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The Hammer Finally Drops On Chinese Companies Aiding North Korea

REUTERS/Jacky Chen

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Ryan Pickrell China/Asia Pacific Reporter
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China has agreed to start cracking down on companies that conduct illegal business with North Korea, often contributing to its nuclear program.

President Barack Obama and Chinese Premier Li Keqiang met Monday at the U.N. General Assembly and agreed to step up cooperation with regard to addressing North Korean provocations, Reuters reports.

The U.S. and China are investigating Hongxiang Industrial Development Co. for its alleged ties to North Korea, revealed the Wall Street Journal Monday. Hongxiang is a massive Chinese firm located in the border town of Dandong in Liaoning.

The investigation began after the U.S. Justice Department warned China that Hongxiang appeared to be engaging in activities capable of furthering North Korea’s nuclear weapons program.

Hongxiang chairwoman, Ma Xiaohong, is said to have been arrested for unacceptable economic practices. A member of the Communist Party of China (CPC), she was among 450 Liaoning legislators who resigned after the details of a voting fraud scandal surfaced last week.

“Ma was arrested by Shenyang law enforcement and is currently being questioned on suspicions of disguising military goods and equipment banned under global sanctions and smuggling them into North Korea,” a source closely associated with North Korean affairs in China told Daily NK.

Hongxiang manages six affiliate enterprises and has been charged with sending “dual-use” materials, such as aluminum oxide and aluminum ingots to the North Koreans. While these products have civilian uses, they can also be used to develop nuclear weapons.

Between 2011 and 2015, Hongxiang supposedly engaged in $532 million in trade with North Korea, according to a detailed report by the Asan Institute for Policy Studies and C4ADS

Police in Northeastern China have reportedly detained more than 10 Dandong business executives for “serious economic crimes,” including illegal trade with North Korea, reports United Press International (UPI). China has also begun targeting individuals, both Chinese and North Korean citizens, attempting to smuggle illicit materials and foreign currency over the border.

China signed U.N. sanctions in March and promised to limit trade with North Korea and restrict the flow of goods across the border, but few expected China to actually put pressure on North Korea.

For years, the U.S. has been calling for China to put an end to illegal trading channels that help North Korea skirt international sanctions and continue its nuclear activities in spite of U.N. Security Council resolutions.

In the wake of North Korea’s fifth and most powerful nuclear test in early August, such calls grew stronger.

“China has an obligation to implement fully the sanctions that have been passed at the U.N. Security Council, including preventing the export to North Korea of a variety of goods and technologies,” White House Deputy National Security Advisor Ben Rhodes said Tuesday.

“It doesn’t matter if it’s a pencil or an ounce of gold or a boatload of coal … Everything that North Korea does, we believe is linked or supportive of their weapons of mass destruction program,” Jon Wolfsthal, senior director for arms control and proliferation on the White House National Security Council, said in response to suggestions that aluminum exports could not be used to build nuclear weapons and are not enough to condemn the Chinese conglomerate Hongxiang.

With pressure from the international community to punish North Korea for its latest nuclear weapons test mounting, it appears China finally got the message.

“China will definitely take harsher measures including economic sanctions and more proactive measures to prevent North Korea from developing nuclear weapons,” Lu Chao, director of the Border Study Institute of the Liaoning Academy of Social Sciences, told the Shanghai Daily.

“Although it is rare for China to announce the punishment of its own companies, it shows the firm determination to implement relevant U.N. resolutions,” he added.

Congress passed the North Korea Sanctions and Policy Enhancement Act of 2016 earlier this year. Last Friday, a group of 19 Republican senators wrote a letter to Obama demanding the president use the full extent of this legislation to punish North Korea and blacklist Chinese entities aiding and engaging North Korea.

“You must begin to designate entities that are assisting the North Korean regime, especially those based in China—the country with which North Korea currently conducts an estimated 90% of its trade,” Senator Cory Gardner wrote in the letter.

China opposes efforts to pressure North Korea, for it fears that the North may suddenly collapse, creating numerous problems on its border. So, it is surprising that China has started cracking down on illegal channels which help prop up Kim Jong Un’s regime in the face of sanctions.

There is the possibility that China is trying to present itself as a responsible state actor dedicated to solving the nuclear crisis in order to prevent punishments designed for North Korea being extended to Chinese people and companies without its direct involvement in the process. The Global Times, a Chinese state-sponsored media outlet, has instructed the U.S. and South Korea to avoid stirring up the situation.

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