North Korea slightly different from those of the United States. China is not as willing to take extremely harsh measures that might lead to the collapse of Pyongyang.

Despite these additional concerns, China does still acknowledge the UN sanctions on North Korea. On August 14, China announced a ban on North Korea’s coal, iron, and seafood imports in accordance with the UN sanction order. Scholars have speculated that China’s cooperative mood could possibly incentivize a revival of the Six Party Talks. This multilateral effort emerged in 2003 with the mission of ending Pyongyang’s nuclear development through negotiation. The six parties involved are China, the United States, South Korea, Japan, Russia, and North Korea. The negotiations came to a halt after the Pyongyang leader walked out negotiations in 2009 and revealed a new Uranium Enrichment Facility to visiting American scientists.

Prior to expressing its opposition to the United States’ unilateral sanctions, China has proposed its preferred alternative method of engaging North Korea on the matter of its nuclear development. China has lobbied for the use of multilateral platforms and working with other countries to curb North Korea. In September 2013, for example, China sent a nuclear envoy to North Korea and proposed to hold an unofficial meeting between the Six Party participants. The United States and South Korea resisted such a plan. As the North Korean nuclear threat further unfolds in international politics, only time will tell whether multilateral negotiation can be achieved and whether it would be an effective instrument in halting North Korea’s nuclear programs.

North Korea, in the words of Former President Obama, “is the most isolated, most sanctioned, the most cut-off nation on Earth.” It is uncertain whether North Korea would react the same way Iran did to continued sanction. Currently, the impact of these sanctions towards North Korea’s nuclear development is unknown. What can perhaps be more easily measured, however, is how unilateral U.S. sanctions affect the ever-important U.S.-China relationship. These potential consequences should not be overlooked.

For further coverage of the United States’ sanctions on China, please see the following news sources and commentary:

The Department of Treasury “Treasury targets Chinese and Russian entities and individuals supporting the North Korea regime”

CFR“The Six Party Talks on North Korea’s Nuclear Program”

The Washington Post“China demands U.S. immediately withdraw North Korea sanctions, warns they will damage ties”

The Atlantic “U.S. Sanctions Chinese entities with financial ties to North Korea”

Bloomberg “U.S. expands North Korea sanctions, seek to seize millions”

Compiled and edited by Scarlette Li.