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China punishes North Korea as US asks for more

Saturday - 3/23/2013, 8:12am  ET

FILE - In this Dec. 8, 2012 file photo, Chinese paramilitary policemen build a fence near a concrete marker depicting the North Korean and Chinese national flags with the words "China North Korea Border" at a crossing in the Chinese border town of Tumen in eastern China's Jilin province. China is trying to punish ally North Korea for its nuclear and missile tests, stepping up inspections of North Korean-bound cargo in a calibrated effort to send a message of Chinese pique without further provoking a testy Pyongyang government. (AP Photo/Ng Han Guan, File)

CHARLES HUTZLER
Associated Press

BEIJING (AP) -- China is trying to punish ally North Korea for its nuclear and missile tests, stepping up inspections of North Korean-bound cargo in a calibrated effort to send a message of Chinese pique without further provoking a testy Pyongyang government.

Freight handlers and trading companies at ports and cities near the North Korean border complain of more rigorous inspections and surprise checks that are raising the costs to doing business with an often unpredictable North Korea. Machinery, luxury goods and daily necessities such as rice and cooking oil are among the targeted products, the companies said, and business is suffering.

"Some business orders we don't dare take. We don't dare do that business because we fear that after the orders are taken, we will end up unable to ship them," said a Mr. Hu, an executive with Dalian Fast International Logistics Co. in the northeastern port city of Dalian, across the Yellow Sea from the North Korean port of Nampo. Hu said the company's business is off by as much as 20 percent this year.

North Korea's economic lifeline, China is showing signs of getting tough with an impoverished neighbor it has long supported with trade, aid and diplomatic protection for fear of setting off a collapse.

The moves to crimp, but not cut off trade with North Korea come as Beijing falls under increased scrutiny to enforce new U.N. sanctions passed after last month's nuclear test, Pyongyang's third. Targeted in the sanctions are the bank financing and bulk smuggling of cash that could assist North Korea's nuclear and missile programs as well as the luxury goods that sustain the ruling elite around leader Kim Jong Un. Pyongyang has reacted with fury and threatening rhetoric against South Korea and the U.S.

U.S. officials in Beijing for two days of talks to lobby China on enforcement said Friday that they were heartened by Chinese expressions of resolve. Spurring Beijing to cooperate, the U.S. officials said, is a concern that North Korean behavior had begun threatening China's interests in a region vital to its economic and security.

"There's reason to believe the Chinese are looking at the threat in a real way," Treasury Undersecretary David Cohen told reporters.

China's change of tack with North Korea unlikely foreshadows a total end to Beijing's support. For Beijing, North Korea remains a pivotal strategic buffer between China and a U.S.-allied South Korea, and Chinese leaders worry that too much pressure could upend an already fragile North Korean economy and cause the Kim government to collapse, leaving Beijing with a security headache and possible refugee crisis.

But North Korea watchers said between blind support and complete abandonment there's much Beijing is doing and can do to try to rein in Pyongyang.

"We have to get away from the binary thinking that either they support North Korea or they pull the plug. That's not the way the world works," said Jonathan Pollack of the Brookings Institution, a Washington think-tank. "The interesting thing is not what happens at the UN but what happens beneath the radar in terms of what Chinese provide in economic aid and energy assistance."

Over the past decade, as previous nuclear and long-range missile tests and other provocations saw the UN, the U.S., South Korea and Japan impose sanctions and reduce trade and assistance to North Korea, China has stepped into the breach. By 2011, China provided nearly all of North Korea's fuel and more than 83 percent of its imports, everything from heavy machinery to grain and electronics and other consumer goods, according to statistics from the International Trade Center, a research arm of the United Nations and World Trade Organization.

Though Pyongyang could look to other trading partners like Russia, Iran or Kuwait for fuel and some other goods, China's proximity -- their shared 1,400-kilometer (880-mile) border -- makes it indispensable. Chinese companies, often with backed by the government, are enlarging North Korean ports and building roads, helping to underpin growth after more than a decade of famine and economic decay.

Such was the Chinese support that U.S. politicians and UN experts complained that Beijing was failing to enforce previous rounds of sanctions, particularly on luxury goods. The $169,000 worth of pleasure boats imported by North Korea last year all came from China, the ITC data show, as did most of the liquor and cigarettes.

As China upped its investment, it became disillusioned with Kim Jong Un. Since coming to power after the sudden death of his dictator father, Kim has refused to heed Beijing's prodding to engage in economic reform and return to negotiations over its nuclear program.

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