More NK sanctions on China and Russia

How to win friends and influence people – sanction them until they drop out of the WTO and form their own trade grouping.  I can foresee the world splitting into 2 trade blocs, and many of the countries like Australia being forced to choose between its main export markets and its main military alliances.

Treasury Slaps Sanctions On China, Russia Entities And Individuals Over North Korea

In a move that is certain to infuriate China further and result in another deterioration in diplomatic relations between Washington and Beijing, moments ago the United States slapped both Chinese and Russian entities and individuals with new sanctions in the Trump administration’s escalating attempts to pressure North Korea to relent and stop its nuclear program and occasional missile launches.

The Treasury Department’s Office of Foreign Assets Control said it would target 10 entities and six individuals who help already sanctioned people who aid North Korea’s missile program or “deal in the North Korean energy trade.” The U.S. also aims to sanction people and groups that allow North Korean entities to access the U.S. financial system or helps its exportation of workers, according to the Treasury:

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated 10 entities and six individuals in response to North Korea’s ongoing development of weapons of mass destruction (WMD), violations of United Nations (UN) Security Council Resolutions, and attempted evasion of U.S. sanctions.  Today’s sanctions target third-country companies and individuals that (1) assist already-designated persons who support North Korea’s nuclear and ballistic missile programs, (2) deal in the North Korean energy trade, (3) facilitate its exportation of workers, and (4) enable sanctioned North Korean entities to access the U.S. and international financial systems.

As a result of the latest action, “any property or interests in property of the designated persons in the possession or control of U.S. persons or within the United States must be blocked, and U.S. persons are generally prohibited from dealing with them.”

Speaking on today’s sanctions, Steven Mnuchin who, or rather whose wife today is in the news for an entirely different reason, made the following statement:

“Treasury will continue to increase pressure on North Korea by targeting those who support the advancement of nuclear and ballistic missile programs, and isolating them from the American financial system,” said Treasury Secretary Steven T. Mnuchin.

“It is unacceptable for individuals and companies in China, Russia, and elsewhere to enable North Korea to generate income used to develop weapons of mass destruction and destabilize the region.  We are taking actions consistent with UN sanctions to show that there are consequences for defying sanctions and providing support to North Korea, and to deter this activity in the future.”

Among the companies sanctions in regards to North Korea’s “WMD program” are the following:

OFAC designated China-based Dandong Rich Earth Trading Co., Ltd. for its support to UN- and U.S.-designated Korea Kumsan Trading Corporation, an entity OFAC previously designated for being owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, the UN- and U.S.-designated General Bureau of Atomic Energy, which is responsible for North Korea’s nuclear program.  Dandong Rich Earth Trading Co., Ltd. has purchased vanadium ore from Korea Kumsan Trading Corporation.  UNSCR 2270 prohibits North Korea’s exports of vanadium ore, and requires member states like China to prohibit the procurement of vanadium ore from North Korea.

OFAC designated Gefest-M LLC and its director, Russian national Ruben Kirakosyan, for support to the UN- and U.S.-designated Korea Tangun Trading Corporation, also known as Korea Kuryonggang Trading Corporation, which is subordinate to the UN- and U.S.-designated Second Academy of Natural Sciences, an entity involved in North Korea’s WMD and missile programs.  Gefest-M LLC, a company based in Moscow, has been involved in the procurement of metals for Korea Tangun Trading Corporation’s Moscow office.

OFAC also designated China- and Hong Kong-based Mingzheng International Trading Limited (“Mingzheng”).  Mingzheng acts as a front company for UN- and U.S.-designated Foreign Trade Bank (FTB), and it has provided financial services to FTB by, among other things, conducting U.S.-dollar denominated transactions on behalf of FTB.  FTB is North Korea’s primary foreign exchange bank; it was designated by the United Nations on August 5, 2017 as part of UNSCR 2371.  OFAC designated FTB in 2013 for facilitating transactions on behalf of North Korea’s proliferation network, including for UN- and U.S.-designated Korea Mining Development Corporation and Korea Kwangson Banking Corporation.  On June 29, 2017, OFAC designated Mingzheng’s owner, Sun Wei.

The Treasury also designated three Chinese coal companies collectively responsible for importing nearly half a billion dollars’ worth of North Korean coal between 2013 and 2016.  Dandong Zhicheng Metallic Materials Co., Ltd. (“Zhicheng”), JinHou International Holding Co., Ltd., and Dandong Tianfu Trade Co., Ltd. have sold, supplied, transferred, or purchased coal or metal, directly or indirectly, from North Korea, and the revenue may have benefitted the nuclear or ballistic missile programs of the Government of North Korea or the Workers’ Party of Korea.  JinHou International Holding Co., Ltd. and Dandong Tianfu Trade Co., Ltd. also were designated for operating in the mining industry in the North Korean economy.

Meanwhile, top U.S. officials have said they do not want to take military action against North Korea unless it is a last resort, and as a result getting China to cooperate is seen as a key part of a diplomatic solution.

Of course, what this latest round of sanctions will achieve, is to further anger Beijing and the local population, in the process making a diplomatic solution even more unlikely and “forcing” America’s ruling Generals, Kelly and McMaster to launch the first “preemptive” shot against Pyongyang.

China speaks on real war

Global Times, the Chinese Communist Party’s mouthpiece, is often used to speak on behalf of the Government on sensitive topics. This piece is saying that if the US strikes North Korea first, China will prevent them (presumably by attacking the US B-1 bombers), whereas if North Korea strikes Guam first, they will not intervene.

Meanwhile Australia’s Prime Minister, Malcolm Turnbull, says the US-Alliance (ANZUS Treaty) means that if Australia is attacked the US will come to Australia’s aid. This is incorrect as the Treaty only requires there to be consultations, and who knows what Trump would do under such circumstances? Turnbull has not yet got the Australian Government’s permission to go to war, so presumably Australia has been encouraged to say this by a phone call from VP Pence, obedient little Australia (militarily) immediately obeys.

Global Times10 August 2017

Reckless game over the Korean Peninsula runs risk of real war


The US and North Korea have both ramped up their threatening rhetoric. The Pentagon has prepared plans for B-1B strategic bombers to make preemptive strikes on North Korea’s missile sites. US Secretary of Defense James Mattis issued an ultimatum to North Korea on Wednesday to “cease any consideration of actions that would lead to the end of its regime and destruction of its people.”

Meanwhile, North Korea issued plans to fire four intermediate-range missiles to land 30-40 kilometers from Guam and claimed it would finalize the plan by mid-August.

Some people in Guam have already expressed panic for the first time after the end of the Cold War. The US has already got the worst of the confrontation with North Korea.

Many people believe the possibility of war is very low. If war really breaks out, the US can hardly reap any strategic harvest and North Korea will face unprecedented risks. North Korea aims to propel the US to negotiate with it, while the US wants to put North Korea in check. Neither can achieve its goal, so they compete to escalate tensions, but neither wants to take the initiative to launch a war.

The real danger is that such a reckless game may lead to miscalculations and a strategic “war.” That is to say, neither Washington nor Pyongyang really wants war, but a war could break out anyway as they do not have the experience of putting such an extreme game under control.

In the near future, it would be highly sensitive if US B-1B fighter jets fly over the Korean Peninsula or North Korea launches missiles in the direction of Guam. Both sides would upgrade their alert to the highest level. The uncertainty in the Korean Peninsula is growing.

Beijing is not able to persuade Washington or Pyongyang to back down at this time. It needs to make clear its stance to all sides and make them understand that when their actions jeopardize China’s interests, China will respond with a firm hand.

China should also make clear that if North Korea launches missiles that threaten US soil first and the US retaliates, China will stay neutral. If the US and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so.

China opposes both nuclear proliferation and war in the Korean Peninsula. It will not encourage any side to stir up military conflict, and will firmly resist any side which wants to change the status quo of the areas where China’s interests are concerned. It is hoped that both Washington and Pyongyang can exercise restraint. The Korean Peninsula is where the strategic interests of all sides converge, and no side should try to be the absolute dominator of the region.

Trump threatens China with new trade war

Not content with this week’s sanctions against Russia, North Korea, Iran, and Venezuela, Trump is also going for China, although the expected announcement didn’t materialise this week. The claim is partly that China is a currency manipulator, although the US is the biggest currency manipulator in the world, courtesy of the Federal Reserve interventions in bonds and equities. It should be noted that China’s stated objective is to hold its currency stable against a trade-weighted basket of currencies that is basically all major currencies, excluding the US. Meanwhile as Foreign Exchange (FX) gamblers play their games with currencies, the US Dollar has seen a massive 7% devaluation in the last 3 months:

This, of course, puts pressure on Japan, Europe, UK to maintain their exports against this US currency manipulation, meaning more stimulus in the form of Central Bank support for bonds and equities, and round we go again. This is called “circling the toilet” or “race to the bottom” or “making America great again”.

One reasonable response to this by China could be a month long boycott of trade with the US, which would see the shelves in Walmart stores empty and protests on the steets (see the current state of Venezuela to see what that is like).

Trump threatens China with new trade war, Beijing appears unmoved

5 Aug, 2017

Amid expectations of the US launching investigations into China’s alleged theft of American intellectual property as well as unfair trade practices, Beijing appears unmoved by the imminent probe while US businesses fear reprisals in case the row unintentionally escalates.

Washington is expected to soon announce investigations into how China tackles copyright protection, protectionism and market access. President Donald Trump reportedly intents to use a provision in the Trade Act of 1974, which would allow him to slap tariffs and other barriers on Chinese products while circumventing the World Trade Organization (WTO) mechanisms for redressing grievances.

A White House announcement of the measures was expected Friday but has been postponed.

US ‘bullying tactics’

The Chinese reaction to the anticipated investigations was calm. Beijing’s commerce ministry said Thursday that China was willing to work with the US to settle their differences, saying trade benefited both parties.

“The China-US trade relationship is… mutually beneficial. Cooperation would benefit both sides and fighting would hurt both,” ministry spokesman Gao Feng told journalists.

He added that conflicts over trade practices should be resolved through the WTO and downplayed the concern over China’s handling of intellectual property rights of foreign companies.

Chinese state media, which often relays Beijing’s position in more strong terms, was more forthcoming. In an editorial, the China Daily warned the US against politicizing bilateral trade, addressing the connection made by Trump between the economy and what he called Beijing’s failure to help in solving the North Korean question.

“Imposing tariffs and restrictions on Chinese imports would serve the interests of neither side, since China will have no choice but to take retaliatory measures, thus paving the way for a trade war,” the newspaper cautioned. “Both sides should work hard to avoid that damaging eventuality.”

The Global Times, the tabloid off-shoot of the official People’s Daily, ran expert commentary which called the US’ tactics “bullying”.

“This is bully negotiating tactics from Trump, trying to pressure China into meeting its unreasonable demands that only benefit the US,” Mei Xinyu, an associate researcher at the Chinese Academy of International Trade and Economic Cooperation under the commerce ministry, told the newspaper.

“China is not what it was two decades ago. Today, we are the world’s second-largest economy and largest trading nation. There are many tools we can use to deal with the US.”

Huo Jianguo, vice chairman of the China Society for World Trade Organization Studies, which is also affiliated with the Chinese commerce ministry, suggested that the US president is picking a fight with China “to make good on campaign promises and ease pressure”.

On his campaign trail, Trump threatened to slap a 45 percent tariff on all goods from China while branding Beijing as a currency manipulator.

After his election, there was much speculation in the Chinese media of an ensuing trade war with the US. Some outlets ran extensive explanations of how China would be invulnerable in such a conflict and could hit back at the US with certain measures, such as buying Airbus aircraft instead of Boeing or placing tariffs on US soybeans and maize.

However the economic tit-for-tat between world’s two largest economies failed to materialize. After meeting China’s President Xi Jinping in April, Trump made it clear that he would rather pressure Pyongyang together with Beijing than threaten Chinese trade.

Meanwhile American companies are worried about how the Trump administration would handle the promised investigations, Reuters reported.

“Companies, I think, are rightly concerned about how this administration will handle any sort of enforcement action or investigation given that we have not seen this administration be particularly nuanced or strategic in its approach,” a technology industry source who asked not to be identified before an official announcement of the probes, told Reuters.

“We’ve been talking with (National Security Council) but frankly for us even, it’s difficult to determine exactly who are the decision makers,” the source said. “We just don’t know exactly what the mentality will be or… the decision making or calculus.”

Concern over potential fallout from the US move was also expressed by the head of WTO, the organization risking to be undermined as a global arbiter of trade conflicts.

“It is easy to see where such chain reactions begin… Should a trade war break out, countries will in the end be worse off than when the dispute begins,” Roberto Azevedo told a trade forum Wednesday.

Beijing’s restrained response to Trump’s trade policy makes sense when you consider the inner workings of the Chinese economy, investor Charles Ortel explained to RT, since it would not be in a position to ‘win’ any kind of trade war with the United States.

“The situation inside China is not as monolithic as some suggest – there are wide gaps between economic reality for the top and then for the bottom 80-90 percent. And I would not and do not presume how to ‘instruct’ the Chinese leadership how best to manage their local realities,” Ortel wrote in an email.

“But, I do believe, fighting with the US is not a winning economic strategy because the internal Chinese market will take many years to hold realistic prospect of absorbing the goods and services presently exported to America.

So, if China wished to move forward, I believe the government could take steps that promote world peace – [such as] truly helping with North Korea, standing down against India [and] pulling back from external expansion in disputed territory – and that are in the interest of many nations, including Russia and the US.

And, if the Trump Administration saw solid evidence of such steps, I believe the rising trade frictions might cool, to an extent.”

However, Hong Kong-based investment and banking specialist Andrew Leung believes that Trump’s measures are an attempt to distract the public from his inability to resolve the problem with North Korea.

“The souring of relations with China is typical of Donald Trump’s capricious and short-wired temperament,” Leung told RT.

“As he appears to be ineffective in resolving the North Korean crisis, he is venting his anger on and trying to divert public attention to China, as if China alone can solve what basically is a deep-seated mistrust problem between Pyongyang and Washington.”

Leung also warned not to underestimate the level of economic damage China could cause the US.

“China has an arsenal of big ticket items of American imports into China which are likely to hurt American businesses very seriously,” he said. “So on the one hand China will continue to urge caution and point out a proper way to address the North Korean issue, on the other hand, China will sound clear warnings targeting big American businesses.”