China helps N. Korea nuke up & break sanctions, then says sanctions don’t work.

Two weeks ago, the Obama Administration’s point man on North Korea policy told Congress that sanctions are hurting Pyongyang. I must confess to some skepticism.

KJU ski

[Ski lift made in China.]

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Instead, the evidence suggests that North Korea’s rich are getting richer, and its poor are staying poor. Materially speaking, the capital’s elites have never had it better, and openly buy imported consumer goods with dollars. Marcus Noland also sees evidence that, whatever the official statistics tell us, Pyongyang’s palace economy appears to have grown in recent years. Outside Pyongyang, however, 70 to 84 percent of the people are barely scraping by.

If our diplomacy is at an impasse and our sanctions aren’t working, then by what measure can the administration say that its North Korea policy is working? When President Park visited Washington last month, she and President Obama warned Kim Jong-Un that if he “carries out a launch using ballistic missile technology or a nuclear test,” he will “face consequences, including further significant measures by the U.N. Security Council.” But for all the talk that China is unhappy with Kim Jong-Un, China’s willingness to violate U.N. sanctions — violations that are too numerous to be anything less than state policy — continues to be the most important reason why sanctions aren’t working.

As I’ve argued recently, U.N. sanctions against North Korea will continue to fail until the U.N. and its member states do what they have not yet done — act promptly to designate the third-country enablers that help Pyongyang break them. Earlier this week, I posted a detailed case study about one of Pyongyang’s most important enablers, Chinese ex-spy and businessman Sam Pa, his 88 Queensway Group, and his North Korean joint venture, known as KKG, a partnership with Bureau 39, Pyongyang’s official money laundering agency. Pa first entered North Korea in 2006, just in time to prop up Kim Jong-Il as the Banco Delta Asia action was starving his regime of the hard currency on which its survival depends.

Unfortunately, KKG is just one of many examples of China helping North Korea to evade sanctions over the course of decades. Not only that, Chinese technology transfers played a major role in helping North Korea build its long-range ballistic missiles to begin with.

The National Security Agency (NSA) suspected in late 1998 that the China Academy of Launch Vehicle Technology (CALT) was working with North Korea on its space program (closely related to missiles) to develop satellites, but that cooperation was not confirmed to be linked to the Taepo Dong-1 MRBM program, the Washington Times reported (February 23, 1999). An NSA report dated March 8, 1999, suggested that China sold specialty steel for use in North Korea’s missile program, reported the Washington Times (April 15, 1999). In June 1999, U.S. intelligence reportedly found that PRC entities transferred accelerometers, gyroscopes, and precision grinding machinery to North Korea, according to the Washington Times (July 20, 1999). Another official report dated October 20, 1999, said that China’s Changda Corporation sought to buy Russian gyroscopes that were more of the same that China supplied to the North Korean missile program earlier that year, reported the Washington Times (November 19, 1999). In December 1999, the
NSA discovered an alleged PRC deal to supply unspecified PRC-made missile-related items to North Korea through a Hong Kong company, said the Washington Times (January 1, 2000).

The DCI first publicly confirmed PRC supplies to North Korea, or Democratic People’s Republic of Korea (DPRK), in July 1999. [….] The DNI’s Section 721 Report of May 2007 told Congress that PRC “entities” continued in 2005 to assist North Korea’s ballistic missile program. [Congressional Research Service, Jan. 5, 2015]

China also gave North Korea’s nuclear weapons program substantial help, both directly and through Pakistan’s A.Q. Khan network:

The New York Times and Washington Post reported on October 18, 2002, that U.S. officials believed Pakistan provided equipment, including gas centrifuges, for the North Korean uranium enrichment program, in return for North Korea’s supply of Nodong MRBMs to Pakistan by 1998. The Washington Post added on November 13, 2002, that the Bush Administration had knowledge that Pakistan continued to provide nuclear technology to North Korea through the summer of 2002. Henry Sokolski of the Nonproliferation Policy Education Center wrote in National Review Online (November 19, 2002) that “one might call on Pakistan, Russia, and China to detail what nuclear technology and hardware they allowed North Korea to import.”

The New York Times reported on January 4, 2004, about a history of nuclear technology proliferating from Pakistan’s Khan Research Laboratories headed by Abdul Qadeer Khan and disclosed that he had transferred designs for uranium-enrichment centrifuges to China first. DCI George Tenet confirmed to the Senate Intelligence Committee on February 24, that North Korea pursued a “production-scale uranium enrichment program based on technology provided by A.Q. Khan.” Particularly troubling was the reported intelligence finding in early 2004 that Khan sold Libya a nuclear bomb design that he received from China in the early 1980s (in return for giving China centrifuge technology), a design that China already tested in 1966 and developed as a compact nuclear bomb for delivery on a missile.47 That finding raised an additional question of whether Khan also sold that bomb design to others, including Iran and North Korea.

Moreover, PRC firms could have been involved directly or indirectly in North Korea’s nuclear weapons programs or weapons proliferation to other countries. In June 1999, authorities in India inspected the North Korean freighter Kuwolsan and found an assembly line for Scud ballistic missiles intended for Libya, including many parts and machines from China or Japan, according to the Washington Post (August 14, 2003). The Washington Times reported on December 9 and 17, 2002, that a PRC company in the northeastern coastal city of Dalian sold to North Korea 20 tons of tributyl phosphate (TBP), a dual-use chemical that U.S. intelligence reportedly believed would be used in the North Korean nuclear weapons program. [CRS, Jan. 5, 2015]

It bears repeating that just days before North Korea’s first nuclear test, influential Chinese academic, frequent Pyongyang visitor, and maleficent asshole Shen Dingli publicly flashed a green light. Shen has since called North Korea’s development of nuclear weapons “a sovereign right to which the D.P.R.K. is entitled.” China’s is not a society that values academic freedom, particularly in the field of its foreign relations. If Shen wasn’t speaking for Beijing, you could forgive Pyongyang (and Washington, and for that matter, me) for believing he was.

nuclear related shipment, 2012, shipped through Dalian

[Nuclear-related shipment, shipped through Dalian, China, 2012]

According to former State Department official David Asher, China has “long served as a safe harbor for North Korean proliferation and illicit trading networks and a transport hub for these networks via its airports and airspace, harbors and sea space.”

[I]n the past decade there have been way too many incidents of Chinese companies actively fronting for North Korea in the procurement of key technologies for the DPRK’s nuclear program. Some of these incidents suggest lax enforcement of export controls, poor border controls, and a head-in-the-sand attitude of senior authorities. Others suggest active collusion and/or deliberately weak enforcement of international laws and agreements against WMD and missile proliferation. There is a great body of information about this and the Chinese are well aware of our grave concerns. [David Asher at the Heritage Foundation, Sept. 14, 2006]

The evidence that has emerged, both before and since 2006, overwhelmingly supports Asher’s charge. China’s failures to enforce U.N. sanctions constitute a long-standing pattern and practice of non-enforcement. In 2007, Secretary of State Condoleezza Rice complained to the Chinese government about its failure to inspect and intercept a shipment of missile parts aboard a North Korean flight to Tehran as it refueled in Beijing.

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[Flight path from Pyongyang to Tehran]

In 2008, China failed to inspect two containers of rocket fuses that were shipped from North Korea to Iran, via the Chinese port of Dalian (page 31). Most of the photographs that follow are from the U.N. Panel of Experts charged with investigating compliance with the U.N.’s North Korea sanctions resolutions.

Shipped through Dalian, 2008, destination Iran

[Shipped through Dalian, China, 2008. Destination, Iran]

In 2009, at least two North Korean arms shipments to Iran, believed to be for the eventual use of Hamas or Hezbollah, passed through Chinese ports or airspace.

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[Flight path from Pyongyang to Bangkok]

Transited Chinese airspace, 2009, destination Iran

[Shipment from N. Korea to Iran, via Bangkok, 2009. Passed through Chinese airspace.]

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[Via the U.N. Panel of Experts]

A North Korean shipment of chemical reagents and protective suits bound for Syria may have passed through China in 2009.

chemical protective suits, shipped through Dalian, 2009, destination Syria shipped through Dalian, 2009, destination Syria

[Shipped through Dalian, China, 2009. Destination, Syria.]

In 2010, France seized a shipment of arms-related materiel en route from North Korea to Syria. The consigner was a shipper based in Dandong, China (page 37).

arms-related shipment, shipped by N Korean front company in Dandong, 2010, destination Syria

[Arms-related shipment, shipped by North Korean front company in Dandong, China, 2010. Destination, Syria]

In 2011, China blocked a report by a U.N. panel of experts that implicated it in North Korean arms transfers to Iran. In 2012, a Chinese state-owned firm, Hubei Sanjiang Space Wanshan Special Vehicle Co., sold North Korea chassis for missile transporter-erector-launchers (pages 80-84, or the CRS report linked above, at 19, or the reports of the U.N. Panel of Experts).

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[The web site of state-owned Hubei Sanjiang Space Wanshan Special Vehicle Company, announcing the sale to “a client in a certain country.”]

In 2013, a South Korean newspaper was able to track down a North Korean money launderer operating in Guangdong, from this apartment complex.
Screen Shot 2015-11-03 at 8.31.54 PM

While the Treasury Department had (at least temporarily) scared off the bigger Chinese banks from North Korean business that year, the Bank of Dandong and North Korean banks operating from China took up the slack. In 2014, the U.N. Panel of Experts reported that a U.N.-sanctioned firm linked to North Korea’s WMD programs was operating openly at a Chinese trade show (page 53). As recently as November 2014, the same company still operated in China and Russia.

Spotted at a trade fair in Dandong, 2013

[Spotted at a trade fair in Dandong, China, 2013]

The U.N. Panel of Experts has named multiple Chinese firms that have facilitated shipments of luxury goods to North Korea (page 41). North Korea is still using the dollar system to conduct its business, although some of that business has moved to a lower level in the financial ecosystem, through intermediaries like the banks in Dandong and Shanghai, 88 Queensway, and the money launderers in Guangdong.

In 2008, the Chinese government also set up “a system which will allow companies and people from North Korea to open bank accounts in China to settle business transactions in yuan,” to avoid the dollar system and Treasury regulations entirely. In 2013, when Treasury sanctions again started to cause pain in Pyongyang, 40 senior North Korean officials gathered in a restaurant in Shenyang to discuss strategies to evade them. Such a meeting could not have taken place without the knowledge and approval of Chinese authorities.

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[Wire transfer for arms sale to Congo, arranged from Beijing]

And of course, let’s not forget that the North Koreans who hacked Sony pictures, and who carried out a successful cyberterrorist threat against movie theaters across America, operated out of the Chilbosan Hotel in downtown Shenyang, China. chilbosan-175304_copy1

[The Chilbosan Hotel, home of North Korea’s Unit 121]

Draw your own conclusions from this evidence, but here’s mine: the Chinese government has provided extensive, active, and long-term support to North Korea’s WMD programs and sanctions violations. This support has come from Chinese government agencies and state-owned firms that work with some of China’s most sensitive (and presumably, most closely watched) defense technologies. In numerous other cases, Chinese law enforcement officials looked the other way when North Korean proliferators smuggled weapons through its ports or its airspace. And we’re talking here about the world’s second-most policed society, where the government can have Jing-Jing and Cha-Cha at a teenager’s doorstep within minutes of her posting “Tibet” or “6.4” on her weibo.

All of which sets the table for a fisking of the five Chinese academics from state schools or government institutions whom NK News interviewed for this article. I’m glad NK News did the interview. It’s important for us to have a clear-eyed view of how China sees North Korea, even if that clear-eyed view reveals that China is, despite much wishful thinking to the contrary, fundamentally hostile to our interests, and either ignorant of the facts or willfully blind to them. These insights may not be comforting, but they’re consistent with a long history of China’s behavior:

Sanctions can’t hurt North Korea at all. I was in North Korea last year. It doesn’t look like North Korea’s economy was hurt by the sanctions in any way. The idea to impose sanctions to change North Korea’s behavior is wrong.

Either he’s saying that his overlords, who voted for six U.N. Security Council resolutions (the most recent of them two years ago) were “wrong,” or he’s accurately reflecting the groupthink in Beijing, thus revealing how fundamentally disingenuous China really is, and how different its U.N. votes are from the actual policies it pursues.

Again, as I said earlier, we have exhausted most of the options to try and shape North Korea’s behavior.

I’ve already addressed that falsehood in detail, but it’s especially concerning to hear the Chinese assert the same falsehoods as our own President, both with the shared intention of disinforming American policymakers that they’re powerless to address the problem.

As long as Washington doesn’t give up its interests in Northeast Asia, especially maintaining its military forces, North Korea will not give up its nuclear weapons.

As long as China doesn’t give up its claims to Taiwan, there’s nothing we can do to keep Taiwan from buying our gas centrifuges, “satellite launch” vehicle gyroscopes, and trucks for transporting curiously long, eight-foot-thick tree trunks.

Is it possible for China to stand on the same side with the U.S.? No. To me, the gap in Western society and Eastern society seemed to grow wider after the September 3 military parade.

Translation: you may not think we’re in a Cold War with China, but China thinks it’s in a Cold War with us.

The sanctions are meaningless. International society believes cutting off the supply of luxury goods to the elites is punishment. The problem is North Korea’s economy has remained relatively independent from the rest of the world. During the Cold War era, its economy was associated with Eastern European nations. After the Cold War, its economy has mainly interacted with China, which means North Korea’s economy has little linkage with international society and the sanctions can barely hurt the country.

Except when we “finally found a way to hurt” Kim Jong-Il, because we cut the links between him and his bank accounts … in China. Including in the Bank of China itself.

Western opinions have successfully shaped North Korea as an evil power.

Yeah, where did we ever get that idea? From the former Attorney General of Indonesia, who might (in turn) have gotten it from any of 30,000 North Koreans who inexplicably risked death, rape, torture, and the gulag to flee their homeland. 

So, how exactly can you ban North Korean from importing luxury goods?

By adopting a reasonable definition of “luxury goods,” as the U.S. and the EU have done, but which China still hasn’t done nine years after it voted to approve UNSCR 1718. By instructing the Chinese Customs officials who are counting the flat screen TVs and the jewelry, and presumably collecting duties on them, to keep them off the flights to Pyongyang, and off the trucks to Sinuiju.

The fifth Chinese “expert,” a young Ph.D candidate, actually comes dangerously close to the truth when he says this:

According to China’s official response, it is not breaking UN sanctions on luxury goods when it comes to the items exported from China.

I think China usually holds a vague approach to sanctions on North Korea. On the one hand, China does not want to provoke North Korea on this issue. On the other hand, North Korea’s main trading partner is China. So sanctions would cause harm to Chinese businessmen.

As we know, exporting luxury goods is a high-profit business. So the businessmen have a high incentive to conduct it. So I think it is difficult for China to officially forbid this behavior when confronting pressure from this interest group.

With the possible exception of our Ph.D candidate, all of the Chinese “experts” insist that their government has enforced the U.N. sanctions. I suppose if you live in a society where slavish groupthink is either compulsory or essential to one’s career advancement, and where inconvenient evidence is censored for your protection, you might actually believe this. It has also occurred to me that most of them don’t.

Whether the Chinese actually believe this or are willfully disinforming us, our survey says that four out of five Chinese experts are dealing in falsehoods. Why does China play these games? Lots of reasons, I suppose, not all of them mutually exclusive. The fact that well-connected Chinese companies are making a lot of money from their North Korea trade would be reason enough. After all, that seems to be why South Korea continues to subsidize trade with North Korea, contrary to its national interests. Other, more malign motives may also play a part — a desire to distract U.S. power in the region, to gain bargaining leverage over the U.S. on the Taiwan issue, an institutional hostility to the U.S. and its interests, and as part of a grander ambition to finlandize both Koreas (which is easier done by keeping them divided).

It’s all speculative, of course. What’s beyond denying is that China isn’t interested in solving this problem; China is the problem. And until China’s support for North Korea draws consequences in its relations with the U.S. and its allies, it will continue to be.


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