China finally pays a (symbolic) price for its North Korean slave trade

This blog has long posited that a nuclear North Korea will not coexist with us and that war with it would be inevitable; that preventing another Korean War will require a focusing an assortment of financial, diplomatic, and political pressures on Pyongyang; and that to deter China’s government and industry from undermining that pressure will require us to pressure China itself. This will carry costs for both economies, and to the relationship between the two governments. Relations with China will have to get worse before they can get better. That is unfortunate, but it is a far better outcome than nuclear war, the collapse of global nonproliferation, or effective North Korean hegemony over South Korea.

Since the Mar-a-Lago summit in April, I’ve worried that President Trump’s tough talk about secondary sanctions against Kim Jong-Un’s Chinese enablers was a bluff. It’s still too early to say that it wasn’t, but the news that Secretary of State Rex Tillerson has dropped China from Tier 2 to Tier 3 under the Trafficking Victims Protection Act — specifically for its use of North Korean slave labor — is a welcome sign that the administration has begun (and hopefully, just begun) to escalate its pressure on Beijing.

“China was downgraded to the Tier 3 status in this year’s report in part because it has not taken serious steps to end its own complicity in trafficking, including forced laborers from North Korea that are located in China,” Tillerson said during a ceremony to release the report.

Tillerson said that forced labor is a key source of illicit revenues for the North.

“An estimated 52,000-80,000 North Korean citizens are working overseas as forced laborers primarily in Russia and China, many of them working 20 hours a day. Their pay does not come to them directly. It goes to the government of Korea, which confiscates most of that, obviously,” Tillerson said.

The North regime receives hundreds of millions of dollars per year from forced labor, he said.

“Responsible nations simply cannot allow this to go on and we continue to call on any nation that is hosting workers from North Korea in a forced-labor arrangement to send those people home. Responsible nations also must take further action,” he said. [Yonhap]

Tillerson’s decision reflects rising anger within the administration that Beijing is (sit down for this) still not fully implementing U.N. sanctions against North Korea.

So what does this action mean for China’s economy and trade, in practical terms? For now, not much. Beijing probably doesn’t care if the U.S. denies it foreign assistance or votes against World Bank loans for it. Any of the TVPA’s sanctions can be waived, and often are. But as Erik Voeten writes in the Washington Post, governments really do care about their tier rankings for reasons of national honor and reputation. I don’t think I’m speaking out of school by saying that during my time at the Foreign Affairs Committee, the competing appeals of diplomats and NGOs to raise or lower a government’s tier status in the next TVPA report consumed an inordinate amount of staff time. The Chinese government, being hypersensitive about its own reputation, will care very much about this.

In Beijing, foreign ministry spokesman Lu Kang said the government was resolute in its resolve to fight human trafficking and the results were plain to see. “China resolutely opposes the U.S. side making thoughtless remarks in accordance with its own domestic law about other countries’ work in fighting human trafficking,” he told a daily news briefing. [Reuters]

Beijing is furious, naturally. I expect it to make some ostentatious displays of non-cooperation to punish Washington. It would be especially tragic if China decides to take its anger out on North Korean refugees. Hopefully, the State Department has already gamed out its responses to potential Chinese escalations. Our message to Beijing must be that we’re also prepared to escalate. China, which needs another decade of high growth rates to pay its coming crop of pensions, cannot afford this. Both sides would suffer in an economic war between the U.S. and China, but China’s export-dependent, labor-intensive economy and fragile banking sector would suffer more. That may give us more leverage to press China to expel its North Korean laborers or the U.N.-designated North Korean proliferation and money laundering networks that have operated openly on its soil for years.

The Chinese companies using the North Korean labor will care much less — at first — but they are facing far greater financial consequences, especially if the KIMS Act passes the Senate. (I sense a particularly strong appetite in both chambers of Congress and both parties for secondary sanctions against North Korean forced labor.) Under section 201 of that legislation, the products of those companies may face exclusion from U.S. markets, and their dollar assets may be frozen. (Needless to say, prospective Kaesong recidivists will not find this news reassuring.)

Dropping China to Tier III will have little immediate legal or economic effect. It still isn’t the “maximum pressure” President Trump promised us. It is an escalation and a warning. It is symbolic, but powerfully so. Ultimately, Beijing may care about being listed as Tier III for human trafficking for the same reason that Pyongyang cares about being listed as a state sponsor of terrorism — because to governments obsessed with their images, symbols can be powerful things. One hopes that this will cause more Chinese citizens to see that North Korea is a ball-and-chain on their country’s acceptance into the family of civilized nations and continued economic growth. One hopes that more of them will say that it’s time to take a hacksaw to the chain.

4 Comments

  1. Here’s the problem though: I read another article recently where China may considering sacrificing North Korea in exchange for domination of South east Asia.

    “Because nothing is free. In return for altering North Korean behavior, China wants the U.S. to yield to its quest to dominate Southeast Asia.

    It’s a quest with two strategic parts. The first is the Asia Investment and Infrastructure Bank. Offering tens of billions of dollars in grants and loans, the AIIB allows China to buy, bribe, and coerce other states into accepting its economic domination. By crowding out alternate rule-of-law based investments from the U.S., China wins a monopoly of regional political influence.

    The second element is military. It involves constructing artificial islands in the South China Sea, and the militarization of those islands so that China can deny vessels transit through those waters. If China can control access to these trade-going waters, it will put immense pressure on states like Vietnam and the Philippines. They will face a choice between kneeling to China’s rule or enduring economic depression.

    America mustn’t play this game.

    Were the U.S. to accept Chinese hegemony in return for pressuring North Korea, it would abandon the region to to 1930s-style imperialism. And as with President Barack Obama’s Syrian red line, it would show American willingnesss to sacrifice her interests.”

    http://www.washingtonexaminer.com/what-china-wants-in-return-for-pressuring-north-korea/article/2627195

    Tbh, I’m pretty sure Trump would consider this option.

    So is it worth it take out North Korea in exchange for Chinese troops in the capitals of Manila, Hanoi, etc.?

    Also you need to consider Russia. In fact there are rumors that Russia will fill the void should China withdraws its support for N. Korea.




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  2. CNPC supposedly now requires the NorKs to pay for oil in cash. Coal for oil? under some Jesuitical paraphrase of the UN sanction regime?




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  3. Any pressure for China which in turn sabotages its bilateral economic relationship with Pyongyang can only have positive affects for a long over due regime change.

    Any stability felt by DPRK now has been due to what is recently being described as a surprisingly vibrant and “growing” economy in Pyongyang.

    As long as we continue to escalate economic and financial sanctions against DPRK and China, it is just a matter of time before those in Pyongyang starts to picture the face of Kim Jong Il whenever the name of Porcine Majesty is mentioned…




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  4. The bus is headed in a better direction, so to speak. Otto Warmbier and Kim Jong-nam deaths remind the public of the DPRK’s nature.




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