China Trade Practices Impact U.S. Economy, Korean Crisis, Part 3

The New York Analysis of Policy and Government concludes its three-part examination of China’s trade relations with both the United States and North Korea.

China’s economic practices are not merely inappropriate from a trade perspective; they are also national security risks, and are quietly assisting the North Koreans.  The FBI reported in June that “The United States has filed a complaint to civilly forfeit $1,902,976 from Mingzheng International Trading Limited (Mingzheng), a company based in Shenyang, China. The complaint alleges that Mingzheng is a front company that was created to launder United States dollars on behalf of sanctioned North Korean entities. According to the complaint, Mingzheng conspired to evade U.S. economic sanctions by facilitating prohibited U.S. dollar transactions through the United States on behalf of the Foreign Trade Bank, a sanctioned entity in the Democratic People’s Republic of Korea (North Korea) and to launder the proceeds of that conduct through U.S. financial institutions.

Indeed, China has found numerous avenues to assist North Korea.  Foreign Policy reveals that an “unpublished U.N. report obtained by Foreign Policy that documents sophisticated North Korean efforts to evade sanctions shows that China has proved a fickle partner at best in Washington’s effort to stymie Pyongyang’s nuclear ambitions…China, despite its apparent cooperation of late with international efforts to sanction North Korea, has instead served as Pyongyang’s economic lifeline, purchasing the vast majority of its coal, gold, and iron ore and serving as the primary hub for illicit trade that undermines a raft of U.N. sanctions that China nominally supports, the report’s findings suggest.”

Ralph Jennings, writing in Forbes in 2016, reported “The State Department may look harder at Chinese companies in case they are equipping North Korea’s nuclear development, sanctions coordinator Daniel Fried told the foreign affairs subcommittee … His comment followed an announcement… that four Chinese nationals and Chinese industrial equipment wholesaler Dandong Hongxiang Industrial Co. faced their own sanctions and money laundering charges over suspected military support for North Korea via U.S. financial institutions…But a broader probe would just turn up just one thing for sure: China is North Korea’s BFF…”

The 2016 Report to Congress of the U.S.-China Economic and Security Review Commission emphasizes that Beijing is using its wealth to “challenge the United States and intimidate China’s neighbors. For example, China’s ability to conduct conventional strikes against U.S. regional facilities recently reached an inflection point with the fielding of new ballistic missiles capable of reaching Guam. The Chinese military’s pursuit of force projection and expeditionary capabilities, while enabling it to provide public goods in the form of antipiracy, peacekeeping, and humanitarian assistance and disaster relief operations, will also strengthen China’s traditional warfighting capabilities against its weaker neighbors, many of whom are U.S. allies or partners. These developments are underpinned by advancements in China’s naval, air force, cyber, and space capabilities. In response to conflicting claims in the East and South China seas, China has increased its military deployments there. Moreover, China’s expanding intelligence collection capabilities, including in the cyber realm, have enabled many infiltrations of U.S. national security entities. The information China has extracted could strengthen its hand in a conflict with the United States.

An insiders‘ view of Chinese thinking on the North Korean issue reveals startling facts.  Rather than concentrating on how to reduce Pyongyang’s belligerence,  notes Rowan Callick in The Australian, “A commentary on the People’s Liberation Army website has urged China to target with ­strategic weapons the base where South Korea is deploying the US Terminal High Altitude Area ­Defence system to help defend it against North Korea.”

China’s actions in the economic, foreign policy, and military realms suggest China’s leaders have decided the time has come for China to leave behind its long-held strategy, espoused by Deng Xiaoping, of “hide your strength, bide your time.” China is showing itself to the world now, and the outcome is not what many had hoped for 15 years ago when the country was welcomed into the WTO and the global economic system.