• Sat
  • Dec 20, 2014
  • Updated: 7:25am
NewsChina

China punishes North Korea for nuclear tests

PUBLISHED : Saturday, 23 March, 2013, 3:02pm
UPDATED : Saturday, 23 March, 2013, 3:10pm
 

China is trying to punish ally North Korea for its nuclear and missile tests, stepping up inspections of North Korean-bound cargo in a calibrated effort to send a message of Chinese pique without further provoking a testy Pyongyang government.

Freight handlers and trading companies at ports and cities near the North Korean border complain of more rigorous inspections and surprise checks that are raising the costs to doing business with an often unpredictable North Korea. Machinery, luxury goods and daily necessities such as rice and cooking oil are among the targeted products, the companies said, and business is suffering.

“Some business orders we don’t dare take. We don’t dare do that business because we fear that after the orders are taken, we will end up unable to ship them,” said a Mr Hu, an executive with Dalian Fast International Logistics Co. in the northeastern port city of Dalian, across the Yellow Sea from the North Korean port of Nampo. Hu said the company’s business is off by as much as 20 per cent this year.

North Korea’s economic lifeline, China is showing signs of getting tough with an impoverished neighbour it has long supported with trade, aid and diplomatic protection for fear of setting off a collapse.

The moves to crimp, but not cut off trade with North Korea come as Beijing falls under increased scrutiny to enforce new UN sanctions passed after last month’s nuclear test, Pyongyang’s third. Targeted in the sanctions are the bank financing and bulk smuggling of cash that could assist North Korea’s nuclear and missile programs as well as the luxury goods that sustain the ruling elite around leader Kim Jong Un. Pyongyang has reacted with fury and threatening rhetoric against South Korea and the US

US officials in Beijing for two days of talks to lobby China on enforcement said Friday that they were heartened by Chinese expressions of resolve. Spurring Beijing to cooperate, the US officials said, is a concern that North Korean behaviour had begun threatening China’s interests in a region vital to its economic and security.

“There’s reason to believe the Chinese are looking at the threat in a real way,” Treasury Undersecretary David Cohen told reporters.

China’s change of tack with North Korea unlikely foreshadows a total end to Beijing’s support. For Beijing, North Korea remains a pivotal strategic buffer between China and a US-allied South Korea, and Chinese leaders worry that too much pressure could upend an already fragile North Korean economy and cause the Kim government to collapse, leaving Beijing with a security headache and possible refugee crisis.

But North Korea watchers said between blind support and complete abandonment there’s much Beijing is doing and can do to try to rein in Pyongyang.

“We have to get away from the binary thinking that either they support North Korea or they pull the plug. That’s not the way the world works,” said Jonathan Pollack of the Brookings Institution, a Washington think-tank. “The interesting thing is not what happens at the UN but what happens beneath the radar in terms of what Chinese provide in economic aid and energy assistance.”

Over the past decade, as previous nuclear and long-range missile tests and other provocations saw the UN, the US, South Korea and Japan impose sanctions and reduce trade and assistance to North Korea, China has stepped into the breach. By 2011, China provided nearly all of North Korea’s fuel and more than 83 per cent of its imports, everything from heavy machinery to grain and electronics and other consumer goods, according to statistics from the International Trade Center, a research arm of the United Nations and World Trade Organization.

Though Pyongyang could look to other trading partners like Russia, Iran or Kuwait for fuel and some other goods, China’s proximity – their shared 1,400-kilometre (880-mile) border — makes it indispensable. Chinese companies, often with backed by the government, are enlarging North Korean ports and building roads, helping to underpin growth after more than a decade of famine and economic decay.

Such was the Chinese support that US politicians and UN experts complained that Beijing was failing to enforce previous rounds of sanctions, particularly on luxury goods. The $169,000 worth of pleasure boats imported by North Korea last year all came from China, the ITC data show, as did most of the liquor and cigarettes.

As China upped its investment, it became disillusioned with Kim Jong Un. Since coming to power after the sudden death of his dictator father, Kim has refused to heed Beijing’s prodding to engage in economic reform and return to negotiations over its nuclear programme.

Beijing’s unhappiness began to show in December, around the time of North Korea’s latest long-range rocket launch but before the nuclear test. It was then, traders and cargo companies said, that orders for tightened inspections appeared.

At Complant International Transportation in the port of Dalian, customs inspectors began opening containers and packages with equipment or luxury goods or anything they deemed sensitive rather than just scan them, said a company executive who identified himself only by his surname, Zhang.

“That was since the end of last year. Now they’re even stricter,” Zhang said.

Companies in the border city of Dandong on the Yalu River said North Korean-bound goods have to be stored in bonded logistics centres for inspection by customs authorities. Banking restrictions mean North Korean traders have a hard time getting hard currency.

“Due to the lack of cash, North Korean companies tend to pay with minerals or coal, but we only trade with those able to pay in cash,” said Yu Tao, vice general manager of the Dandong Import and Export Co. Yu said the company trades daily consumer goods and has been reducing its trade with North Korea because of the risks.

Banking is one area where China has been tightening controls, but the US would like Beijing to do more. “China remains the name of the game when it comes to financial sanctions against North Korea,” said Jo Dong-ho, an expert on the North Korean economy at Seoul’s Ewha Womans University.

In late 2011, Beijing forced the China Construction Bank to close accounts opened by the Korea Kwangson Banking Corp. in Dandong and the Golden Triangle Bank in Hunchun, another border city, to comply with previous UN sanctions. Still, with tens of thousands of North Koreans having fled to China, many just for short-term work, plus traders, the yuan is used inside North Korea, and smuggling of large amounts of the Chinese currency across the border has become common.

Cohen, the US Treasury official, said he urged China to follow the US lead and impose sanctions on North Korea’s Foreign Trade Bank. The bank serves as the main foreign exchange bank for North Korea, wiring and receiving funds to facilitate trade, most of which goes through China, so sanctions would in effect further force more North Koreans to turn to cash.

“North Koreans will have no choice but to carry a large amount of cash by themselves,” said Kim Joongho, a senior research fellow at South Korea’s Export-Import Bank. That will cause “inconvenience on the Pyongyang elites’ economic lives.”

 

Share

Related topics

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

 
 
 
 
 
3

This article is now closed to comments

msbpodcast
China has a pivotal role to play in the continuing history of North Korea.
Since the war was never ended, merely an armistice reached which caused a cessation of hostilities, the current and desperate sabre rattling by the Kim dynasty is an attempt to restart the old process of suing for peace.
Once North Korea sues someone, anyone, for peace, and a peace treaty gets signed, they can begin to normalize their relations with the rest of the world.
Mostly, North Korea can begin to get aid and can begin, at last, to live in the modern world, rather than stay stuck in the 1950's.
The United States is unwilling to participate in the process because, if feels poor, (though if it wants to see real poverty, it only has to look at the North Koreans,) and because it is not in its interest to meddle in China's extended border defenses.
China is stuck with a choice:
• Continue to prop up North Korea, and therefore bear the costs of trying to bring the 21st century to people some 50 years behind, or,
• to reach some form of binding peace treaty with a reunified Korea where the former South Korea would be in an analogous position to West Germany after the fall of the GDR under Erich Honecker.
Clearly the first choice is impractical.
The second choice will demand some careful negotiations and some real brinksmanship on China's part to settle the problems of the past 50 years while helping a reunified Korea to settle into its new role as a buffer state.
lib_prc

This article is mis-leading. China does not have the right to "punish" any other country. China's national interest lies in maintaining a normal relationship with North Korea, not in unrealistic expectations of mutual loyalty. China has no interest in over-reaching for or against North Korea. Most Chinese people believe that North Korea and the US can easily patch up with a moment's notice as both countries really have no fundamental conflict of interest; when that happens (which is inevbidable), China does not want to be completely marginalized and still expects to have a normal relationship with North Korea. Let's not forget N. Korea in the 1960s and 1970s was a more successful country than S. Korea (in 1966, they were the first ever Asian team to make it into final 8 in the World Cup held in the UK)...don't see why the US wants to topple N. Korea in the end if it were not under unusual influence from S. Korea...
msbpodcast
The US does not want anything to do with the Kim dynasty. The quicker it sues for peace and things get normalized the better.
The military exercises are more for show than for any belligerent intent. They are a pretext being seized upon by the North to sue for a long and overdue peace.
North Korea is a failed state which makes a hole in a satellite map at night. Everywhere else on the planet is lit at night. Even the Gobi desert is not as implacably dark as North Korea.
The North's missiles are not a credible threat to the US as their missiles only threaten Alaska. But they DO threaten Russia and China, even if by failure.
The question is how will North Korea lose the next war and against whom?

Login

SCMP.com Account

or