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Trump Puts Squeeze on Beijing over North Korea

“Recently, certain people, talking about the Korean peninsula nuclear issue, have been exaggerating and giving prominence to the so-called ‘China responsibility theory,’” said Foreign Ministry spokesman Geng Shuang on Tuesday, referring indirectly to Trump administration officials. “I think this either shows lack of a full, correct knowledge of the issue, or there are ulterior motives for it, trying to shift responsibility.”

Beijing expressed more than just irritation with Washington. “Asking others to do work, but doing nothing themselves is not OK,” Geng said. “Being stabbed in the back is really not OK.”

Language this intemperate is rarely heard from government officials in public, especially diplomats, and it tells us that US-China relations are about to spiral downward.

And, frankly, that would be a good thing. For a generation, American diplomats have equated good relations with cordial relations. Yet, in China’s view good relations exist only when Beijing gets what it wants. And, indeed in the name of good relations, American diplomats have allowed their Chinese counterparts to outmaneuver them to make profound gains in an array of areas—currency, trade, and security, to name a few—all the while tolerating China’s increasingly irresponsible, hostile, and dangerous behavior, which has frequently violated both international norms and law.

Since the beginning of his term, President Trump’s approach, on full display at his April meeting in Mar-a-Lago with Chinese ruler Xi Jinping, has been generous. And the early signs were positive. A couple of weeks after the meeting, the president suggested the two were cooperating, tweeting, “Why would I call China a currency manipulator when they are working with us on the North Korean problem?” Adding coyly, “We will see what happens.”

It appears now that in Trump’s view, insufficient progress has “happened,” as it were, because the administration’s approach has changed. In late June, the president began to impose costs by designating the Bank of Dandong a “primary money laundering concern,” a long overdue move that essentially sawed off the shady institution’s links to the global banking system.

Beijing was certainly displeased, but Geng’s denial of his country’s responsibility for North Korea’s arms build-up and missile tests suggest Chinese officials hope to head off additional American sanctions.

Beijing’s problem, however, is that as North Korea’s primary benefactor and life-line, much of its ongoing and multi-faceted commercial, security, and trade relationship with the Kim regime directly violates US law, the Patriot Act in particular.

Some of China’s larger banks appear to have washed cash for the Kim regime, a primary suspect being the Bank of China, one of China’s so-called Big Four banks. The bank was listed in a 2016 UN report for designing and operating a money-laundering scheme for Pyongyang.

In the last few weeks, a number of analysts have proposed schemes to disarm or defang the Kim regime. Yet, Kim would come under considerable pressure if the US would simply enforce existing law, designed to prevent foreign banks from laundering currency. That law puts Chinese financial institutions, working on behalf of Kim Jong Un’s destitute and dangerous state, in the crosshairs.

China can expect more banks to suffer the fate of the Bank of Dandong. The Trump administration is targeting other financial institutions laundering cash for the Kim regime—some of them believed to be Chinese—and it is also seizing the funds of parties dealing with North Korea, like Dandong Zhicheng Metallic Material Co. and four related front companies.

The Chinese will complain about America’s “long-arm” jurisdiction, but for the moment this White House seems determined to reconsider its criteria for “good relations” with China by preventing Chinese and other banks from aiding Pyongyang. Beijing will not be pleased and that’s why a downward—and healthy—spiral in relations can be expected.

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