North Korea nuclear crisis

China opposes ‘long arm jurisdiction’, says Beijing after US action against Chinese firm

Ministry reacts to US decision to sanction Chinese firm under US domestic regulations

PUBLISHED : Tuesday, 27 September, 2016, 9:18pm
UPDATED : Wednesday, 28 September, 2016, 9:33am

China said on Tuesday it was opposed to any country using its own laws to carry out “long arm jurisdiction”, after the United States sanctioned a Chinese industrial machinery wholesaler tied to North Korea’s nuclear programme.

The US Treasury said it was sanctioning Dandong Hongxiang Industrial Development along with its executives Zhou Jianshu, Hong Jinhua, Luo Chuanxu and its owner Ma Xiaohong under US regulations targeting proliferators of weapons of mass destruction.

It accused the firm of acting on behalf of North Korea’s Korea Kwangson Banking Corp (KKBC), which has been under US and UN sanctions for supporting proliferation of such weapons.

Asked about the move, Chinese foreign ministry spokesman Geng Shuang said China was committed to upholding United Nations Security Council resolutions against North Korea, which mandate tough sanctions for its nuclear and missile tests.

Chinese firm charged with plotting to evade US sanctions against North Korea’s nuclear programme

Any person or company found in breach of the rules would be punished and if necessary China would cooperate with other countries on this on the basis of mutual respect and equality, Geng told a daily news briefing.

“I want to stress that we oppose any country enacting so-called long arm jurisdiction, using its own domestic laws against a Chinese entity or individual,” he added.

“We have already communicated this position to the US side,” Geng said, without elaborating.

The firm has been at the centre of a scandal since last week over its suspected role in aiding North Korean leader Kim Jong-un’s rapidly expanding nuclear weapons programme by selling materials for developing nuclear bombs. Pyongyang launched its fifth and largest atomic test explosion this month, its second this year.

China, US to step up cooperation to halt North Korea’s nuclear weapons programme

The firm is also being investigated by Chinese authorities for unspecified “serious economic crimes” in the course of its trading activities, according to provincial police in Liaoning and the ministry.

Hongxiang’s owner, Ma, was one of the Liaoning lawmakers who were dismissed over an unprecedented vote-buying fraud at the provincial legislature earlier this month.

Set up by Ma in 2000, the firm has since grown into one of the biggest cross-border trade companies in Dandong. Its total sale stood at 633 million yuan (HK$736 million) last year, according to its annual report.

The KKBC and Hongxiang were co-shareholders of another company Ma set up in 2010 – Dandong Hongxiang Industrial logistics. The KKBC invested 9.8 million yuan and Hongxiang 10.2 million, according to the government-run corporate registry.

China’s legal foundation shaken as 45 lawmakers expelled in unprecedented vote-rigging scandal

The firm, whose sole business was warehousing, was deregistered at the State Administration for Industry and Commerce in April 2015. The KKBC was one of the 12 entities listed as targets of sanctions under UN Security Council Resolution 2270, which was implemented unanimously in March following Pyongyang’s fourth nuclear test.

South Korean newspaper Joongang Daily reported on Monday Chinese authorities were also investigating the KKBC, which was ordered closed under the UN sanctions but kept operating in secret in the border city of Dandong, citing unidentified sources.

According to its official registry, Hongxiang trades a wide range of goods across the Yalu River, including coal, chemicals, metals, machinery equipment, textiles, agricultural products and other daily supplies.

China bans weapons-related exports to North Korea

A South Korean think tank, the Asan Institute for Policy Studies, said in a report last month Hongxiang supplied aluminium oxide and other materials that could be used in processing nuclear bomb fuel. Hongxiang is one of the biggest traders with North Korea with imports and exports worth a total of US$532 million in 2011-15, said the report, co-authored by the US-based research group, C4ADS.

Additional reporting by Associated Press and Reuters