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U.S. Treasury Secretary Steven Mnuchin issued a statement Tuesday regarding additional sanctions on North Korea.   © Reuters
North Korea Crisis

New US sanctions on North Korea ensnare more Chinese entities

Beijing issues tempered response but warns against 'unilateral' acts

WASHINGTON/BEIJING -- The U.S. could be taking further steps to curb North Korea's weapons development in the coming weeks to follow a fresh round of sanctions announced Tuesday, with even sanctions on Chinese state-run banks believed to be on the table.

"We are steadfast in our determination to maximize economic pressure to isolate [North Korea] from outside sources of trade and revenue," U.S. Treasury Secretary Steven Mnuchin said that day. Newly sanctioned parties are having their U.S. assets frozen, and will be unable to do business with U.S. citizens.

Additional sanctions will reinforce Washington's "maximum pressure campaign to isolate the murderous regime," President Donald Trump had also said Monday, when he re-designated North Korea as a state sponsor of terrorism. He suggested additional measures could come in the following two weeks.

The newest sanctions broadly serve two functions. First, they prod the global community to cooperate with the U.S. in placing maximum pressure on the North. The Treasury Department published photos of North Korean trading ships moving cargo to other ships at sea, a practice banned by United Nations sanctions, in its Tuesday release -- a message that the Trump administration will crack down on any attempts to evade sanctions.

At least 20 countries had reduced the number of North Korean guest workers or ordered North Korean embassies to downsize their staffs as of a month and a half ago, State Department spokeswoman Heather Nauert told reporters on Tuesday. 

Second, the sanctions also serve as warning to China, which remains North Korea's economic lifeline. Trump in September signed an executive order to expand the potential targets of sanctions. This opened the door for economic sanctions to be applied to individuals and companies that do business with the rogue nation, whereas such treatment was previously limited to those suspected of ties with the country's efforts to develop weapons of mass destruction. Based on the new criteria, an additional four Chinese companies and one Chinese businessperson were sanctioned on Tuesday.

"We have a good relationship with China; that's not going to change because we've made this designation," Nauert said Tuesday.

Trump is pressuring Chinese President Xi Jinping to take tougher action against Pyongyang, based on discussions from their recent summit.

The U.S. president could still sanction Chinese state-owned banks, which would seriously affect the Chinese economy. But such a move would also deliver a critical blow to bilateral relations and pose a threat of retaliation against U.S. companies in China.

"The U.S. can hint at sanctions on state-owned banks, but won't actually be able to impose them," a European diplomatic source said.

Holding its tongue

In response to the Tuesday sanctions, Chinese Foreign Ministry spokesman Lu Kang on Wednesday said "China has always implemented the U.N. Security Council's [North Korea] related resolutions."

"We always firmly oppose the wrong act of imposing unilateral sanctions," he added. But Lu did not directly criticize the U.S. by name.

China sent Song Tao, head of the Communist Party's International Liaison Department, as a special emissary to North Korea over the weekend. But Song was probably unable to meet with North Korean leader Kim Jong Un, weakening Beijing's argument for a dialogue-based resolution.

The Chinese have been implementing their own measures to cut off the flow of people and cash into the North. A regular flight between the countries' capitals was suspended Monday after Song returned home, a move many believe the authorities were behind.

Beijing also imposed unilateral sanctions following North Korea's sixth nuclear test in September, which effectively banned North Korean individuals and entities from using Chinese bank accounts. The government also said it is shutting down North Korean joint ventures in China by January 2018.

Still, China has given no indication that it will take the harsh options advocated by the U.S., such as completely cutting off Pyongyang's oil supply. Beijing is pressuring North Korea to return to the negotiating table, but it is still avoiding measures that could lead to a collapse of the North's economy.

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