Foreign Policy

China’s ‘ban’ on North Korean coal isn’t the tough stance it seems


China announced on Feb. 18 that it would stop all coal imports from North Korea. Analysts greeted the news with optimism, suggesting it improves prospects for a U.S.-North Korea nuclear deal or was an attempt by Beijing to curry favor with the Trump administration.

China, however, should not be applauded for doing what it has already promised the international community, and ultimately must do more to address the threat of North Korea’s nuclear program and missiles.

{mosads}China had issued a ban on North Korean coal imports in April 2016, but later exploited a loophole to let it import $858 million worth nonetheless. Then, in December 2016, Beijing exceeded the monthly U.N.-imposed cap on North Korea’s exports.


The cap restricted Pyongyang from exporting coal amounting to more than one million metric tons or worth $53.5 million for that month — whichever was lower. For its part, Beijing imported more than double the allowed amount and more than triple the value.

In November 2016 the U.N. also imposed a cap on North Korea’s coal exports for 2017 at 7.5 million tons or $400 million, whichever is lower. In February 2017 China reported to the U.N. that it had imported just over 19 percent of the allowable 2017 imports in January alone. China’s foreign ministry also stated this week that imports were approaching the value limit for 2017. Beijing far exceeded the December 2016 numbers, and the 2017 numbers will likely exceed the cap as well.

China’s accelerated imports of North Korean coal are suspicious, and Washington should question its motives.

Ultimately, Beijing’s moves must be viewed in the context of its aggressive policy toward South Korea, as it consistently forces Seoul to choose between defending itself against the threat from the north and access to the Chinese market.

During Defense Secretary James Mattis’ trip to Seoul this month, South Korea committed to the deployment of the Terminal High Altitude Area Defense (THAAD) system to counter North Korea’s missile program (China does not want the U.S. using the radar to provide early warning for Chinese missile strikes).

South Korea’s Lotte Group — a large retail firm — is involved in the THAAD deployment through the government’s plan to station the system on the firm’s land. China’s state media on Monday threatened Lotte with severe consequences if it follows through on the plans.

Beijing has also halted the construction of a real estate project tied to the company and subjected its 120 retail stores to unnecessary fire inspections or tax investigations. South Korea’s Korea Institute for National Unification tallied 43 Chinese actions since July 2016 to pressure Seoul into canceling the THAAD deployment. Since December 2016, Beijing has also limited charter flights from the country.

Moreover, North Korea violates U.N. and U.S. sanctions with the direct assistance of Chinese nationals, likely with Beijing’s approval.

For example, the Justice Department found that from August 2009 to September 2015 Chinese nationals had used 22 front companies to open Chinese bank accounts to conduct dollar transactions through the U.S. financial system when completing sales to Pyongyang. Beijing arrested 10 people and froze the assets of those involved, but not a single Chinese bank was penalized for this illicit North Korean activity.

If China wants to increase pressure on North Korea beyond the coal ban, it should do three things.

First, announce an investigation into Chinese banks assisting North Korea’s financial activities in violation of U.N. and U.S. sanctions. As the Treasury Department has noted, North Korea’s access to American banking is “a threat to the integrity of the U.S. financial system” itself.

If Beijing claims to be a partner in Washington’s efforts to confront North Korea, it can prove it through cooperation between U.S. and Chinese financial experts.

Second, Beijing should extradite its four nationals accused of violating multiple U.S. sanctions for the benefit of North Korea, thereby demonstrating it will not shield its nationals who circumvent U.S. or U.N. sanctions.

Third, China — and the U.S. — should support U.N. sanctions against front companies and individuals that North Korea uses overseas to further its proliferation and illicit activities and human rights abuses.

If China is unwilling to take these steps, the United States should enact robust measures against Beijing. It should start with substantial fines against, or the designation of, Chinese banks assisting North Korea. Washington should also call Beijing’s bluff and force it to veto new U.N. designations of North Korean front companies and individuals.

China is not a partner in U.S. efforts to counter the North Korean nuclear and missile threat, and until it is, we must treat it accordingly. A porous ban on coal imports does little to change that.

Anthony Ruggiero is a senior fellow at the Foundation for Defense of Democracies and formerly a foreign policy fellow for Senator Marco Rubio and an official at the Departments of the Treasury and State. Follow him on Twitter @_ARuggiero.

The views of contributors are their own and not the views of The Hill.

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