China hits North Korea

China’s commerce ministry has announced that it has banned North Korean nationals from setting up new businesses in the country.

Background

The North Korean nuclear program has been a source of concern for the US and the international community for decades. In July 2017, North Korea successfully test launched two Intercontinental Ballistic Missiles (ICBM). The state media announced that the first ICBM, which was launched on July 3rd, was a “gift” to America. At the time, experts said that this ICBM could reach Alaska. The second one can reportedly reach a number of cities in the US including Boston and New York. US has responded by condemning the tests and carrying out joint military exercises along with South Korea.

In August 2017, North Korea threatened to strike Guam, which is a US territory. The region currently hosts 6,000 US service members and has a population of over 160,000 people.

After North Korea test launched a second ICBM, the UN Security Council unanimously imposed fresh sanctions on the country. These sanctions can significantly hurt North Korea’s $3 billion annual export revenue. In August 2017, US imposed further sanctions on Chinese and Russian companies and individuals for seemingly aiding North Korea.

Analysis

Despite warnings from the US and the international community, in August 2017, North Korea fired several short-range missiles into the sea. US has intermittently threatened military conflict to North Korea if the latter did not scale back on its operations. US President Donald Trump has also repeatedly pressed China to be more proactive when it comes to countering the North Korean challenge.

China has held a diplomatic stance between the two nations. It has urged US not to conduct military exercises with South Korea and has implored North Korea to stop testing missiles.

In keeping with the sanctions imposed by the UN, the Chinese commerce ministry has now banned North Korean nationals from setting up new businesses in the country.  

Economically, China is North Korea’s most important political ally. It is North Korea’s largest trade partner. Trade with China represents 57% of North Korea's imports and 42% of its exports. In February 2017, China announced that it will be suspending all imports of coal from North Korea until the end of 2017. Coal is North Korea’s most vital export commodity. The combined value of North Korea’s 2016 export to China, of coal, iron-ore, lead-ore and seafood, all of which are now banned Beijing was almost $1.5 billion. This is about 60% of its total exports.

Assessment

Our assessment is that China’s sanctions on North Korea would hit it far more than the actions of any other nation in the world. The already isolated nation is running out of allies and its options to seek dialogue with the US.  

Read more:

Next target, Guam

Fresh sanctions