North Korea: China to Cut Oil Exports, Impose Bank Sanctions

Published on December 1, 2017

In a series of extremely significant developments, we understand China’s President Xi Jinping has ordered four strong policy measures against North Korea in response to its latest ballistic missile launch.

*** China will drastically cut crude oil exports to North Korea, by one third, or even one half, of its original export plan, beginning in December. In addition, Xi has ordered the closure of the main road connection to North Korea, the China-North Korea “Friendship Bridge” across the Yalu River; a series of small-scale, live-fire, military exercises about 80-100 kilometers from the North Korean border, and; perhaps in the most serious measure, we understand China has ordered all Chinese commercial banks to stop doing business with North Korea. ***

A Surprise Snub to Xi Confidante

The four policy measures come on the heels of the closely monitored mission by President Xi Jinping’s special envoy and confidante Song Tao, officially Minister of the CPC Central Liaison Department, to Pyongyang on November 17-20. The trip did not go particularly well. 

In what is a major snub to Beijing, from what we understand, President Xi’s envoy Song was not given the hoped for, if not fully expected, meeting with North Korea’s Supreme Leader Kim Jong-un. His intention was to personally deliver a message from Xi, as well as a personal message from President Trump (see SGH 11/22/17, “North Korea: Outreach behind the Escalation”).

Instead, Song was relegated to the DPRK’s military second-in-command, Choe Ryong Hae. 

When Song did meet with Kim’s military second-in-command, who is officially also a member of the Presidium and Secretariat of the Workers’ Party of Korea, he was told Kim Jong-un was unfortunately busy on a previously scheduled engagement, visiting the countryside.  

Choe then told Song, who continued to press to deliver Xi’s message to Kim personally, that as the representative of Kim, he could deliver any message to the leader himself.

But when Song did finally bring up the situation on the Korean Peninsula to Choe, the military chief and other North Korean leaders present blankly avoided any direct response or discussion of the matter.

The only points Choe did make were that the nuclear and ICBM programs are the ultimate guarantors of the national security of the DPRK, the DPRK would never give up its nuclear and ICBM programs at any time, in any situation, and that the DPRK intended to take more efforts to develop its economy and improve the lives of its people.

Missile Launch, Russia, and US Military Exercises 

In truth, despite the frosty meeting, North Korea was also careful to alert China of its intentions to launch the high altitude ballistic missile three days ago. 

Song Tao was briefed on the last day of his visit, November 20, by Ri Su Yong, North Korea’s top official in charge of foreign affairs, that Pyongyang intended to launch a missile soon, ostensibly aimed at the upcoming US-South Korea Air Force “Vigilant Ace” joint exercises scheduled for December 4 and 8. 

Tuesday’s launch, however, also pointedly came just as a delegation from Russia’s state Duma (parliament) arrived in North Korea for a visit – a defiant signal that no country, China or Russia, could sway the North Korean regime from its nuclear program.

In response, the clearly frustrated leadership in Beijing, while denying that Trump’s calls to Xi have had any practical effect, is indicating it will support the UNSC measures to condemn the latest North Korea missile test, and that Beijing has no real problem with Washington returning North Korea to the United States’ state sponsor of terror list.

But most important will be the imposition by Beijing now of banking sanctions, and the decision from the very highest levels of China’s leadership to cut off, in a substantial manner, those all-important crude oil exports to the DPRK.

Welcome News to Washington

The tightening of these critical lifelines to Pyongyang will be welcome news to the UN Security Council, the Trump Administration, and to the embattled US Secretary of State, Rex Tillerson.

And despite the terse meeting, missile launch, and now China’s decision to pressure Pyongyang and cut oil exports, Chinese senior security officials do not, however, expect tensions on the Korean peninsula to get materially worse than they already are now, at least not in the near term. 

Beijing, for instance, has been told North and South Korea intend to begin multi-channel talks soon, and with South Korea’s President scheduled to visit China in the next month, Chinese security officials believe the Korean peninsula will in the short term at least remain relatively stable. 

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