Among other things, the launch of the North Korean ICBM has caused a series of negative statements from the media leadership of the United States on the subject of China. Initially, President Donald Trump himself criticized China’s policy toward the DPRK on his Twitter, saying that he was very disappointed by the Chinese, who can “very easily” deal with the problem of North Korea if they so desired. “Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do nothing for us with North Korea,” Trump wrote, adding that he will not allow this to continue any longer.
As a result, according to the Politico publication that cited two sources in the White House, for several days, the main advisers to the US president discussed on how to punish China – whether to impose economic sanctions on Beijing or simply put limits through trade sanctions.
Similar accusations were levelled by the US Permanent Representative to the UN Nikki Haley. In addition to the odious statement that it was senseless to hold emergency meetings of the Security Council of the international organization on the actions of North Korea, because they “are fruitless,” Haley stressed that Beijing should promptly decide whether it would want to return to stronger UN sanctions, referring to the American draft resolution providing for a ban on the export of oil and petroleum products to the UK. And if not, Washington was ready to increase pressure on China, which accounts for the bulk of Pyongyang’s foreign trade.
However, back on June 29, during a regular briefing, State Department spokesman Heather Nauert stated that Beijing’s pressure on Pyongyang on the North Korean nuclear issue is still rather weak: Washington is pushing for more active measures.
It seems more than likely that the outcome of the China-US summit was perceived as “we pushed China and they backed down.” The leadership of the People’s Republic of China was polite, but this politeness was viewed as a form of capitulation, and the capitulation as weakness and willingness to succumb to the first instance of pressure. After that, the Washington strategists began developing their success so vigorously that they went too far, something about which the author had earlier warned.
US and South Korean politicians often believe that the “economic cooperation between the ROK and China is more important than the previous brotherly relations between Beijing and Pyongyang.” Yes, at the upcoming National Congress of the Communist Party of China, Chairman Xi would not look good if the “disobedient neighbor” ignores the interests of the People’s Republic of China, or even worse, if the trade war begins within his term of office. But it would look even worse if he appeared as a leader who spinelessly fulfils American demands in fear of a trade war.
Here, one cannot help recalling the Japanese media, where the “wayward” Park Geun-hye was criticized for the fact that, against the backdrop of the US-China confrontation, she “continued drawing closer with China, thereby causing anger in Washington.” Thanks to this, her government was forced to make serious diplomatic concessions in its relations with the United States and Japan, including consent to the deployment of the THAAD or the abandonment of legal claims for compensation when concluding an agreement with Japan on comfort women.
Meanwhile, the author has repeatedly explained to the audience the difficult choice that Beijing is confronted with, and about the fact that, as a consequence, his policy towards the states of the Korean peninsula can at best be viewed as equally-spaced: it gets to any side that exacerbates tension.
On the one hand, the People’s Republic of China has significantly reduced its supply of hydrocarbons to North Korea, subsequently refusing to import North Korean coal in 2017. Last year, China exported 96,000 tons of gasoline and 45,000 tons of diesel for a total cost of USD 64 million, but for this year, the figures remain unknown. Satellite data has indicated that North Korean tankers have not gone out to sea, and prices for gasoline and diesel fuel have soared in Pyongyang and Sinuiju. As reported by Reuters, as of July 5, in the above cities, the price of gasoline from private sellers was USD 2.18 per liter, which is roughly 50% more than on June 21.
Contacts in the military field have also decreased. According to the Head of the Center for International Cooperation of the Ministry of Defence of China Zhou Bo in an interview with the Singaporean TV channel Channel News Asia, after the UN Security Council passed an anti-North Korean resolution last March, the once-regular program for upgrading the skills of North Korean officers in China was discontinued.
How Pyongyang has reacted to these changes in position is quite telling. In the central press, a critique of “one neighboring power” with a policy “equivalent to the actions of the enemies” began. However, China was not mentioned “by name”.
The South Korean and Japanese media have hastened to aggravate the crack. Bogus stories about (as usual, referring to anonymous sources of human rights organizations with ties in North Korea) a tumultuous anti-Chinese campaign beginning in the DPRK immediately started circulating. Allegedly, it is now written on all the fences that the US is a distant enemy, and China is a close enemy.
But then, on July 21, the Korean Central News Agency published a commentary from the government-controlled Rodong Sinmun, where it was openly stated: “The US yabber about “China’s accountability” for strengthening the North Korean nuclear force is nothing more than a despicable and cynical trick to blame others.” The US attacks on the DPRK through “courting” China will never break the tradition of friendship bound by the blood shed during the anti-imperialist and anti-American resistance of the peoples of our two countries, and if they believe that they can ignore the self-respect of a sovereign state and the tradition of history and consider someone their “errand boy”, only shame and rebuff are waiting for them. At the same time, reports were circulating somewhere else that the fuel had again begun being loaded onto ships.
In general, if in connection with the ban on North Korean coal imports, the total import of North Korean products to China in the first six month decreased by 24.3%, amounting to USD 844 million, the volume of Chinese exports to the North, on the contrary, increased by 18% and amounted to USD 1, 656 billion. These are the data of the Korea Foreign Trade Association, published on July 26, 2017.
Now, concerning the pressure of the People’s Republic of China on South Korea: In the first weeks after the arrival of Moon Jae-in, the informal sanctions were removed. However, even up to now, the level of pressure still resembles what was under Park Geun-hye regime. This is directly connected to the issue of the THAAD, because almost immediately after the inauguration of Moon Jae-in on May 13, an article was posted in the Huánqiú Shíbào that Beijing must maintain a position of protest against the deployment of the US missile defence system in the Republic of Korea even if the dialogue with Seoul was strengthened. These statements are made constantly, as on July 22, Chinese Ambassador to the Republic of Korea Qiu Guohong stated that the THAAD had a significant impact on relations between Seoul and Beijing, and was becoming a strategic problem that was seriously harming the mutual trust of the two countries.
Against this backdrop, in May, the number of Chinese tourists who visited the Republic of Korea decreased by 64.1% vs the same period last year, amounting to 253 thousand people, and the share of South Korean companies in the Chinese market is also rapidly decreasing. This was due not only to the measures of economic pressure taken by Beijing in response to the deployment of the THAAD, but also to the rapid increase in the competitiveness of Chinese companies. In light of these developments, in 2012, the share of Samsung Electronics in the Chinese smart-phone market was 17.7%. However, in the first quarter of this year, this value was only in the eighth place at 3.1%, and the local manufacturer Huawei has increased its market share from 9.9% to 18.9% over a five year period. A similar situation is being observed in the car market.
In addition, the Chinese government intends to continue the policy of the forcible repatriation of illegal migrants from North Korea posing as refugees. As Representative of the Ministry of Foreign Affairs of China Lu Kang stated on July 24, citizens of the DPRK who illegally crossed the border are not refugees, and with respect to such people, the Chinese authorities have always acted in accordance with domestic and international law while observing the principles of humanity.
China reacted positively to the initiative of Seoul to resume the dialogue with Pyongyang on July 17, 2017. The Chinese television channel CCTV highlighted this news in detail, and Representative of the Ministry of Foreign Affairs of China Lu Kang said that the proposal of Seoul will contribute to mitigating the tense situation and “improving inter-Korean relations through dialogue and the development of conciliatory cooperation, which is very important in the matter of preserving peace.”
Not surprisingly, the American pressure on China continues. On July 13, 2017, Reuters quoted a senior source as saying that due to China’s insufficient efforts to contain Pyongyang in the US, they are considering a package of new sanctions against Chinese banks and companies cooperating with North Korea. Initially, this will involve insignificant sanctions that will affect small Chinese financial institutions and front companies associated with the North Korean nuclear program, and the further scope and timing of new economic restrictions on Beijing would then depend on its actions in the matter concerning the pressure on Pyongyang.
The US Treasury Department has already imposed sanctions on one bank, one company and two citizens from the People’s Republic of China for their support of Pyongyang’s missile and nuclear programs. The black list includes the Chinese bank Dandong, which provided the DPRK access to US and international financial systems and facilitated the conduct of transactions for millions of dollars with companies involved in the missile and nuclear programs. The sanctions were also imposed on the Chinese cargo shipping company Dalian Global Unity Shipping and two private individuals Li Hongzhi and Sun Wei. Lee cooperated with the head of the branch of the North Korean bank Koryo in Beijing, Lee Song Hyok, while Sun established a shell company for a North Korean foreign trade bank that is under American sanctions.
On July 15, the Japanese newspaper Yomiuri Shimbun reported that the US was investigating a Chinese trading company registered in Dandong that it suspected of conducting illegal operations with the DPRK. According to the non-profit research organization C4ADS, over the past three years, this company has become the largest importer of North Korean coal, and the US Department of Justice believes that it is also conducting operations with Pyongyang related to military equipment and weapons development for up to USD 700 million. At the moment, the accounts of the company are frozen, and there is a possibility of the prosecution of Chinese citizens who are related to this case.
In this context, on July 25, Chinese Ambassador to the US Cui Tiankai said that the “secondary boycott” measures initiated by the US towards Chinese companies operating with the DPRK are unacceptable and are an attempt to apply US laws on China. He also noted that although the goals of the two countries regarding the Korean peninsula are similar, the “secondary boycott” had a serious negative impact on the cooperation between Beijing and Washington.
Indeed, there is no question of a break in cooperation. As Nikki Haley said on the same day, the US and China are developing a dialogue on the issue of new anti-North Korean sanctions by the UN Security Council. According to her, it is difficult to accurately determine the degree of the progress, but the fact that China acknowledges the seriousness of the North Korean problem is important. In his turn, Permanent Representative of the People’s Republic of China to the UN Liu Jie confirmed the fact of the discussion of this topic with the American side, but nothing more. The fact that it was discussed does not necessarily mean it was agreed.
Therefore, as pertains to what will become of the difficult choice facing Beijing at the moment, it is still difficult to predict with absolute certainty.