Chinese Foot-dragging on North Korea Thwarts U.S. Security Interests

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Chinese Foot-dragging on North Korea Thwarts U.S. Security Interests

August 11, 2016 24 min read Download Report
Bruce Klingner
Senior Research Fellow, Northeast Asia
Bruce Klingner specializes in Korean and Japanese affairs as the Senior Research Fellow for Northeast Asia.

North Korea’s fourth nuclear test, held in January 2016, paradoxically triggered a stronger international response than any of its first three. Although this latest test was not significantly larger than its previous ones, it did result in an international consensus that stronger, more comprehensive sanctions must be imposed on North Korea for its serial violations of its agreements, U.N. resolutions, and U.S. law.

This new consensus was triggered by cumulative anger and frustration from repeated North Korean violations, the realization that diplomatic engagement with Pyongyang was no longer a viable solution, heightened concern over North Korea’s growing nuclear and missile threat, and a greater willingness to push China for more extensive sanctions.

The enhanced punitive measures are welcome, if long overdue, to sharpen North Korea’s choice between its nuclear program and economic isolation. Moreover, the augmented sanctions will fulfill near-term objectives of enforcing laws, imposing penalties on those that violate them, and strengthening measures to constrain both the importation and proliferation of prohibited nuclear and missile technology.

That all of these measures could have been implemented years ago is testament to a collective lethargy to confront North Korean belligerence. Even today, some counsel caution in pressing the Chinese for fear of jeopardizing other priorities in the U.S.–China relationship. China has agreed to the stronger measures, but previous back-sliding on sanctions enforcement raises doubts as to how long Beijing will remain on board.

While new U.N. and U.S. sanctions are commendable, their utility is dependent on complete and forceful implementation. But just as sheepishness is contagious, so is fortitude and resolution action. The United States and other nations should not shirk their responsibility to stand up to those who would do us harm and those that enable them.

China Agrees to Strong U.N. Response

After nearly two months of debate, the U.N. Security Council unanimously approved Resolution 2270 in March 2016 to augment previous efforts to punish North Korea for its most recent violations of earlier U.N. resolutions. The tougher resolution reflects growing international concern over Pyongyang’s growing nuclear capabilities and resolve to confront the regime’s defiance.

The new resolution goes beyond previous U.N. actions by increasing financial sanctions, expanding required inspections of North Korean cargo, and targeting key exports.

The resolution is the first instance of the U.N. targeting North Korean commercial trade, including mineral exports. The sanctions and mandatory inspections of all cargo shipments will make foreign companies and investors more reluctant to engage with North Korea for fear of facing sanctions themselves.

The sanctions, following the decline in bilateral trade with China in 2015 and the global slump in commodity prices for North Korea’s principal exports, could cause the North Korean regime to face shortages of foreign currency and depletion of its currency reserves.

Resolution 2270 is yet another attempt by the U.N. to punish North Korea for its blatant and repeated violations. However, U.N. members, most notably China, have been lackadaisical in enforcing previous resolutions. Although an improvement over its predecessors, in order for Resolution 2270 to effectively curtail North Korea’s persistent violations, U.N. members need to take forceful and purposive steps toward enforcing the sanctions.

U.S. Strategic Patience Policy Is Dead. For years, the Obama Administration has been hitting the snooze bar on North Korean sanctions by not fully enforcing existing U.S. laws and regulations. Rather than fully utilizing existing authorities to target North Korean violators, the Obama Administration had pulled its punches.

To date, the Administration has failed to sanction any Chinese entities for facilitating prohibited North Korean activity. Overall, the U.S. sanctions fewer North Korean entities than it does in less egregious offending countries like Zimbabwe.

In February 2016, Congress, frustrated by the Administration’s policy of timid incrementalism, stepped in to force the President to use the powers he already had to punish North Korea as well as provide additional authorities. Congress overwhelmingly approved the North Korea Sanctions and Policy Enhancement Act by Senate and House of Representatives votes of 96–0 and 408–2, respectively. The Act stands as an example of the kind of supra-partisan, supra-ideological unity needed to respond to North Korea’s constant violations of U.N. resolutions, U.S. and international law, and the norms of international behavior.

That the North Korea Sanctions and Policy Enhancement Act makes enforcement of certain sections of U.S. laws mandatory rather than discretionary is a rebuke to Obama’s minimalist approach. Although the introduction of new sanctions is vital, fully implementing and enforcing already existing far-reaching measures is of prime importance.

South Korean Trustpolitik Policy Is Dead. In response to North Korea’s January 2016 nuclear test and Chinese unwillingness to constrain its ally, South Korean President Park Geun-hye abandoned her signature policy of trustpolitik (trust-building) toward North Korea. Park had actively sought to strengthen bilateral ties with Beijing to attain increased Chinese pressure on North Korea and acquiescence to Korean unification. The Park Administration touted initial indications of concord on policy toward North Korea:

  • June 2013. A summit meeting with President Xi Jinping led Park to declare that they “share the view that North Korean possession of nuclear weapons cannot be tolerated in any situation.” She added that China was “against North Korea’s possession of nuclear weapons, and wishes for a firm stance on the denuclearization of the Korean Peninsula.”[1]
  • June 2013. South Korean Foreign Minister Yun Byung-se noted that “China appears to have increasingly viewed the North’s military adventurism as a strategic liability, instead of a strategic asset.”[2]
  • July 2014. President Xi’s decision to visit Seoul prior to traveling to Pyongyang—the first time a Chinese leader had ever done so—was interpreted as a strong signal of Beijing’s displeasure with Kim Jong-un’s antics.
  • September 2015. President Park traveled to Beijing (the only Western leader to do so) to watch China’s military parade commemorating the 70th anniversary of the end of World War II. Both the Park administration and the South Korean media emphasized[3] how the greater respect paid by the Chinese to Park than to the lower-ranking North Korean envoy reflected South Korea’s ascent above North Korea and Chinese acceptance of Seoul’s unification policy.

However, the Park administration’s efforts to gain alignment with China on policy toward North Korea were ultimately unsuccessful. After North Korea’s 2016 nuclear and missile tests, President Park implored China to “play a more aggressive role to live up to its strong will and public stance.”[4] China persisted in its inaction, failing to prevent or confront North Korea’s nuclear and missile tests, and President Xi refused to take a phone call from President Park for a month.[5] This state of affairs led President Park to undertake several dramatic policy changes.

  • First, South Korea agreed to discussions with Washington over the potential deployment of the THAAD ballistic missile defense system to improve South Korean protection against North Korean attacks. Seoul worried that doing so would have jeopardized China’s perceived support on North Korea since Beijing had declared that deployment of the defensive system would undermine China’s strategic interests.

    South Korea decided following North Korea’s nuclear and missile tests that it would finally stand up to Chinese pressure and attempted economic blackmail by announcing it would move forward on U.S. deployment of THAAD to South Korea. Having previously reassured the public that the indigenous South Korean Air and Missile Defense system sufficiently protected the country, the Park administration now admitted its shortcomings. Minister of Defense Han Min-koo acknowledged that “there is a limitation to our capabilities, so there is a military need[”6] to review THAAD deployment. Polls now show 60 percent to 70 percent of South Koreans favor U.S. deployment of THAAD to the peninsula.

  • Second, President Park also terminated the inter-Korean economic venture at Kaesong. The venture had failed in its political objectives to induce North Korean reform and moderate the regime’s aggressive behavior, as North Korea rebuffed numerous attempts at engagement, killed and maimed South Koreans, and threatened Seoul with nuclear annihilation, during the venture’s operations. The decision to withdraw from Kaesong was difficult, necessary, and long overdue.

    South Korea’s exit from the Kaesong venture severed a critical source of foreign currency for North Korea. Kaesong generated 23 percent of North Korea’s foreign trade ($2.3 billion of North Korea’s annual overall trade of $9.9 billion) and $120 million in annual profits.

    President Park declared that most of the cumulative $560 million provided to North Korea from the Kaesong venture was “funneled into the leadership of the Workers’ Party which oversees the North’s nuclear and missile development.”[7] The Ministry of Unification announced the funds had been used by the regime to “upgrade its nuclear weapons and long-range missiles,”[8] making it unlikely that Seoul would be willing to resume providing benefits to North Korea for the foreseeable future.

    South Korea’s distribution of cash to North Korea meant that Seoul could not credibly advocate for “bone numbing” sanctions[9] as long as it was undermining the effectiveness of international sanctions by funneling cash to Pyongyang. President Park decided that South Korea could no longer turn a blind eye to North Korea’s diversion of money nor repeatedly ignore North Korean duplicity and provocations.

Chinese Policy Toward North Korea: Mix of Sanctions and Support

Faced with a stronger international consensus for greater pressure on North Korea, the Chinese government, as well as Chinese banks and businesses, undertook a number of promising actions.

  • The Chinese foreign ministry “strongly” urged North Korea to “stop taking actions that worsen the situation.”[10]
  • Beijing accepted stronger text and sanctions in U.N. Resolution 2270 that went beyond previous U.N. resolutions.
  • President Xi Jinping vowed “full and complete implementation” by China of the new U.N. sanctions.[11]
  • Chinese banks and businesses reduced their economic interaction with North Korea, though it is unclear whether it is due to government direction or anxieties over their own exposure to sanctions. In either case, it can be argued that the actions were triggered by concerns that the new U.S. law, which authorizes sanctions against secondary violators, could be applied to Chinese entities.

In addition, following the approval of U.N. Resolution 2270, China:

  • Froze remittances to North Korea. Chinese state-owned and commercial banks in the border city of Dandong suspended all money transfers in all currencies to North Korea following directives from their headquarters.[12] China had previously frozen all dollar-denominated remittances in 2013.[13]
  • Shut down a branch of the (North) Korea Kwangson Banking Corporation in Dandong. Beijing had suspended North Korean bank operations in China after Pyongyang’s 2013 nuclear test, but some banks had been operating covertly to provide financing to North Korean businesses trading with China.[14]
  • Planned, beginning in March 2016, to stop importing North Korean coal, which accounts for 43 percent of bilateral trade.[15] A Chinese company in Dandong was reportedly ordered by the Chinese Ministry of Commerce to halt its coal trade with North Korea.[16] Trucks loaded with North Korean minerals were not allowed to pass through Chinese customs in Dandong.[17]
  • Saw a decline of 30 percent in daily shipments of China–North Korea bilateral trade in the border area.[18]
  • Augmented customs officials in order to increase inspections of cargo going to and from North Korea. (U.N. Resolution 2270 imposes mandatory inspections for all cargo leaving and entering North Korea.)[19]
  • Turned away the North Korean cargo ship Grand Karo and two other ships on the U.N. sanctions list from Rizhao port in northeastern China.[20]

Seemingly Strong Chinese Rhetoric. After each of North Korea’s previous nuclear and missile tests, some U.S. experts assessed that Beijing had hardened its position toward North Korea, ended its unconditional support to Pyongyang, and predicted that some forthcoming provocation (now long since passed) would trigger even more decisive action by China.

Since 2006, there have been numerous media articles with titles such as “Chinese anger signals policy shift toward North Korea.” Similarly, there have been periodic assurances by overoptimistic U.S. diplomats that China now “got it,” was on board with U.S. objectives, and would adopt a tougher policy toward North Korea.

China’s statement criticizing North Korea’s 2016 nuclear test used similar but weaker language than that used in missives responding to Pyongyang’s previous nuclear tests. In 2006, China declared “we strongly demand that the DPRK [Democratic People’s Republic of Korea] abide by its commitments on denuclearization” (emphasis added). China’s subsequent statements only “strongly urge[d]” (emphasis added) North Korea to abide by its denuclearization commitments.[21]

In 2006, Beijing accused its ally of defying the “universal opposition of the international community” and “flagrantly” conducting the test. Beijing had previously reserved “flagrantly” for criticizing the actions of opponents and never an ally. China has never used the phrase again in subsequent statements against North Korea.[22]

China Applies Pressure, But Gently. Even as China was seemingly on board with stern U.N. measures against North Korea, Beijing continued to signal its limits, making clear that it saw sanctions only as a catalyst to resumed dialogue.

  • February 2016. China’s foreign ministry spokesman Hong Lei: “All relevant parties should return to the right track of resolving the Korean nuclear problem through dialogue [and] exercise restraint and avoid ratcheting up tensions. We believe that sanctions are not the fundamental purpose.”[23]

    China’s Ambassador to the United Nations Liu Jieyi, calling for a return to dialogue: “Today’s adoption should be a new starting point and a paving stone for political settlement of the nuclear issue on the Korean Peninsula.”[24]

  • March 2016. Chinese Foreign Minister Wang Yi: “Blind faith in sanctions and pressure, in fact, is not responsible for the future of the Korean Peninsula.” “[S]anctions are not an end in themselves…the new U.N. resolution should not provoke new tension in the situation or destabilize the Korean Peninsula.”[25]

China also opposed Washington implementing its own unilateral sanctions against North Korea. The foreign ministry affirmed that China “always opposes any country imposing unilateral sanctions. We oppose any moves that may further worsen tensions [on the Korean Peninsula]. We have clearly stressed many times [that] any unilateral sanctions should neither affect nor harm China’s reasonable interests.”[26]

China Previously Acted, Then Backed Off. Beijing’s recent business and banking actions to pressure North Korea are both meaningful and welcome. Yet, China has repeatedly taken action in the past, only to reduce its enforcement and resume normal economic trade with North Korea within months.

Oil Deliveries

  • August–September 2006. China reduced a “significant amount” of its oil supplies to North Korea following the July 2006 long-range missile launch[27] and exported no crude oil to North Korea in September 2006.[28]
  • October 2006. China resumed exports of crude oil to North Korea in October, according to Chinese customs figures. Chinese oil shipments to North Korea in October were up 67 percent from a year earlier, despite the October 2006 nuclear test.[29]
  • 2009. China reportedly suspended exports of crude oil for four months. However, there were no accompanying indications of oil shortages in North Korea, suggesting China had only pretended to cut off deliveries.[30]
  • 2011–2013. China did not export any crude oil to North Korea in February 2011, February 2012, and February 2013.[31] However, China often does not ship oil to North Korea in February because of seasonal factors. Since 2000, China shipped crude to North Korea in February only during 2001, 2004, 2009, and 2010.[32] Annual Chinese shipments to North Korea in March are often double the usual amount, indicating the reason is not because of Chinese displeasure with nuclear or missile tests.[33]
  • 2014–2015. Chinese customs statistics reported no Chinese oil exports to North Korea in 2014 or 2015. However, Chinese Ministry of Public Security officials commented, “We are continuously supplying oil” to North Korea. The deliveries are not recorded in Chinese customs data or foreign trade statistics because they are characterized as aid.[34] Continued operations at North Korean refineries and stable petroleum prices indicated Beijing continued to provide 500,000 tons of oil annually.[35] South Korean intelligence officials commented that China was secretly providing North Korea with oil.[36]

Financial Transactions

  • 2013. China ceased financial transactions with North Korea’s Foreign Trading Bank. The U.S. and South Korea had found dozens of accounts linked to Kim Jong-un in several banks in Shanghai and elsewhere in China. Beijing refused to allow them to be included in U.N. financial sanctions passed after North Korea’s February 2013 nuclear test.[37]
  • 2016. According to the U.N. Panel of Experts, North Korea used a Chinese bank to evade nuclear sanctions. The U.N. determined that Pyongyang transferred tens of millions of dollars through Bank of China’s Singaporean branch. Chinese representatives at the U.N. delayed publication of the report as they previously hindered reports of Chinese noncompliance or malfeasance.[38]

Bilateral Trade

  • October 2006. The Chinese customs office in Dandong closed for 40 days. Approximately 80 percent of Chinese exports to North Korea pass through Dandong.[39]
  • 2007. Chinese–North Korean trade rose 21 percent year-on-year during the several months following the October 2006 nuclear test.[40]
  • 2009. Chinese authorities banned shipments of all metals and chemicals to North Korea that could be diverted to military use and issued a stern warning that it would severely punish any violating Chinese business. Beijing also began shutting off food exports to North Korea, allowing only shipments under 50 pounds for personal use.[41]
  • 2010. After North Korea’s 2009 nuclear test, Chinese trade and investment increased during the first 11 months of 2010 to $3 billion, a dramatic increase from $1.7 billion in 2009.[42]
  • 2013. The Chinese Ministry of Transport directed customs agencies and logistics companies in Dandong and Dalian to strictly enforce U.N. Security Council Resolution 2087. Concurrently, the Ministry of Finance began cracking down on illegal financial transactions by North Korean banks, including freezing North Korean assets.[43]
  • 2013. According to Jilin Province officials, there were more stringent Chinese border checks and reduced bilateral trade for several weeks after North Korea’s third nuclear test. The Chinese companies had reduced their exposure to North Korea due to concerns over the new sanctions but were assured by Beijing that they should continue business with North Korea as usual.[44]
  • April 2013. China increased border checks on trade shipments with North Korea. However, the flow of goods was largely unaffected, according to more than a dozen Chinese trading firms based near Dandong.[45]
  • 2015. North Korean trade with China dropped nearly 15 percent in 2015 to $5.76 billion with North Korean export of coal and iron falling 6.3 percent and 68.5 percent, respectively. However, the downturn took place before North Korea’s nuclear test, suggesting it could also be attributed to China’s economic slowdown and Kim Jong-un’s call for using homemade products.[46]

China as Enabler of North Korean Misbehavior. In the U.N., China has acted as North Korea’s defense lawyer by:

  • Repeatedly resisting stronger sanctions,
  • Watering down proposed resolution text,
  • Insisting on expansive loopholes,
  • Denying evidence of North Korea violations,
  • Blocking North Korean entities from being put onto the sanctions list, and
  • Minimally enforcing resolutions.

For example, while the latest U.N. resolution appears to ban export of key North Korean resource commodities such as coal and iron, China insisted on an exemption for “livelihood purposes.” In implementing the U.N. resolution, Beijing simply requires any company importing North Korean resources to sign a letter pledging that it “does not involve the nuclear program or the ballistic missile program” of North Korea.”[47] The reality is that the loophole is larger than the ban, making the sanction largely ineffective.

After each North Korean violation, China temporarily tightened trade and bank transactions with Pyongyang and reluctantly acquiesced to incrementally stronger U.N. resolutions, though undermining through lackadaisical enforcement. Sporadic reports of sanctions enforcement do not equate to a change in Chinese policy.

Even after the latest U.N. resolution sanctions, China remains a reluctant partner, fearful that a resolute international response could trigger North Korean escalatory behavior or regime collapse. Beijing resists imposing conditionality in trade because it believes it could lead to instability and unforeseen, perhaps catastrophic, circumstances.

The effectiveness of international sanctions is hindered both by China’s weak implementation as well as its willingness to provide economic benefits outside the conditionality of the Six-Party Talks. Chinese economic engagement, though not a violation of U.N. resolutions, undermines the overall effectiveness of sanctions.

By offering alternative sources of revenue, Beijing reduces the likelihood that North Korea will return to the Six-Party Talks. Why would Pyongyang seek the conditional benefits offered as inducements to fulfill its denuclearization commitments when it can receive the same benefits directly from China through bilateral trade?

Beijing continues to see North Korea’s sense of insecurity, brought on by a perceived hostile U.S. policy, as the root cause of the crisis on the peninsula. Such a view assigns blame to both Pyongyang and Washington for North Korea’s actions, leading Beijing to call for the U.S. to take steps to alleviate North Korea’s concerns. China sees American advocacy for punitive measures as only adding fuel to the fire.

China may share the U.S. objective of denuclearizing North Korea, but it has its own ideas about policy, strategy, and tactics. Beijing advocates creating a favorable external environment to induce North Korea to feel less threatened, moderate its behavior, and implement economic reform. The U.S. prefers diplomatic isolation, economic sanctions, and security pressure. China, on the other hand, prefers diplomatic engagement, economic benefits, and security reassurance.

China has more potential influence over North Korea than any other country since it accounts for 90 percent of its energy, 80 percent of its consumer goods, and 45 percent of its food.[48] China’s repeated tolerance of North Korea’s egregious behavior shows Beijing is unwilling to confront North Korea.

China’s reluctance to strongly pressure its ally provides Pyongyang a feeling of impunity which encourages it toward further belligerence. North Korea is willing to directly challenge China’s calls for peace, stability, and denuclearization by repeatedly upping the ante to achieve its objectives including buying time to further augment its nuclear and missile capabilities.

China’s timidity, and the international community’s willingness to accommodate it, only ensures continual repetition of the cycle with ever-increasing risk of escalation and potential catastrophe. China cannot be relied upon to strongly pressure North Korea or to fully implement the resolution sanctions that it agreed to in the U.N.

U.S. policy should realize China will not be fully on board with international efforts to uphold and implement U.N. resolution sanctions. As such, Washington needs to increase China’s carrying cost for appeasing North Korea.

China’s Policy of Inaction Is Ineffective and Irresponsible

After North Korea’s January 2016 nuclear test, Secretary of State John Kerry prodded Chinese Foreign Minister Wang Yi that “there cannot be business as usual” and that Beijing’s approach to the North Korean nuclear issue “has not worked.”[49] Kerry counseled his Chinese counterpart that “there’s been a lot of talk about North Korea through these past years. Now we believe is the time for action that can bring North Korea back to the table.”[50]

Kerry chastised China’s inaction on North Korea, “All nations, particularly those who seek a global leadership role share a fundamental responsibility to meet this challenge with a united front [and] with more significant and impactful sanctions.”

However, Kerry’s rhetoric toward China contradicted the Obama Administration’s consistent (and inaccurate) depiction of North Korea as the “most heavily sanctioned, the most cut off nation on Earth”; Kerry told Foreign Minister Wang that “more significant and impactful sanctions were put against Iran, which did not have nuclear weapons, than against North Korea, which does.”[51]

Furthermore, Kerry inadvertently challenged the Obama Administration’s years of praise of China for its assistance on North Korean policy and its claims of success in gaining Chinese convergence with U.S. policy.

  • October 2009. Assistant Secretary of State for East Asia Kurt Campbell: “I have rarely seen better coordination between China and the United States…. There is virtually unprecedented acceptance of basic goals and ambitions associated with the Six Party Talks and negotiations with North Korea. The alignment in views has been rather deeply reassuring.”[52]

  • March 2013. President Obama: “I think what’s most promising is we’re starting to see the Chinese, who historically have tolerated misbehavior on the part of the North Koreans because they’re worried about regime collapse and how that could spill over to them. You’re starting to see them recalculate and say, ‘You know what? This is starting to get outta hand....’ [W]e may slowly be in a position where we’re able to force a recalculation on the part of North Koreans.”[53]

  • June 2013. National Security Advisor Tom Donilon: “[Presidents Xi and Obama] stressed the importance of continuing to apply pressure [to] halt North Korea’s ability to proliferate [and were in] full agreement that the Security Council resolutions which put pressure on North Korea need to be enforced.”[54]

  • June 2013. President Obama: “We’ve seen the Chinese take more seriously the problem of constant provocation and statements from the North Koreans—rejecting the nuclearization.”[55]

  • July 2013. Secretary of State Kerry: Praised China for its “very firm statements and very firm steps” toward North Korea and claimed that the U.S. and China were “absolutely united and absolutely firm in our insistence that the future with respect to North Korea must include denuclearization.” He also stated that China had agreed to “intensify efforts” to ensure North Korea abandoned its nuclear program.[56]

  • February 2014. Secretary Kerry: “[A]t every level in all of our conversations today, China could not have been more emphatic or made it more clear that they will not allow a [North Korean] nuclear program over the long run, that they believe deeply in denuclearization, that denuclearization must occur, that they are committed to doing their part to help make it happen.”[57]

    “[China] made it very clear that if the North doesn’t comply and come to the table and be serious about talks and stop its program and live up to an agreed-upon set of standards with respect to the current activities that are threatening the people, that they’re prepared to take additional steps in order to make sure that their policy is implemented.”[58]

    “There has been a very important recalibration of China’s policy toward North Korea…. They are now willing to put more pressure to North Korea, especially after the third nuclear test or if North Korea displays further provocative and irresponsible behavior down the road.”[59]

What Should Be Done

The Obama Administration has been reluctant to fully enforce U.S. laws and executive orders targeting North Korea violators. The Administration has yet to include a single Chinese entity on U.S. sanctions list for facilitating North Korean violations. Private discussions by the author with U.S. officials indicate an intent to focus only on enforcing U.N. resolutions rather than the more extensive authorities included in U.S. laws and regulations, as well as a hesitancy to going after Chinese entities out of concern of impacting the bilateral U.S.–China relationship. U.S. officials made similar private comments in 2009 after a previous North Korean nuclear test.

After years of extolling China for assisting U.S. policy toward North Korea, the Obama Administration now criticizes Beijing for being unhelpful. It is past time for the U.S. to impose secondary sanctions against Chinese violators to increase pressure on North Korea. Indeed, there is historical precedent to support this: In 2006, resolute U.S. action led the Bank of China to cease financial transactions with North Korea despite the Chinese government advocating against such action.[60]

The United States should:

  • Pressure China to take additional measures against North Korea.
  • Make clear that Pyongyang is a national security threat to the U.S. and its allies and that Chinese inaction or obstructionism on North Korea will impact the bilateral U.S.–China relationship.
  • Demonstrate readiness to implement defensive measures (deployment of THAAD, increased military exercises and deployments, etc.) because of North Korean actions.
  • Inform Beijing that if it is unwilling to shut down Chinese violators of U.N. resolutions and U.S. law, the U.S. will do it for them.
  • Fully enforce U.S. law, including imposing sanctions against third parties, particularly Chinese financial institutions and businesses, that trade with those on the sanctions list or export prohibited items. President Obama’s assertion that North Korea is the most isolated nation on Earth is mistaken. The U.S. has imposed stronger measures on other nations for less egregious violations. The Obama Administration has sanctioned zero Chinese entities for facilitating North Korean prohibited behavior.
  • Call on Beijing to abandon repatriation of North Korean defectors and allow visits by the U.N. rapporteur on North Korean human rights to investigate refugee conditions in northeast China.
  • Increase information operations to promote greater North Korean exposure to the outside world.
  • Expand broadcasting services, such as by Radio Free Asia, and distribution of leaflets, DVDs, computer flash drives, documentaries, and movies into North Korea through both overt and covert means. Increased North Korean exposure to information is a useful long-term means to begin the transformation of the nature of the regime, as took place in Communist Eastern Europe and the Soviet Union.

The U.N. should:

  • Ban North Korea overseas workers exploited in highly abusive conditions. Workers are stripped of their passports, denied most of their earnings, and forced to perform labor without compensation. North Korea has an estimated 60,000 to 100,000 overseas workers in 50 countries but mainly China and Russia, earning the regime between $1.2 billion and $2.3 billion annually in foreign currency.[61] Other experts estimate the figure is lower, approximately $300 million to $400 million annually.[62]
  • Eliminate the “livelihood purposes” exemption for North Korean export of its resources and impose a ban on sale of crude oil to North Korea.
  • Target North Korean human rights violations which a U.N. Commission of Inquiry deemed “crimes against humanity.” Impose sanctions on North Korean entities, both at the individual and agency levels regardless of the impact on third parties.


The next U.S. President will face a dramatically different landscape from that which Barack Obama faced in 2009. Then, many experts and pundits blamed the U.S. for the North Korean nuclear problem. President Obama’s offers of dialogue seemed to offer hope for improving bilateral relations and achieving denuclearization. However, North Korea’s determination to act as badly toward the Obama Administration as it did toward that of George W. Bush, combined with the collapse of yet more attempts at engagement, have put such naïve aspirations to rest.

At present, any offer of economic inducements to entice North Korea to abandon its nuclear arsenal is an ill-conceived plan with little chance of success. Instead, the consensus is that stronger sanctions must be imposed on North Korea for its serial violations of international agreements, U.N. resolutions, and U.S. law. Little change will occur until North Korea is effectively sanctioned, and China becomes concerned over the consequences of Pyongyang’s actions and its own obstructionism. President Obama should abandon his policy of timid incrementalism through not fully implementing U.S. laws and holding some sanctions in abeyance, to be rolled out after the next North Korean violation or provocation. Washington must sharpen the choice for North Korea by raising the risk and cost for its actions as well as for those, particularly Beijing, who have been willing to facilitate the regime’s prohibited programs and illicit activities and condone its human rights violations.

—Bruce Klingner is Senior Research Fellow for Northeast Asia in the Asian Studies Center, of the Kathryn and Shelby Cullom Davis Institute for National Security and Foreign Policy, at The Heritage Foundation.

[1] James Pearson, “Despite Park Trip, China Sticks to Basic Message on North,”, July 1, 2013, (accessed July 1, 2016).

[2] Lee Kwang-ho, “S. Korea-China Cooperation and China’s Policy Shift on N.K.,” Yonhap Vantage Point, Vol. 36, No. 6 (June 2013), (accessed July 1, 2016).

[3] “Test of Seoul-Beijing Ties,” Korea Times, January 11, 2016, (accessed July 1, 2016).

[4] Ser Myo-Ja, “Park Pressures Beijing to Act After North’s Nuke Test,” Korea Joongang Daily, January 14, 2016, (accessed July 1, 2016).

[5] Anna Fifield, “After Nuclear Test, Park Has Epiphanies on North Korea—and China,” The Washington Post, February 20, 2016, (accessed July 1, 2016).

[6] Sarah Kim, “Defense Chief Says Thaad Must Be Considered,” Korea Joongang Daily, January 27, 2016, (accessed July 1, 2016).

[7] Kim Tong-hyung, “How Impoverished but Nuclear-armed North Korea Earns Money,” The Morning Journal, February 12, 2016, (accessed July 1, 2016).

[8] Press release, “Government Statement regarding the Complete Shutdown of the Gaeseong Industrial Complex,” South Korea Ministry of Unification, February 10, 2016, (accessed July 1, 2016).

[9] Ju-min Park and Tony Munroe, “South Korea Calls for ‘Bone-numbing’ Sanctions on North for Nuclear Test,” Reuters, January 13, 2016, (accessed July 1, 2016).

[10] Bonnie Glaser, “China’s Reaction to North Korea’s Nuclear Test,” Center for Strategic and International Studies, January 7, 2016, (accessed July 1, 2016).

[11] Kim Oi-hyun, “China Issues Official List of North Korea Embargo Products,” Hankroyeh, April 6, 2016, (accessed July 1, 2016).

[12] “Chinese Banks Halt Transfer of Yuan Currency to N. Korean Banks,” Yonhap News Agency, March 2, 2016, (accessed July 1, 2016).

[13] “China Halts Remittances to N. Korea,” The Chosun Ilbo, March 3, 2016, (accessed July 1, 2016).

[14] “China Complies with Sanctions Against N. Korea,” The Chosun Ilbo, March 17, 2016, (accessed July 1, 2016).

[15] “China Halts Half of Imports of N. Korean Coal,” The Dong-a Ilbo, February 25, 2016, (accessed July 1, 2016).

[16] “Chinese Firm Ordered to Halt Coal Trade with N. Korea: State Media,” Yonhap News Agency, February 24, 2016, (accessed July 1, 2016).

[17] Seol Song Ah, “Trucks Loaded with Mineral Extracts Blocked from Entering China,” DailyNK, March 7, 2016, (accessed July 1, 2016).

[18] “China Appears to Have Implemented New Sanctions on N. Korea,” The Korea Times, March 9, 2016, (accessed July 1, 2016).

[19] “China Strengthens North Korea Cargo Inspections: Source,” Yonhap News Agency, March 16, 2016, (accessed July 1, 2016).

[20] Park Ju-min and Ruby Lian, “China, South Korea Step up Sanctions on North Korea,” Reuters, March 8, 2016, (accessed July 1, 2016).

[21] A. Greer Meisels, “Is Enough Enough for China and North Korea?” The Asia Times, March 21, 2013, (accessed July 1, 2016).

[22] Glaser, “China’s Reaction to North Korea’s Nuclear Test.”

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[24] Louis Charbonneau and Michelle Nichols, “U.N. Imposes Harsh New Sanctions on North Korea Over Its Nuclear Program,” Reuters, March 3, 2016, (accessed July 1, 2016).

[25] Jonathan Pollack, “Punishing Pyongyang: With New US Sanctions, How Will China Respond?” Brookings Institution, February 2, 2016, (accessed July 1, 2016).

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[27] Bo-mi Lim, “China Reduces Oil Shipment to N. Korea,” The Washington Post, August 26, 2006, (accessed July 1, 2016).

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[30] Choi Hyun-june, “The Mystery of China’s Zero Oil Exports to North Korea,” Hankyoreh, Aug 4, 2014, (accessed July 1, 2016).

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[34] “Sino-NK Oil Supplies Keep on Flowing,” DailyNK, May 24, 2014, (accessed July 1, 2016).

[35] Stephan Haggard, “North Korea Trade and the Oil Mystery,” North Korea: Witness to Transformation, Peterson Institute for International Economics, February 6, 2016, (accessed July 1, 2016).

[36] Julian Ryall, “China Covertly Providing Oil to North Korea,” Daily Telegraph, November 14, 2014, (accessed July 1, 2016).

[37] “Kim Jong-un’s Slush Funds Found,” The Chosun Ilbo, March 22, 2013, (accessed July 1, 2016).

[38] Colum Lynch, “UN Panel: North Korea Used Chinese Bank to Evade Nuclear Sanctions,” Foreign Policy, March 7, 2016, (accessed July 1, 2016).

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[40] “China Makes Little Investment in N. Korea Since October Nuclear Test,” Yonhap News Agency, February 2, 2016, (accessed July 6, 2016).

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[42] “China and Inter-Korean Clashes in the Yellow Sea,” International Crisis Group, Asia Report No. 200, January 27, 2011, (accessed July 1, 2016).

[43] Jenny Jun, “Dealing with a Sore Lip: Parsing China’s ‘Recalculation’ of North Korea Policy,” 38 North, U.S.–Korea Institute at Sais, March 29, 2013, (accessed July 1, 2016).

[44] Stephanie Kleine-Ahlbrandt, “China’s North Korea Policy: Backtracking from Sunnylands?” 38 North, U.S.–Korea Institute at Sais, July 2, 2013, (accessed July 1, 2016).

[45] Ben Blanchard, “China Steps up Customs Checks, but North Korea Trade Robust,” Reuters, Apr 30, 2013, (accessed July 1, 2016).

[46] “North Korea’s Trade with China Contracts in 2015,” The Korea Herald, January 31, 2016, (accessed July 1, 2016).

[47] Stephen Haggard, “Once Again, Sanctions Enforcement,” North Korea: Witness to Transformation, Peterson Institute for International Economics, July 5, 2016, (accessed July 7, 2016).

[48] Eleanor Albert and Beina Xu, “The China-North Korea Relationship,” Council on Foreign Relations Backgrounder, October 7, 2010, (accessed July 1, 2016).

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[50] “U.S., China Spar over North Korea, South China Sea,” SFGate, January 27, 2016, (accessed July 1, 2016).

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[52] News release, Kurt M. Campbell, Assistant Secretary, Bureau of East Asian and Pacific Affairs, Beijing, China, U.S. Department of State, October 14, 2009, (accessed July 1, 2016).

[53] “Transcript: President Obama’s Exclusive Interview with George Stephanopoulos,” ABC News, March 13, 2013, (accessed July 1, 2016).

[54] News release, Tom Donilon, National Security Advisor, Office of the Press Secretary, The White House, June 8, 2013, (accessed July 1, 2016).

[55] “Obama Says China Getting Tougher on North Korea,” Space Daily, June 18, 2013, (accessed July 1, 2016).

[56] “China Says ‘Very Firm’ with North Korea on Nuclear Program: Kerry,” Reuters, July 1, 2013, (accessed July 1, 2016).

[57] News release, Secretary of State John Kerry, Beijing, China, U.S. Department of State, February 14, 2014, (accessed July 1, 2016).

[58] Ibid.

[59] Simon Denyer, “Kerry Pushes China on N. Korea Nuclear Program,” The Washington Post, (accessed July 1, 2016).

[60] Juan Zarate, Treasury’s War: The Unleashing of a New Era of Financial Warfare (New York: Public Affairs, 2013), Kindle edition.

[61] Kim Tong-hyung, “How Impoverished but Nuclear-armed North Korea Earns Money.”

[62] “N. Korea’s Treatment of Its Laborers Abroad Is Scandalous Abuse,” The Chosun Ilbo, February 22, 2016, (accessed July 1, 2016).


Bruce Klingner
Bruce Klingner

Senior Research Fellow, Northeast Asia