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More US Sanctions on the Menu for Chinese Financial Institutions Helping North Korea?
Jul 11, 2017 | The Diplomat
By Ankit Panda
The recent steps against the Bank of Dandong marked an end to that approach and perhaps the start of something more unilateral, veering in the direction of secondary sanctions against a broader array of Chinese individuals and entities. -
Don't hold us responsible for solving North Korea standoff, China says
Jul 11, 2017 | CBS News
China on Tuesday said it shouldn't be held responsible alone for solving the North Korean nuclear standoff, and accused other countries of shirking their responsibilities in the effort to reduce tensions. -
Petrofin Research: Bank Ship Lending Dwindles
Jul 10, 2017 | World Maritime News
The shipping industry saw USD 42.5 billion removed from the ship lending jar in 2016, according to Petrofin Research’s latest report on global bank ship finance.
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More US Sanctions on the Menu for Chinese Financial Institutions Helping North Korea?
Jul 11, 2017 | The Diplomat
By Ankit Panda
At the end of June, the Trump administration announced that it would be penalizing the China-based Bank of Dandong for facilitating transactions for “companies involved in North Korea’s WMD and ballistic missile programs.” I wrote then that the action signaled a change in approach in how the Trump administration was planning on handling the increasingly grave problem of North Korea’s ballistic missile and nuclear weapon programs.
Following his April summit with Chinese President Xi Jinping, U.S. President Donald J. Trump seemed to have given China an undefined amount of time to come around on North Korea. Going back to the 2016 presidential campaign, Trump has long thought that the solution to the North Korean problem will be found in Beijing — that China, as North Korea’s largest trading partner bar none, holds the key to bringing Kim Jong-un to heel.
The recent steps against the Bank of Dandong marked an end to that approach and perhaps the start of something more unilateral, veering in the direction of secondary sanctions against a broader array of Chinese individuals and entities. Indeed, I’d remarked that the Bank of Dandong move was “somewhat of a shot across Xi’s bow to signal that other Chinese financial institutions may be next.”
That appears more likely to be the case. The Wall Street Journal reported on Monday that the Trump administration appears to be lining up a second salvo of unilateral sanctions against Chinese financial institutions culpable for facilitating North Korean transactions. The move would ostensibly ramp up the pressure to act on China, but it’s unclear just how far Beijing will allow these moves to go before starting to push back.
The Journal notes:
The Justice Department, in a federal-court case that was partly unsealed last week, pointed to “offshore U.S. dollar accounts” associated with a network of five companies linked to Chinese national Chi Yupeng. That included one of the largest importers of North Korean goods into China, Dandong Zhicheng Metallic Material Co.
Dandong Zhicheng and other Chinese firms may be next on the Trump administration’s list. Last week’s test of an intercontinental ballistic missile has certainly injected the North Korean issue with more urgency and consensus between China and the United States remains remote. Beijing remains married to its proposal of a “dual freeze” while Washington remains disinterested in a freeze and instead prefers continued pressure as a means to eventually pursue North Korea’s total disarmament.
To be sure, the Trump administration’s use of sanctions in this manner isn’t a novel idea; China accounts for 90 percent of North Korea’s trade and even if it is no longer Pyongyang’s closest ally, given the post-2013 chill in bilateral relations, it is still the most important.
Where pressure on China leads, however, no one quite knows. Previous administrations have tried to seek China’s acquiescence in the full implementation of sanctions, but Beijing’s fundamental geopolitical preferences toward North Korea effectively cap how far China is willing to let Pyongyang economically suffer.
http://thediplomat.com/2017/07/more-us-sanctions-on-the-menu-for-chinese-financial-institutions-helping-north-korea/
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Don't hold us responsible for solving North Korea standoff, China says
Jul 11, 2017 | CBS News
BEIJING -- China on Tuesday said it shouldn't be held responsible alone for solving the North Korean nuclear standoff, and accused other countries of shirking their responsibilities in the effort to reduce tensions.
The complaints, made in unusually strident language, follow a phone conversation between President Xi Jinping and President Trump earlier this month in which the Chinese leader warned of "some negative factors" that were harming China-U.S. relations, indicating relations between the two countries had hit a rough patch after some initial optimism.
Foreign ministry spokesman Geng Shuang told reporters Tuesday that China was upholding its obligations under United Nations resolutions on North Korea, while other countries were fanning the crisis while damaging China's interests by their actions.
"China is not to be blamed for the current escalation of tension, nor does China hold the key to resolve the issue," Geng said at a daily news briefing.
"If China is striving to put out the fire, while the others are fueling the flame ... how can China's efforts achieve expected outcomes? How can the tension be eased? How can the Korean Peninsula nuclear issue be resolved?" Geng said.
Saying some unidentified parties were circulating the "China responsibility theory," Geng said they were operating with "ulterior motivations" and sought to shrug off their own responsibilities.
"Absolving oneself of responsibility is not OK. Tearing down bridges after crossing the river is not OK. Stabbing in the back is even less OK," Geng said.
China is North Korea's only major diplomatic ally and economic partner, and the U.S. and others have called on Beijing to use whatever leverage it has to pressure North Korea into curbing nuclear tests and missile launches that violate U.N. sanctions.
Last week, U.S. officials said the window for diplomacy is closing, and U.N. Ambassador Nikki Haley spoke about punishing countries like China that trade with North Korea.
"We will not look exclusively at North Korea. We will look at any country that chooses to do business with this outlaw regime," Haley said. "Much of the burden of enforcing U.N. sanctions rests with China. Ninety percent of trade with North Korea is from China."
However, China says perceptions of its influence with North Korea are exaggerated. It also refuses to take measures that might destabilize North Korea's hard-line communist regime and lead to violence, massive flows of refugees into China, and the possibility of a united Korea allied with the United States.
Beijing complained after one of its banks was recently cut off from the U.S. financial system for allegedly helping North Korea launder money, saying other countries' laws shouldn't extend to Chinese entities.
It also bitterly opposes South Korea's deployment of a sophisticated U.S. missile defense system that Beijing says jeopardizes Chinese security because of an ability to monitor missile launches and other military activities within northeastern China.
http://www.cbsnews.com/news/north-korea-china-says-dont-hold-us-responsible-nuclear-standoff/
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Petrofin Research: Bank Ship Lending Dwindles
Jul 10, 2017 | World Maritime News
The shipping industry saw USD 42.5 billion removed from the ship lending jar in 2016, according to Petrofin Research’s latest report on global bank ship finance.
The fall has been mainly attributed to the removal of Commerzbank and Royal Bank of Scotland, the lower bank portfolios by many banks, as well as a stabilization of exposure by Chinese banks, as a result of the sharp increase of Chinese Leasing.
According to Petrofin, the top 40 banks had a total of USD 355.25 billion exposure to shipping at the end of December 2016.
“Global bank finance now stands at the 2007 levels. Bank sentiment is still affected by loan losses and high provisions, sales of portfolios to financial institutional funds, international and European restrictions and the still not so bright outlook of shipping, which makes shipping banks quite cautious and seeking safety through known and large clients, higher margins and low finance percentages, as well as stringent terms,” Petrofin explained.
Furthermore, it has been noted that despite the fact that bank finance is coming down, mainly driven by decline of interest and ability by Western banks to maintain their loan portfolios, the global fleet is expanding.
“This results in a lower average bank finance per vessel, and financing of new vessels via a combination of equity, leasing, funds and private individuals’ equity,” Petrofin added.
Geographically speaking, banks in Europe have shown consistent decline with Germany, traditionally the biggest lender, falling sharply again this year. Dutch and Scandinavian banks are showing a slowdown as well.
The Far East also shows a small fall, primarily due to the dominance of Chinese Leasing in financing new and second hand vessels.
With respect to the market outlook for 2018 and beyond, having in mind the slow, and often short-lived recovery rate, especially in the tanker sector, LPG and offshore, Petrofin expects the shipping markets across the board not to be supportive to fresh bank lending.
“Loan portfolios of banks have slimmed as a result of vessel sales, write offs, loan sales and normal reductions via repayments. This has been useful for Western banks seeking to contract their lending as a result of capital constraints. The one ray of hope is the US banks who are coming out of the difficult years in a more robust way and whose capital ratios are stronger and which have room to expand,” Petrofin said.
What is more, as traditional bank finance has decreased substantially, this has left the medium to small owners relying on own funds and private equity. Nevertheless, some banks are preparing to join ship finance, which seem to cater for the medium to smaller owners, such as Warburg Bank and Maritime and Merchant Bank.
“As a general conclusion, we anticipate that over the next couple of years, global shipfinance may form a base. The departure of the previous big lenders, RBS and Commerzbank and the reduction of HSH Nordbank, plus a lot of retrenchment by others, is expected to complete soon. On the other hand, successful banks with a bigger appetite for shipping, such as Credit Suisse, ING, BNP Paribas, ABN Amro and DVB should assist in the above base being formed.
“Finally, for the banking sector as a whole, a recovery may only be anticipated when public market conditions shall be able to support fresh capital increases via the public markets. Such capital for banks would allow them to grow again and it is expected that their interest in ship finance shall return especially as the available margins are attractive and the clients and loans involved, of a very high level,” the research company said.
http://worldmaritimenews.com/archives/224691/petrofin-research-bank-ship-lending-dwindles/
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