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Dory 7/14
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WILL TRUMP STOP THE 10 CHINESE COMPANIES SUPPLYING NORTH KOREA'S NUCLEAR PROGRAM?
Jul 13, 2017 | Newsweek
By Bill Powell
The city of Dandong, in China’s northeastern Liaoning province, appears to be an embarrassing relic of the country’s economic past. Old, run-down state-owned factories sit on the outskirts of a town full of dreary office buildings. There is none of the flash and glitz so prevalent in China’s far more prosperous cities. -
Exclusive: U.S. prepares new sanctions on Chinese firms over North Korea ties - officials
Jul 13, 2017 | Reuters
By Matt Spetalnick and David Brunnstrom
...In late June, Washington imposed secondary sanctions on two Chinese citizens and a shipping company for helping North Korea's nuclear and missile programs and accused a regional Chinese bank, the Bank of Dandong, of laundering money for Pyongyang. -
TRUMP WANTS CHINA TO PAY FOR FAILING TO STOP NORTH KOREA
Jul 13, 2017 | Newsweek
By Greg Price
...In particular, the city of Dandong, located in the northeastern province of Liaoning, aides in the sale of machinery that the North can use to make its bombs and missiles as well as a financing arm for the North’s weapons program. -
How weakened banks are hurting the US in critical way
Jul 13, 2017 | CNBC
By Richard X. Bove
In response to North Korea's recent launch of an intercontinental ballistic missile, a recent U.S. Federal Court granted the Treasury Department's request to put into effect a "damming seizure" related to a North Korean coal mining company, the Dandong Zhicheng Metallic Material Co. -
China Has Its Own Rust Belt, And It's Getting Left Behind As The Country Prospers
Jul 13, 2017 | Forbes
...Considering that Liaoning’s provincial governor admitted in January to having inflated fiscal data by at least 20% between 2011 and 2014, there’s a good chance the regional economic situation is even worse than previously reported. -
BMW opens largest R&D center outside Germany
Jul 13, 2017 | Xinhua
By Song Lifang
BMW Brilliance Automotive (BBA) put into operation a new R&D center in Shenyang, capital of northeast China's Liaoning Province on Thursday. -
China maps its goals for coastal clean-up
Jul 14, 2017 | China Dialogue
By Zhang Chun
...The Marine 13th FYP proposes several redlined zones, including the Liaodong peninsula, home to the key oil terminal port of Dalian, the Bohai Gulf which receives river water run off from much of the north east China plain and is a crowded shipping way with several major ports, and the sub-tropical island province of Hainan. -
China is trading more with North Korea but buying much less coal
Jul 14, 2017 | CNN Money
By Rishi Iyengar
A Chinese government official said Thursday that China-North Korea trade was worth $2.6 billion in the first half of 2017, up about 10% over the same period last year. -
China defends imports of North Korean iron ore
Jul 14, 2017 | AP (In ABC News)
By Joe McDonald
China defended Thursday its purchase of iron ore from North Korea following criticism by U.S. President Donald Trump and said it is "strictly and earnestly" complying with U.N. sanctions. -
With Possible New Sanctions, White House Gets Serious on China’s North Korea Ties
Jul 13, 2017 | Foreign Policy
By Bethany Allen-Ebrahimian
The United States is reportedly preparing a new round of secondary sanctions on Chinese companies and individuals that do business with North Korea, according to Reuters. -
Trump admin considering new sanctions on China over North Korea ties: report
Jul 13, 2017 | The Hill
By Max Greenwood
The Trump administration is weighing news sanctions on small Chinese banks and shell corporations linked to North Korea, Reuters reported Thursday. -
China defends importing iron ore from North Korea
Jul 13, 2017 | The Hill
By Olivia Beavers
The Chinese government defended importing iron ore from North Korea on Thursday, saying such purchases “strictly and earnestly” comply with the United Nations' sanctions, The Associated Press reported. -
China Defends Its Growing Trade With Sanctioned North Korea
Jul 13, 2017 | The Wall Street Journal
By Liyan Qi and Chun Han Wong
China defended a 10.5% rise in its trade with North Korea in the year’s first half as part of a normal economic relationship with its neighbor in areas not covered by United Nations sanctions. -
Belt and Road to ease container shipping overcapacity
Jul 13, 2017 | Journal of Commerce
By Turloch Mooney
Turloch Mooney -
China’s growing cold chain needs better industry standards
Jul 13, 2017 | Journal of Commerce
By Greg Knowler
China’s cold chain is growing at a phenomenal rate and placing increasing pressure on a temperaturecontrolled supply pipeline that urgently requires actively enforced industrywide standards, better training, and a new collaborative approach if it is to cope. -
No rapid rise of US beef exports to China expected as market opens
Jul 14, 2017 | Journal of Commerce
By Greg Knowler
The first consignment of US beef to be imported by China in 14 years is just days away from arriving in the country following a trade deal reached between the two countries that once again puts the meat on Chinese tables. -
More Ports Look to LNG Bunkering
Jul 13, 2017 | The Maritime Executive
Port of Ningbo-Zhoushan, Port of Marseille Fos and Port of Vancouver have joined the Port of Singapore and seven other organizations to participate in an international LNG bunkering port focus group.
Port Mentions - There are no relevant clips to report at this time.
City/Province Mentions
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US - China Relations
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Full Text of Stories Below
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WILL TRUMP STOP THE 10 CHINESE COMPANIES SUPPLYING NORTH KOREA'S NUCLEAR PROGRAM?
Jul 13, 2017 | Newsweek
By Bill Powell
The city of Dandong, in China’s northeastern Liaoning province, appears to be an embarrassing relic of the country’s economic past. Old, run-down state-owned factories sit on the outskirts of a town full of dreary office buildings. There is none of the flash and glitz so prevalent in China’s far more prosperous cities.
But Dandong is nevertheless one of the most important cities in China, because it sits just across the border from North Korea and is Pyongyang’s economic lifeline. Nearly 85 percent of North Korea’s global trade is with China, and much of that flows through Dandong. That includes the machinery, purchased in contravention of both U.S. and U.N. sanctions, needed to build nuclear weapons, as well as the missiles needed to deliver them. And, crucially, Dandong is also the source of the offshore financing from Chinese banks that Pyongyang needs to pay for its illicit weapons program.
That program took yet another step forward on July 4, America’s Independence Day, when Pyongyang successfully tested a missile capable of reaching Alaska. This latest in-your-face provocation from North Korean leader Kim Jong Un came after President Donald Trump had signaled that his strategy for reining in the North—relying on China to use its clout with the Pyongyang regime—had failed. “At least we know China tried,” Trump tweeted on June 20.
But the U.S. and some of its allies in East Asia privately acknowledge that they don’t think Beijing tried hard enough. A recent White House policy review of U.S. strategy toward North Korea, completed late this spring, has emboldened those in the administration who believe Washington and its allies have the ability to increase the economic pressure on Pyongyang—but only by going after the Chinese companies that funnel money and dual-use technology (equipment that can have an innocent purpose but which the North can also use in its weapons program) to Pyongyang.
Doing so may be easier than most of the outside world understands if—and only if—Washington is willing to offend Beijing. While more than 5,000 Chinese companies do business with North Korea each year, trade between the two countries is dominated by just a handful of large companies, several of which are based in Dandong. In late June, the U.S. asked Beijing to go after 10 companies and individuals who, Washington believes, play an outsize role in China’s trade with North Korea—including selling parts and machinery used in Pyongyang’s weapons program.
Why wouldn’t Beijing do all it could to crack down on its own companies playing such a significant role in the North Korean economy? U.S. and allied intelligence analysts are divided on the answer. Some believe that the heads of the big conglomerates doing business with Pyongyang—a long-standing Chinese ally—are politically connected in Beijing. With a once-every-five-years Communist Party congress coming up in the fall, President Xi Jinping and his political allies don’t want to make more enemies of powerful businessmen, many of whom are already angry at China’s anti-corruption drive. Other analysts simply believe that a nuclear North means a permanently divided peninsula, rather than one under Seoul’s rule, and that Beijing will forever be happy with that arrangement because it wants no part of a united Korea allied with the U.S. on its border.
The U.S. told Beijing that if China hadn’t made progress by the end of the summer in sanctioning the “Chi-NoKo 10,” as one American official puts it, then the U.S. would do so unilaterally. And on June 30, the Trump administration signaled it was serious: It announced sanctions against the Bank of Dandong, accusing it of facilitating financing for the North’s weapons program. On July 5, at the United Nations, Trump’s ambassador, Nikki Haley, delivered a blunt message to Beijing: “We will look at any country that chooses to do business with this outlawed regime.” That same day, the commander of U.S. forces in South Korea, General Vincent Brooks, said the U.S. and its ally were ready to go to war if necessary, to prevent nuclear proliferation in North Korea. “Self-restraint, which is a choice, is all that separates armistice and war,” Brooks said.
The change in the administration’s policy toward the North is striking. In the wake of Trump’s summit meeting with Xi at Mar-a-Lago in April, the administration’s attitude toward China had seemed to become unexpectedly warm. During the campaign, Trump bashed China relentlessly as a trade predator and a bad actor militarily in the South China Sea. The U.S. seemed to be girding for a full-blown cold war with Beijing. That changed after Mar-a-Lago. Trump said after meeting Xi that he understood that there was a long, complicated history between the two countries. He seemed implicitly to accept Beijing’s premise that it was harder than the outside world believed to coerce Pyongyang to behave. And he deferred to Beijing to deal with its unruly ally.
The irony is that behind the scenes—in work being done by both intelligence agencies and private firms digging into the North’s trade with Beijing—analysts were becoming convinced that Xi had played Trump, and that China, in fact, did have the means to curb Kim if it chose. Beijing has, over the years, portrayed the companies who do business with the North as rogue firms, small private traders who worked hard to stay in the shadows and thus were difficult to control. But a recent, detailed report by C4ADS, a research firm based in Washington, D.C., which often consults with the U.S. on security issues, buttresses those inside the administration pushing for a harder line with Beijing. It argues that Pyongyang’s financing and procurement system for its weapons of mass destruction program is “centralized, limited and vulnerable—and thus ripe for disruption.”
Analysts in both the CIA and the U.S. Treasury Department have been arguing this for years. They note that sanctions in 2005 against a single Macau-based bank—Banco Delta Asia—infuriated Pyongyang because BDA was a linchpin in the laundering of North Korean funds. It was also thought to house some of the money of senior government officials. More than $25 million in funds were frozen, and every international bank that did business with BDA lost access to the U.S. financial system. The BDA sanctions were “the most effective targeted effort we’ve had,” says former Treasury official Stuart Levey. Two years later, Pyongyang demanded that the BDA sanctions be removed as the price of returning to the nuclear negotiating table in the so-called six party talks—also involving China, Russia, Japan and South Korea. The Bush administration relented. The talks went nowhere.
Fast-forward 10 years, and the North is now closer than ever to lobbing a nuke at the United States. Optimists say that date is at best three years away. Pessimists say 18 months. At that point, the U.S. and its allies will face a critical decision: to either treat Kim as a rational nuclear actor, who can be deterred through mutually assured destruction, or assume the opposite—that he’s “unpredictable” a description widely used in the U.S. media, though not universally subscribed to by U.S. policymakers)—and think about pre-emption and the disastrous war that could start. Given that, it’s no wonder Team Trump is now willing to risk Beijing’s ire and go hard after the Chinese companies that enable the North. Says a White House staffer involved in the North Korea deliberations, “What other real choice do we have?”The Nuclear Option
The Trump administration has yet to publicly identify the 10 key companies it is now pressuring Beijing to deal with, aside from the recently sanctioned Bank of Dandong. Officials say, however, that there is a precedent for what they intend to do. Washington believes there are a handful of so-called gateway firms in China that facilitate trade and financing for North Korea abroad. Last fall, the U.S. Justice Department brought charges—and the Treasury issued sanctions—against one of those companies, the Dandong Hongxiang Industrial Development Co., and its subsidiary, the Liaoning Hongxiang Group. “It’s important to understand,” the recent report from C4ADS states, “the unique role the [two companies] played in the broader system of China-North Korea trade.” According to documents released by the Department of Justice, DHID described itself as “an enterprise that conducts Sino-North Korea import and export.” The firm and its affiliated companies were able to satisfy procurement orders for North Korean government organizations and purchase hundreds of millions of dollars of North Korean commodities that it moved through domestic Chinese distribution channels. Those funds, the U.S. believes, were in turn used to finance the purchase of key dual-use components for Kim’s nuclear and missile program.
In addition to being a large-scale trading firm on the border of North Korea, DHID also played a likely much more valuable role for North Korea: It served as a front for the sanctioned North Korean financial institution Korea Kwangson Banking Corp. to access the global financial system. Since 2009, KKBC has been barred from accessing the international financial system because of its alleged role in financing some of North Korea’s most notorious weapons proliferators. KKBC is a key bank in North. If it doesn’t have access to the international financial system, Pyongyang can’t pay various foreign suppliers of parts, machinery and equipment for its weapons program. (Those suppliers want dollars, not North Korean won.) Once KKBC was cut off, DHID stepped in. The Justice Department states that “DHID Entities served as financial intermediaries for U.S. dollar transactions between North Korea–based [companies], who were financed by KKBC and suppliers in other countries in order to evade the restrictions on U.S. dollar transactions.” Over two separate time periods, the Justice Department alleges DHID did more than $11 million worth of deals on KKBC’s behalf.
In order to pull that off, DHID set up front companies and shells all over the world to try to cover its tracks—altogether 43 companies in six countries on four continents. The Justice Department further states that DHID used at least 22 companies to move nearly $75 million through the U.S. financial system. As C4ADS writes, “Far from being isolated” (as the standard trope about North Korea has it), “the scope of the network allowed sanctioned North Korean entities to conduct financial transactions that would appear to U.S. and European correspondent banks as coming from companies based in the British Virgin Islands, the Seychelles, England, Wales and Hong Kong.”
Trump administration officials believe that targeted international action against entities like DHID strike where the North Korean overseas financing system is most vulnerable—at key “chokepoints” where licit and illicit activities converge. Their pressing question is: Why didn’t the Obama administration pursue other important Chinese facilitators beyond DHID? That question can probably be answered with another one: How willing was—and is—the U.S. to anger Beijing?
A one-off case against a big Dandong-based holding company such as DHID is one thing. Beijing apparently didn’t protest too much when the Treasury issued its sanctions, apparently believing that it needs to show at least some willingness to pressure Pyongyang, even at the expense of one of China’s own firms. But several Trump appointees in the national security community are increasingly scathing about the efforts of both the Obama administration and Beijing to hobble Kim’s nukes. “As the North continued to make progress [toward an intercontinental ballistic missile capable of delivering a nuke], the U.S. and the U.N. tightened sanctions, it’s true,” says one Trump official. “But those were sanctions with a big caveat: They didn’t much apply to China, at least when China wanted to ignore them.” Another Trump official says the Obama team was focused on climate change as the key issue in bilateral relations with Beijing—not North Korea. “At no point was the sanctions regime against North Korea as effective as the sanctions were against Iran before they came to the [nuclear negotiating table],” says one senior Trump official, “and that’s almost entirely because of China.”
Now, Trump is vowing that equation will change. His administration has assessed that if Beijing proves itself to be unserious by the end-of-summer deadline Washington has set for action, the U.S. must go after the North’s Chinese partners itself, cutting off their access to the U.S. financial system if need be.
Beijing, obviously, won’t be happy about this; just how unhappy it will be is the critical (and, for the moment, unknowable) question. An increasingly powerful China has many ways to hurt the U.S., including by punishing the American companies selling into the world’s second largest economy, as well as by using economic pressure against the two key U.S. allies in the region, South Korea and Japan. But Washington has decided that pressuring Chinese companies is essentially the only option left, short of war on the Korean Peninsula. No one wants that, including Beijing. It “tried” once, Trump tweeted; now, he’s giving China one last shot. Tensions in East Asia are as high as they’ve been since the end of the Korean War. Prepare for them to get worse.
http://www.newsweek.com/2017/07/21/trump-stop-chinese-companies-supplying-north-koreas-nuclear-weapons-635538.html
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Exclusive: U.S. prepares new sanctions on Chinese firms over North Korea ties - officials
Jul 13, 2017 | Reuters
By Matt Spetalnick and David Brunnstrom
Frustrated that China has not done more to rein in North Korea, the Trump administration could impose new sanctions on small Chinese banks and other firms doing business with Pyongyang within weeks, two senior U.S. officials said.
The U.S. measures would initially hit Chinese entities considered "low-hanging fruit," including smaller financial institutions and "shell" companies linked to North Korea’s nuclear and missile programs, said one of the officials, while declining to name the targets.
It would leave larger Chinese banks untouched for now, the official said.
The timing and scope of the U.S. action will depend heavily on how China responds to pressure for tougher steps against North Korea when U.S. and Chinese officials meet for a high-level economic dialogue in Washington on Wednesday, the administration sources told Reuters.
President Donald Trump and his top aides have signaled growing impatience with China over North Korea, especially since it last week test-launched its first intercontinental ballistic missile, which experts say could put all of Alaska in range for the first time.
U.S. officials have also warned that China could face U.S. trade and economic pressure - something Trump has held in abeyance since taking office in January - unless it does more to restrain its neighbor.
The so-called secondary sanctions now being considered are a way for the United States to apply targeted economic pressure on companies in countries with ties to North Korea by denying them access to the U.S. market and financial system.
Word of the sanctions plan comes as U.S. ambassador to the United Nations Nikki Haley seeks to overcome resistance from China and Russia to a U.N. Security Council resolution imposing stiffer international sanctions on Pyongyang.
The targets now being weighed for sanctions would come from a list of firms numbering "substantially more than 10" that Trump shared with Chinese President Xi Jinping at a Florida summit in April and which U.S. experts have continued to compile for review, according to one of the officials.
The administration has yet to see what it considers a sufficient response from China.
"The president is losing patience with China," the official said, adding that there would be a "more aggressive approach to sanctioning Chinese entities ... in the not-too-distant future."
The White House declined comment.
In Beijing, Chinese Foreign Ministry spokesman Geng Shuang reiterated China's opposition to unilateral sanctions outside the framework of the United Nations and that China has been fully enforcing U.N. resolutions.
Getting China's help on passing U.N. resolutions and then putting unilateral sanctions on China was like "abandoning one's benefactor upon achieving one's goal", Geng added.
"What China enforces is United Nations resolutions, not the domestic law of certain countries."
U.S. and U.N. sanctions have failed to deter North Korea from pursuing its nuclear and missile programs, and on Friday, it justified its ICBM test was an exercise of its legitimate right to self-defense.
The North's KCNA news agency quoted an unidentified foreign ministry spokesman as denouncing U.S. efforts for a new U.N. resolution as a "racket" fabricated by the United States to evade its responsibility for having driven the North to "bolster its nuclear force."
"Should the U.N. Security Council adopt another 'resolution on sanctions,' this will trigger corresponding measures," KCNA cited the official as saying. It did not elaborate on the measures.Haley's Warning
Though the sources stressed that no final decisions had been made, they said China, North Korea's main trading partner, was crucial to pressuring Pyongyang to prevent it from achieving the capability of striking the United States with a nuclear-tipped missile.
During a U.N. Security Council meeting last week, Haley threatened secondary sanctions if the council could not agree on new sanctions – though she did not cite China by name.
In late June, Washington imposed secondary sanctions on two Chinese citizens and a shipping company for helping North Korea's nuclear and missile programs and accused a regional Chinese bank, the Bank of Dandong, of laundering money for Pyongyang.
Fresh U.S. sanctions would be aimed at sending a message to Beijing of Washington’s resolve to act further on its own.
But they would stop short, at least for now, of the kind of broad “sectoral” sanctions Trump’s predecessor, Barack Obama, secured through unilateral and international action against Iran to pressure it into negotiations to curb its nuclear program.
Cui Tiankai, China’s ambassador to Washington, said on Monday that secondary sanctions were "not acceptable."
"Such actions are obstructing cooperation between China and the U.S. and lead to questions about the real intentions of the U.S. side,” according to a transcript of his remarks from the Chinese embassy.
The threat of further secondary sanctions on Chinese companies could complicate next week’s U.S.-China Comprehensive Economic Dialogue, an important forum for narrowing differences between the world’s two biggest economies.
While preparations for fresh sanctions are moving forward, tangible new steps by China could prompt Washington to put the measures on hold, the U.S. sources said.
“They’d have to show they’re really serious,” the second official said. “We’re not going to be paralyzed into inaction.”
Trump pledged repeatedly during his election campaign to get tough on Chinese trade practices deemed unfair to the United States, but his rhetoric softened after the friendlier-than-expected April summit with Xi.
Shortly after their meeting, Trump said he had told Xi that China would get a better trade deal if it reined in North Korea.
But in recent weeks, Trump has fired off tweets denouncing China's trade with North Korea and cast doubt on whether Beijing was doing enough to counter Pyongyang.
Reflecting growing concern about North Korea on Capitol Hill, two members of the U.S. Senate Banking Committee, Democrat Chris Van Hollen and Republican Pat Toomey, announced on Wednesday they would soon introduce legislation for North Korea modeled on the Iran secondary sanctions laws passed by Congress.
https://www.reuters.com/article/us-northkorea-usa-sanctions-exclusive-idUSKBN19Y28A
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TRUMP WANTS CHINA TO PAY FOR FAILING TO STOP NORTH KOREA
Jul 13, 2017 | Newsweek
By Greg Price
He’s blasted the Asian superpower and even asked President Xi Jinping face-to-face to take a tougher stance on North Korea’s missile and nuclear defense program. But try as he might on Twitter or in person, President Donald Trump hasn’t persuaded China to keep Kim Jong Un’s regime from testing missile after missile during his first six months in office.
Now, the Trump administration is reportedly considering a fresh round of sanctions against small Chinese financial firms and shell companies that conduct business with North Korea, two senior U.S. officials told Reuters.
And it’s possible the new line of sanctions could be another step toward even stiffer financial penalties.
"The president is losing patience with China," one official told Reuters.
The official also said that there may be an even "more aggressive approach to sanctioning Chinese entities ... in the not-too-distant future."
The fresh and potential sanctions could target “low-hanging fruit,” or smaller institutions rather than any of China’s bigger banks, but the breadth of and when the sanctions are put in place will be contingent on talks between the U.S. and China Wednesday, administration sources told Reuters.
One official said more than 10 Chinese firms could be targeted, much more than Trump reportedly shared with Xi when he hosted him at the president’s Mar-a-Lago club in Florida back in April.
More than 5,000 Chinese companies regularly work with the North Korea every year, and China accounts for almost 85 percent of North Korea’s trade, Newsweek reported Thursday. In particular, the city of Dandong, located in the northeastern province of Liaoning, aides in the sale of machinery that the North can use to make its bombs and missiles as well as a financing arm for the North’s weapons program.
Late last month, the U.S. Treasury Department announced sanctions against two Chinese citizens and a shipping company, with the two individuals each conducting business with the North Korean government, according to Foreign Policy.
However, Treasury Secretary Steven Mnuchin clarified then that the sanctions were intended to hinder anyone doing business with the North rather than specifically against the Chinese.
“The United States is sending an emphatic message across the globe that we will not hesitate to take action against persons, companies and financial institutions who enable this regime,” Mnuchin’s statement read.
The latest potential measures could also be posturing prior to next week’s meetings, given Trump's tweet following his meeting with Xi at the Group of 20 summit in Hamburg, Germany over the weekend.
“Leaving Hamburg for Washington, D.C. and the WH. Just left China’s President Xi where we had an excellent meeting on trade & North Korea,” Trump stated Saturday.
http://www.newsweek.com/trump-china-north-korea-sanctions-636294
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How weakened banks are hurting the US in critical way
Jul 13, 2017 | CNBC
By Richard X. Bove
In response to North Korea's recent launch of an intercontinental ballistic missile, a recent U.S. Federal Court granted the Treasury Department's request to put into effect a "damming seizure" related to a North Korean coal mining company, the Dandong Zhicheng Metallic Material Co.
Bank of America, Bank of New York Mellon, Wells Fargo and Citigroup are among the eight banks involved. Hundreds of millions of dollars are at stake according to U.S. Treasury documents.
A damming seizure occurs when the Treasury orders its biggest banks to accept all money flowing into them from wire transfers and other mechanisms and then refuses to let that money out to the intended recipient, basically trapping the funds in the American banking system.
It has been reported that 95 percent of the North Korean company's foreign exchange profits from coal exports are used to fund that country's weapons program. For years North Korea has used a series of sophisticated maneuvers to avoid sanctions.
The Treasury Department also imposed sanctions against China's Bank of Dandong which is located near the North Korean border. The complaint is that this bank was laundering money that was ultimately used in North Korea's weapons program.
One might argue that the United States' control of the global financial system is perhaps its strongest non-military weapon when it wishes to confront an "enemy" to U.S. interests. This "weapon" was first believed to be used against China in 1949 when Mao Tse-tung's revolution rested control of China from Chiang Kai-shek's government and Mao tried to gain control of China's bank accounts.
The weapon was also prominent in the United States' more recent sanctions against Iran. French bank BNP Paribas paid a fine of $8.9 billion to the United States Treasury for violating the U.S. sanctions.
Has the United States lost this tool?
There is a great deal of data that suggests that the United States has lost this weapon thanks to the Dodd Frank Act regulations that were put in place following the financial crisis.
The capital requirements of the biggest banks have slowed their growth. The liquidity requirements have removed their ability to lend funds freely. The determined use of the Bank Secrecy Act and the Anti-Money Laundering Laws (BSA/AML) has chilled the ability of these banks to operate overseas.
In this country, the nation's biggest four banks have seen their share of U.S. banking assets shrink from 57 percent in 2010 to 51 percent today according to FDIC numbers. The reduction overseas is more startling. At the beginning of the financial crisis, the four big U.S. banks' assets were equal to 158 percent of the assets of the four biggest Chinese banks. This is now down to 72 percent.
Forget China. In 2008 the assets of the four biggest U.S. banks were 4.0 times the size of the biggest four Canadian banks. They are now 2.9 times the size of the Canadians. U.S. banks are giving ground just about everywhere.
The situation is so bad that even the Economist Magazine, in a recent issue, has an editorial basically asking the United States to stop. "A financial system that lets dirty money flow freely is a bad one. One that blocks clean money is even worse" it says.
Reserve Currency
Chinese banks are filling the vacuum. While the United States pundits constantly deride these banks as being filled with questionable loans and even more questionable accounting, the international financial regulators do not agree. Last October, the IMF granted China's request to make the yuan the fifth global reserve currency. The Financial Stability Board, which sets risk ratings on international banks, has rated the big Chinese banks safer than the big American banks (an unbelievable farce worthy of a separate comment).
History indicates that the financial sanctions used by the United States have been very effective. They kept the Soviet economy from entering world markets. They were the most critical factor in bringing Iran to the negotiating table on nuclear weapons.
However, for financial sanctions to work, critical mass is needed in the global markets. In 1952, IMF numbers indicate that 88 percent of the world's convertible currencies was simply the dollar and the dollar could only be easily obtained by working with U.S. banks, which were the biggest in the world.
Today the dollar is only 20 percent of the world's convertible currencies and the United States banks are far from the biggest in the world. Now, the United States must work with a coalition of governments to make any sanctions work.
There are multiple currencies and banking systems that will allow North Korea to obtain the money to build its weapons systems. The United States has started to try to make financial sanctions work against North Korea but without the help of these other banks the successes of the past will not be repeated. North Korea will continue to find the funding to build its bombs and missiles while we sit on the sidelines and complain at a United Nations that has no interest in listening.
As a starting point, the United States needs to rebuild its banks. It needs banks that can compete with the Canadians, French, British and Chinese. This is necessary to help this country regain lost control of the financial markets. But it's for more than just foreign affairs. It is necessary for U.S. companies to expand globally.
http://www.cnbc.com/2017/07/13/north-korea-fight-hurt-by-weakened-us-banks-commentary.html
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China Has Its Own Rust Belt, And It's Getting Left Behind As The Country Prospers
Jul 13, 2017 | Forbes
Dongbei holds a special place in modern China. Made up of the three provinces Liaoning, Jilin, and Heilongjiang, Dongbei was both the military launching point for the communist takeover of the country beginning in late 1948, as well as the industrial base of Maoist China. Thanks to comprehensive infrastructural development during the 14-year Japanese occupation beginning in 1931, Dongbei’s industrial sector was well primed when the communists took power in 1949. Rich in oil, coal and iron ore, and armed with an infrastructure ready to process them, Dongbei quickly developed its heavy industries and became the model of industrialization for the rest of the country.
But since 1978, when capitalist market reforms began bringing China in line with the global economy, Dongbei’s GDP as a percentage of the national total has plummeted from 14% to 6.8%.Comparatively, the coastal province of Guangdong climbed from 5.4% in 1985 to 11% in 2015. Considering that Liaoning’s provincial governor admittedin January to having inflated fiscal data by at least 20% between 2011 and 2014, there’s a good chance the regional economic situation is even worse than previously reported.
Numerous factors have contributed to the region’s decline, China’s shifting economic model among them. As the country opened its doors to the world in the 1980s, the central government focused on developing the infrastructure of the coastal provinces to boost international trade. Although Dongbei shares three international borders, they are with Mongolia, Russian Siberia, and North Korea—all ailing economies. To make matters worse, the heavy industries that once made Dongbei the pride of China are today mostly stagnant, state-owned enterprises that have trouble keeping up with the flexibility of the private sector, and which have fallen on particular hard times in recent years as the world turns away from polluting industries.
The obvious parallel to the Midwestern United States has earned Dongbei the moniker “China’s Rust Belt.”
Of course, Dongbei’s stagnation has not gone unnoticed by the central government. Since the early 2000s, talk of a great plan to “Rejuvenate the Old Dongbei Industry Base” has been appearing in party propaganda, but as of yet no significant change has occurred. And Xi Jinping’s Belt and Road Initiative—a development strategy to revive ancient trade routes and increase cooperation with neighboring countries—seems focused on developing the infrastructure of China’s western provinces, through which the majority of overland trade will pass.
Still, there are options. Zhang Yifan, a professor in Dongbei’s College of Humanities and Sciences of Northeast Normal University, shared how the regional governments could boost GDP growth: “The Belt and Road Initiative is mostly about selling out of China, about exporting or even using our capital to build up other economies so that China will benefit in the long run, but Dongbei has Heilongjiang province, which neighbors Russia.”
Russian Siberia is replete with two of China’s most sought-after resources: oil and timber. Hundreds of years of exploiting domestic timber resources, sharply accelerated during the frenzied industrialization of the Mao and reform eras, has left China severely deforested. On the petroleum front, China’s domestic fields have become unable to keep up with market demand in recent years and the country has become the world’s largest net importer of crude oil.
A second option is to expand trade with South Korea. Because of its proximity to the Korean peninsula, Dongbei is home to millions of Chinese Koreans, especially Jilin province. “The region is crowded with people who already speak the language,” Zhang said. “They go to South Korea to work, and South Koreans come here for business. There’s this connection that already exists.”
The problem of course is the recent souring of relations between the two countries. The deployment in the past year of the United States’ Terminal High Altitude Area Defense (THAAD) system in South Korea has drawn sharp criticism from China’s foreign ministry, who argued it could be used by the U.S. to spy on their own defense systems. This has prompted a backlash by Chinese consumers, who have been encouraged by state-owned media to organize boycotts against South Korean products. The central government has even gotten involved by banning tour groups to South Korea and closinglegitimate Korean businesses in the mainland for alleged safety violations.
The final and perhaps most alarming threat to a stable and prosperous Dongbei is the region’s impulsive neighbor: North Korea. According to NBC, China keeps up to 250,000 troops operating in Dongbei, many of whom are stationed on the 1,400-kilometer border shared by the two countries. One reason many analysts have put forth to explain China’s continued support for North Korea is the fear of a refugee swarm into Dongbei were the Kim regime to collapse.
Of the three provinces that make up Dongbei, Liaoning is by far the wealthiest. The province’s 2,110-kilometer coastline has been earmarked for development in recent years by the central government as part of the Belt and Road Initiative. Jilin and Heilongjiang aren’t as lucky. Landlocked and heavily dependent on traditional industries, they should instead focus on reforming their cumbersome state-owned enterprises and nourishing the links they already have with Russia and South Korea. Rich in resources and infrastructure, Dongbei has the potential to reclaim its economic dynamism, but to do so it will need to forge its own development model distinct from the southern coastal powerhouses.
https://www.forbes.com/sites/outofasia/2017/07/14/dongbei-china-rust-belt/#6e6a2c0e4012
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BMW opens largest R&D center outside Germany
Jul 13, 2017 | Xinhua
By Song Lifang
BMW Brilliance Automotive (BBA) put into operation a new R&D center in Shenyang, capital of northeast China's Liaoning Province on Thursday.
The new R&D center, covering an area of over 40,000 square meters, is by far the BMW Group's largest auto R&D hub outside Germany, the company said.
The center is an extension of the original one built in 2012, and is five times larger than the first-stage project.
About 75 percent of the 800-plus research personnel are Chinese, the company said, adding that the center will focus on new energy technology to establish a complete R&D and production chain in China.
Johann Wieland, President and CEO of BMW Brilliance Automotive, said the new R&D center would act as a hub to bring in more advanced technology under the German Industry 4.0 model to promote the transformation and upgrading of the automobile industry in China.
China has become the largest single market for BMW automotive vehicles. Earlier in May, the BMW assembly plant in Shenyang's Dadong District began operations. In January last year, an engine plant also began production in Shenyang.
Founded in 2003, BMW Brilliance Automotive Ltd is a joint venture of BMW Group and Brilliance China Automotive Holdings Ltd.
http://news.xinhuanet.com/english/2017-07/13/c_136441345.htm
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China maps its goals for coastal clean-up
Jul 14, 2017 | China Dialogue
By Zhang Chun
In May, China’s central government published its marine strategy for the 13th Five-Year Plan period (2016-2020), setting out broad aims and, for the first time, some binding targets.
The Five-Year Plan’s (FYP) marine economic development plan is a clear signal that the government is giving greater strategic significance to the oceans. It is only the second time the country’s national development blueprint has included a section on the seas, starting with the 12th FYP in 2012.
The plan covers water pollution, land development and coastal conservation targets, and provides a framework for managing regions under pressure.
Filthy water
China’s breakneck economic development took off largely along the eastern seaboard in the 1980s, creating a legacy of serious water pollution and land management problems. Today, China’s economic powerhouses are still almost all in coastal provinces.Sign up to our newsletterThe first marine economic development plan, issued in 2012, drew upon locally relevant marine economic strategies that coastal cities and provinces were already producing. Official figures show that between 2006 and 2010 the marine economy, including fishing and shipping, accounted for 10% of China’s economy as a whole – but closer to 18% of the economy in the eleven coastal provinces.
Coastal waters have been heavily polluted by industrial pollutants from rivers, and many wetlands drained for development.
According to the annual Report on China’s Marine Environmental Quality, issued by the State Oceanic Administration, the percentage of coastal waters classed as severely polluted (Class IV or worse) fluctuated between 12% and 17% in the period to the end of the last plan in 2016. Seawater is classified as Class I to Class IV. Only Classes I and II are safe for human contact. Water of worse quality than Class IV is effectively useless.
Nor is pollution the only problem. Overfishing has depleted coastal fishery stocks, and wiped out many traditional fishing grounds.
Setting targets
The new Five Year Plan document emphasises “stronger comprehensive management of the marine environment,” with “comprehensive” indicating that onshore economic activity will be increasingly constrained by marine environmental capacity.
It says 70% of coastal waters should be of good (Class I or II) quality by 2020, compared to 50% in 2004.
It contains a coastline conservation goal, that coast not damaged by land reclamation or construction should account for at least 35% of the total coastline.
These are quantified binding targets that will be used to evaluate the performance of officials. Although there are only two binding targets on marine policy, they are a new addition for the 13th FYP period, and significant because local officials’ careers depend upon meeting them.
Better management
A series of management systems will be put in place, laying the foundations for a coherent approach to cleaning up coastal water pollution.
They include caps on pollution in key areas; assessments of coastal water quality; and licenses to permit and control releases of pollutants into coastal waters.
Ecological red lines are among China’s most important environmental management systems, and are now these are now being applied to coastal waters.
Redlines will divide coastal waters into zones where development is banned, and those where it is permitted with restrictions. Where development is banned, no construction will be allowed except for the purpose of environmental protection.
Key zones
The Marine 13th FYP proposes several redlined zones, including the Liaodong peninsula, home to the key oil terminal port of Dalian, the Bohai Gulf which receives river water run off from much of the north east China plain and is a crowded shipping way with several major ports, and the sub-tropical island province of Hainan.
The redline zone off Shandong province in the Bohai Gulf covers both current and planned nature reserves. It bans removal of sand from key estuaries, land reclamation and new waste outlets within the zone, and sets a minimum volume for freshwater flowing from rivers into the sea.
The system builds on trials of marine redlines that started as early as 2012 in some areas.
In July 2016, national standards for setting marine redlines were released. However, there is still no legislative basis for marine redlines, so the requirements are not binding.
Wang Yamin, associate professor at the Marine College of Shandong University, toldchinadialogue, that any future legislation would need to take account of regional differences, and allow for regional environmental characteristics and development needs.
Gao Ying, senior policy officer with World Wildlife Federation China, said China’s desire to deal with marine pollution stems partly from its need to improve the overall economy by tackling environmental constraints on growth. Wang too sees the process as a consistent development from wider concerns.
Deep sea strategy
Statistics suggest there may be more scope for economic growth in marine economy than on land: China’s marine economy grew by 8.1% during the 12th FYP period (2011-2015), beating 7.8% growth for the economy as a whole.
Furthermore, there may be more value in developing farther off waters, rather than coastal waters already damaged by pollution and over-fishing.
However, China’s increasing activity in Antarctica, and illegal fishing by some of China’s deep-sea fishing vessels, has raised international concern.
The Marine 13th FYP calls explicitly for expansion into the oceans, including land, sea and air monitoring platforms near the North and South Poles; study and assessment of deep-sea biological resources, the promotion of deep-sea mining and related equipment manufacturing, and the use of biological resources.
It speaks of “becoming a marine superpower,” “protecting marine interests” and “expanding blue economic space.”
Global profile
China’s 13th FYP lays out its desire to become more involved in international governance of Antarctica. Liu Nengye, a law lecturer at the University of Adelaide in Australia, has pointed out that, as Chinese fishing and tourism in the Antarctic is growing rapidly, China’s effective regulation of these industries is needed for sustainable development.
China’s fishing fleet first ventured into polar waters in the 1980s. More recently, the rapid expansion of its deep-sea fishing fleet in other oceans too has caused international concern and criticism. Subsidies for deep-sea fishing initiated in 2006 led to a rise of 45% in the number of vessels from 2007 and 2014, during a time of unprecedented pressure on global fisheries after years of over-fishing.
China is gradually increasing regulation of its fishing industry. Reforms to subsidies started in 2015, with phased cuts to fuel subsidies – by 2019 the subsidy is set to return to its 2014 level of 40%. China is also bringing its distant water fishing fleet into line with international norms, with standardised logs, monitoring of vessel locations, and catch certification.
China’s influence in marine governance is growing.
In May, China hosted an annual meeting of signatories to the Antarctic Treaty, the first time it has hosted the meeting since 1983, when it signed up to the 1959 treaty.
As China becomes more aware of its “marine rights”, it will also take on more responsibility for global marine governance, says Gao. She pointed out that Xi Jinping stressed at the UN Sustainable Development Summit in 2015 that China would promote global sustainable development, so China cannot avoid the issue of sustainable marine development.https://www.chinadialogue.net/article/show/single/en/9917-China-maps-its-goals-for-coastal-clean-up
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China is trading more with North Korea but buying much less coal
Jul 14, 2017 | CNN Money
By Rishi Iyengar
A Chinese government official said Thursday that China-North Korea trade was worth $2.6 billion in the first half of 2017, up about 10% over the same period last year.
But coal imports slumped by 75%, suggesting Beijing is gradually choking off North Korea's biggest source of foreign currency.
China's overall imports from North Korea fell 13% compared to the first half of 2016, said Huang Songping, a spokesman for China's customs department. They had risen by 18% in the quarter ended March.
The decline follows China's decision in February to ban all imports of North Korean coal.
President Trump has repeatedly criticized China over its trade with North Korea, calling on it to exert more pressure on Kim Jong-un's regime. He called out the "nearly 40%" increase in trade in the first three months of the year on Twitter last week.
"So much for China working with us - but we had to give it a try!" he added.
Related: How North Korea makes its money
The overall rise in trade has been driven by China's exports to North Korea, which were up by nearly 30% in the first half of the year.
China insists none of its current trade with Pyongyang is in violation of international sanctions. Huang told reporters on Thursday that the rise in trade was mainly due to an increase in textile exports.
"The sanctions imposed by the [United Nations] are not a comprehensive embargo," he said. "Trade related to the people's livelihood in the North Korea, especially those that embody humanitarian principles, should not be affected by sanctions."
The new data reflects China's attempt to pull off a delicate balancing act between the U.S. and North Korea, where it wants to prevent the regime collapsing because it worries about what that would mean for regional stability.
But Beijing is also eager to avoid riling Trump.
"If Trump were to give up on Chinese support in terms of containing North Korea, then there's a risk of increased trade tensions between the U.S. and China, which could negatively impact China's overall export performance," said Julian Evans-Pritchard, China economist at Capital Economics.
"The new figures that the customs bureau have put out today suggest [they] have made an effort, at least on paper," he added.
http://money.cnn.com/2017/07/13/news/economy/china-north-korea-trade-data-us-trump/index.html
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China defends imports of North Korean iron ore
Jul 14, 2017 | AP (In ABC News)
By Joe McDonald
China defended Thursday its purchase of iron ore from North Korea following criticism by U.S. President Donald Trump and said it is "strictly and earnestly" complying with U.N. sanctions.
China stopped importing North Korean coal but total trade has risen, which prompted Trump to complain last week Beijing is failing to use its economic leverage to stop Pyongyang's pursuit of nuclear weapons.
Chinese purchases of North Korea iron ore rose 34 percent from a year earlier in the first five months of the year, according to a South Korean industry group, the Korea International Trade Association. Iron ore is among China's biggest imports from the North after it stopped buying coal this year due to the sanctions.
Such purchases are permitted under the sanctions and generate no revenue for nuclear development, said a foreign ministry spokesman, Geng Shuang.
"We will continue to strictly and earnestly implement the North Korea-related Security Council resolution in its entirety," said Geng at a regular news briefing.
"We hope all relevant sides can make sure that they are clear that Security Council sanctions imposed on North Korea are not comprehensive economic sanctions."
China has long been the North's main diplomatic defender but increasingly expresses frustration with leader Kim Jong Un's provocative behavior.
Beijing agreed in March 2016 to enforce U.N. sanctions following North Korea's test of a missile possibly capable of carrying a nuclear warhead. But Chinese leaders are reluctant to push Pyongyang too hard for fear Kim's government might collapse. They argue against disrupting trade in food and other goods that might cause public hardship.
Last week, Trump cited a Chinese Customs agency statement that two-way trade with North Korea rose 36.8 percent from a year earlier in the first quarter. He complained that indicated Beijing was failing to do enough.
Total Chinese imports from North Korea declined 13.2 percent in the first half of the year compared with a year earlier to $1.7 billion, while exports to the North rose 29.1 percent to $880 million, the Chinese Customs agency reported Thursday.
Chinese imports of North Korean coal in the first half fell 75 percent to 2.7 million tons from a year earlier following the suspension in February, according to Huang Songping, a Customs agency spokesman.
Huang said month-on-month figures showed an even sharper decline. He said Chinese imports from the North fell 36.5 percent in March, 41.6 percent in April and 31.6 percent in May.
"Trade related to the people's livelihood in North Korea, especially if it embodies humanitarian principles, should not be affected by sanctions," said Huang at a separate news briefing.
http://abcnews.go.com/Business/wireStory/china-defends-imports-north-korean-iron-ore-48607393
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With Possible New Sanctions, White House Gets Serious on China’s North Korea Ties
Jul 13, 2017 | Foreign Policy
By Bethany Allen-Ebrahimian
The United States is reportedly preparing a new round of secondary sanctions on Chinese companies and individuals that do business with North Korea, according to Reuters.
The new measures would target select companies and minor financial firms but no big banks, and could be announced within a matter of weeks, according to the report. The United States slapped an initial round of sanctions on Chinese firms who help prop up Pyongyang in late June — a departure from a traditionally cautious approach to ratcheting up pressure on North Korea’s main source of support.
That the White House would consider a second round of sanctions so soon after the first indicates that the Trump administration is willing to back up its tough rhetoric on North Korea. The sanctions are meant to apply meaningful pressure on a government which is all but single-handedly propping up a regime that threatens South Korea, Japan, and the United States with nuclear destruction.
North Korea’s multiple missile tests in recent months, culminating with its first-ever successful launch last week of an intercontinental ballistic missile capable of reaching Alaska, has alarmed the international community and presented Trump’s first major foreign policy test.
Trump has sought to persuade China, North Korea’s largest economic and trade partner by far, to use its leverage over its rogue neighbor to scale back its missile program — as have American governments for years. Despite that track record, the Trump White House displayed an initial optimism, presenting North Korea as an easily solvable problem with the help of Chinese President Xi Jinping, with whom Trump had a friendly summit back in April.
But Beijing, as it has in the past, largely resisted Trump’s demands. After Trump publicly pressed Beijing to rein in economic support for the rogue regime, trade between China and North Korea grew more than 37 percent in the first quarter, a statistic available in April but which Trump didn’t publicly acknowledge until last week.
China is nervous about a nuclear armed North Korea. But it is especially worried about the collapse of the regime with which it shares a border, and fears both an influx of millions of North Korean refugees and the possibility of a unified Korea with U.S. troops again at the Yalu River.
Trump acknowledged as much at a July 12 press availability held aboard Air Force One on the way to France to celebrate Bastille Day. He referred to “tough pressures” that China faces in its relationship with North Korea. “It’s not like, oh, gee, you just do whatever we say,” Trump said. “They’ve had numerous wars with Korea.”
The White House took swift action after seeing that a strategy of persuasion wasn’t working — approving a long-delayed arms sales package to Taiwan, sending in a pair of freedom of navigation operations to challenge Beijing’s territorial claims in the heavily contested South China Sea, and imposing an initial round of secondary sanctions, which targeted a few individuals and companies with financial ties to Pyongyang.
Sanctions are the only action so far that are specifically intended to pressure China on North Korea; arms sales and fleet movements have happened before and would have again sooner or later.
Sanctions are also the measure with the greatest potential to rankle Beijing, which considers unilateral sanctions a violation of national sovereignty and fears the economic disruption that sanctions might cause.
On Wednesday, China’s foreign ministry bristled at questions about ongoing trade with Pyongyang that seems to skirt U.N. sanctions meant to isolate the regime — and reiterated its hostility to broader economic sanctions.
“Make no mistake, the Security Council’s sanctions on [North Korea] cannot be equated with all-encompassing economic sanctions. The maintenance of normal economic and trade exchanges between China and [North Korea] does not violate Security Council’s resolutions,” the foreign ministry spokesman said.
http://foreignpolicy.com/2017/07/13/with-possible-new-sanctions-white-house-gets-serious-on-chinas-north-korea-ties/
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Trump admin considering new sanctions on China over North Korea ties: report
Jul 13, 2017 | The Hill
By Max Greenwood
The Trump administration is weighing news sanctions on small Chinese banks and shell corporations linked to North Korea, Reuters reported Thursday.
The sanctions being prepared would leave larger Chinese banks unaffected but would deny smaller firms that do business with North Korea access to U.S. markets.
President Trump and administration officials have grown increasingly irritated that China has not done more to rein in North Korea's nuclear and missiles programs, despite public pressure from the U.S.
Whether the new penalties are put in place will depend on how a high-level economic meeting between U.S. and Chinese officials in Washington next week goes and on how China responds to U.S. pressure on Pyongyang, according to Reuters.
Since taking office in January, Trump has vowed to press Beijing, North Korea's only major ally and largest trade partner, to do more to curb the reclusive regime's weapons programs.
But the Trump administration's patience grew even thinner last week after Pyongyang conducted its first successful test of an intercontinental ballistic missile believed to be capable of striking the U.S.
In a joint news conference with French President Emmanuel Macron on Thursday, Trump acknowledged that Chinese President Xi Jinping was "trying to do what's right for China," but said he could do more to crack down on Pyongyang.
"He loves China — I can tell you — he loves China. He wants to do what's right for China," Trump said. "We've asked for some assistance with respect to North Korea. Probably he could do a little bit more, but we'll find out."
http://thehill.com/policy/international/341897-trump-admin-considering-new-sanctions-on-china-over-north-korea-ties
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China defends importing iron ore from North Korea
Jul 13, 2017 | The Hill
By Olivia Beavers
The Chinese government defended importing iron ore from North Korea on Thursday, saying such purchases “strictly and earnestly” comply with the United Nations' sanctions, The Associated Press reported.
China's total trade with North Korea has risen, with iron ore imports increasing by 34 percent in the first five months of the year when compared to a year earlier, the Korea International Trade Association, a South Korean industry group, told the news wire.
While the Chinese stopped importing coal from North Korea this year because of sanctions, iron ore is a top import for the North's neighbor.
Shuang argued that iron ore and some other purchases are allowed under the sanctions, adding that they do not aid the state's nuclear development program, the AP reported.
“We hope all relevant sides can make sure that they are clear that Security Council sanctions imposed on North Korea are not comprehensive economic sanctions,” Shuang said.
President Trump criticized Beijing for the purchases last week, saying China is not using its economic leverage to halt North Korea's nuclear and missile programs.
"Trade between China and North Korea grew almost 40% in the first quarter. So much for China working with us — but we had to give it a try!" Trump tweeted last week.
While Beijing is North Korea's longtime ally in the region, the state has voiced frustration with North Korean leader Kim Jong Un’s aggressive behavior.
China's defense of the trades comes after Trump has repeatedly pressed Chinese President Xi Jinping about adding additional pressure to stop the North's pursuit of a nuclear arsenal.
In March of last year, China agreed to enforce U.N. sanctions after North Korea launched a missile with potential nuclear capabilities.
http://thehill.com/blogs/blog-briefing-room/news/341832-china-defends-importing-iron-ore-from-north-korea
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China Defends Its Growing Trade With Sanctioned North Korea
Jul 13, 2017 | The Wall Street Journal
By Liyan Qi and Chun Han Wong
China defended a 10.5% rise in its trade with North Korea in the year’s first half as part of a normal economic relationship with its neighbor in areas not covered by United Nations sanctions.
The rise in trade was driven by a 29.1% increase in exports from a year earlier, while imports fell 13.2%, said Huang Songping, spokesman for the General Administration of Customs, at a briefing Thursday. He said China was abiding by U.N. sanctions “comprehensively, carefully, accurately and seriously” and that the first-half data doesn’t reflect Beijing’s current stance on its neighbor.
He said imports from North Korea have fallen for the past four months and all coal imports were made in the first two months of the year, before China suspended coal purchases from Pyongyang. He said coal imports were down 74.5% for the full first half from a year earlier.
Goods exported to North Korea were largely items such as textile products not covered by sanctions, Mr. Huang said.
China is by far North Korea’s biggest trading partner, accounting for more than 80% of the hermit state’s external trade for the past five years. After North Korea’s successful launch of an intercontinental ballistic missile on July 4, U.S. President Donald Trump in a tweet cited a rise in China’s trade with Pyongyang in the first quarter, questioning Beijing’s willingness to ratchet up pressure on its neighbor.
The U.S. has since stepped up its rhetoric, moving toward unilaterally tightening sanctions, targeting Chinese companies and banks the U.S. says are funneling cash into Pyongyang’s weapons program.
Beijing has resisted suggestions it isn’t doing enough to pressure North Korea, countering that Washington must directly engage Pyongyang to dissuade its nuclear ambitions. China backed tougher U.N. sanctions last year on North Korea’s coal exports, while ensuring an exemption for “humanitarian” needs. Chinese officials say the February suspension of imports of North Korean coal for the rest of this year was part of efforts to enforce those sanctions.
China’s Foreign Ministry says Beijing has played an “indispensable” role in trying to denuclearize the Korean Peninsula. On Thursday, a ministry spokesman said Chinese imports of iron ore in the first half were allowed under the U.N. sanctions as they are for “civilian use” and generate no income for North Korea’s nuclear-weapons program.
The data on the customs agency’s website didn’t break out iron-ore imports from North Korea in the first half.
China’s imports of the steelmaking material from all countries jumped 16% from a year earlier in June and rose 9.4% for the first half, customs data showed, as a lasting property boom has spurred demand from the construction sector.
The Foreign Ministry spokesman, Geng Shuang, also reaffirmed Beijing’s commitment to the U.N. sanctions. “China is implementing the [North Korea]-related resolutions in a full and strict manner,” he said.
In the first quarter, total trade between China and North Korea grew 29.2% from a year earlier, according to Chinese customs data. Both the first-quarter and first-half increases were in dollar terms.
https://www.wsj.com/articles/as-exports-grow-china-defends-trade-with-sanctions-hit-north-korea-1499948395
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Belt and Road to ease container shipping overcapacity
Jul 13, 2017 | Journal of Commerce
By Turloch Mooney
The container shipping industry is starting to feel the benefits of firmer demand in a strengthening global economy, which together with industry consolidation and China’s Belt and Road initiative, is driving more positive sentiment ) among industry stakeholders, according to Tim Smith, chairman and chief representative of Maersk Line in North Asia.
But Smith warned that the improvement in the business environment for container lines would be a “gradual” process and there were significant concerns such as rising levels of trade protectionism and the falling ratio of world trade to GDP growth.
“Our business is global and relies on free trade for growth. Protectionism is not good for world shipping,” he told delegates at a gathering of global industry leaders in Ningbo, eastern China, to discuss cooperation under China’s Belt and Road initiative.
Smith said the current wave of industry consolidation was good grounds for optimism because it would ultimately bring “greater stability” to the market.
“Over the past two decades the industry has had three waves of consolidation, but the latest is by far the most significant as eight of the top 20 players have disappeared from the market.
With plans to generate $2.5 trillion in additional trade between China and Belt and Road countries over the next 10 years, the Belt and Road initiative would have a major positive impact on the global container industry, Smith said. Belt and Road champions connectivity as the main enabler of trade growth and trade driven prosperity.
A 10 percent improvement in connectivity between countries along the route would deliver a 3 percent decrease in Chinese trade costs, which would in turn boost China’s imports and exports by around 6 percent and 9 percent, respectively, he noted. “It is a massive pump priming initiative that will contribute substantially to helping shipping and transportation recover and to deal with the ongoing overcapacity issues.”
Smith said the careful and systematic management of costs as well as the digitization of processes would be two areas of major focus for global container shipping companies over the coming years. “Lower costs make carriers more competitive. It makes organic growth profitable, and it makes inorganic growth add value for shareholders.”
Digitization would create new products and services to create and share value with customers, and technologies such as blockchain have the potential to bring major improvements to the global industry, he added.
“Transparency reduces fraud and errors; it reduces the time products spend in the transit and shipping process, it improves inventory management, and it ultimately reduces waste and costs.”
Referring to the recent cyber attack on the Maersk Group ), Smith acknowledged the challenges of doing business in an increasingly connected world. “We need to recognize the risks of cyber connectivity and we need to work together to protect ourselves.”
http://www.joc.com/maritime-news/container-lines/belt-and-road-ease-container-shipping-overcapacity_20170713.html?destination=node/3335526
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China’s growing cold chain needs better industry standards
Jul 13, 2017 | Journal of Commerce
By Greg Knowler
China’s cold chain is growing at a phenomenal rate and placing increasing pressure on a temperaturecontrolled supply pipeline that urgently requires actively enforced industrywide standards, better training, and a new collaborative approach if it is to cope.
Revenue from cold chain logistics in 2016 reached $3.5 trillion, according to Wu Junyang, deputy director at the economy and trade department of the National Development and Reform Commission (NDRC).
He told the Global Cold Chain Summit in Dalian that among the quarter of a million logistics companies that operated in the country, 3,500 were offering cold chain logistics. Storage capacity in 2016 grew to 42 million tons, 2.3 times of that of 2010, and 150,000 refrigerated trucks were in service last year.
Even as rising incomes ramp up cold chain volume, the increasing demand is being accompanied by a need to ensure food safety after a series of scandals, and the NDRC and the Ministry of Transport in April issued a document aimed at accelerating measures to improve the storage and transportation of food.
Wu said these measures will ensure that by 2020, the cold chain logistics industry would have better infrastructure, be using improved technology and would be following stricter regulations.
“The supervision of the cold chain industry needs to be stepped up. Standards need to be improved and we are encouraging firms to innovate and use technology to develop their temperature monitoring systems,” Wu said.
“Companies in the cold chain should pay more attention to the expiry date while the government streamlines the administrative procedures and optimize customs clearance, continuing to use the fast-pass for cold chain vehicles.”
Wu’s address was followed by a panel of cold chain leaders that engaged in an intense session of navel gazing as they pondered the challenges and opportunities present in the industry. Marco Zhang, chairman and CEO of Shanghai Exfresh Logistics Technology, said China's cold chain faces immense challenges.
“Consumers are changing. They are younger and use multiple channels and applications both on and offline in purchasing temperature-sensitive products,” he said. “The fresh e-commerce market is huge, but so are the challenges. From farmer to table, there is no one company that can manage the entire chain so all those involved in the process need to collaborate and build a cold chain ecosystem.
“But it has to be safe and credible to work, with each company focusing on what it is good at and sharing data, which means IT within the sector will become increasingly important.”
Tang Yan, executive president of seafood processing and transporting Zoneco Group, agreed. “The demand for fresh goods in China is high, so there needs to be some kind of industry platform where all participants can share data. Companies up and down the supply chain should collaborate,” she said.
Lu Yin, innovation officer at the Danish Consulate in Shanghai, also highlighted the need to collaborate, pointing out that the cold chain was a complete system stretching from the farm to the consumer’s fridge and had to be viewed as such. “There cannot be any break in the cold chain or the product will spoil,” he said.
However, the greater collaboration, innovation and greater use of data analysis and technology that the industry leaders were calling for would come at a price, warned Katsuhiko Umetsu, senior executive officer for Yamato Holdings.
“The more technically advanced a company gets, the more education and training is needed for the people running the operations, otherwise the ecosystem everyone is calling for will not be achievable,” he told the summit.
“A company will need to keep robust cold chain standards, which means standardizing training of its front line people.”
The lack of industrywide standards in China’s cold chain remains a problem. Up to now, standards have been mostly recommendations from the government, but there is a strong push by the authorities to implement compulsory measures in the storage and transportation of temperature sensitive goods.
David Shen, vice president of the China supply chain for McDonald’s, said compulsory standards needed to be adopted by those in the cold chain logistics industry and companies had to emphasise quality.
Cindy Qian, director of business development for food distributor Sysco, also said there was an urgent need for standards to be set out, with full traceability of fresh products that was needed to ensure food safety.
“Customers need to see that a product is fresh and the description is equivalent to what was seen by the customer online,” she said.
But even with the challenges brought by rapidly rising volume, there remained widespread optimism at the summit that China’s cold chain was heading in the right direction and benefitting from rapidly growing e-commerce that requires fast and efficient delivery. As little as 10 years ago the industry was largely primitive, and while in more remote areas the last mile delivery can still be via taxi or on the back of a scooter, this is changing fast.
http://www.joc.com/international-logistics/logistics-providers/china%E2%80%99s-growing-cold-chain-needs-better-industry-standards_20170713.html?destination=node/3335521
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No rapid rise of US beef exports to China expected as market opens
Jul 14, 2017 | Journal of Commerce
By Greg Knowler
The first consignment of US beef to be imported by China in 14 years is just days away from arriving in the country following a trade deal reached between the two countries that once again puts the meat on Chinese tables.
On June 12, US beef was added to the list of products eligible for export to China after a meeting in Florida between Chinese president Xi Jinping and US president Donald Trump in April. It ended a long-standing ban on US beef imports by China following a 2003 case of mad cow disease in the United States.
However, although the news was received with excitement by China’s cold chain industry and meat distributors who are expecting growing interest from consumers, the short-term demand as the market opens is not expected to be high.
“China is not good at cooking steak,” was how Zhang Taixi put it. The general manager of China’s largest meat processing company Shuanghui Group told the Global Cold Chain Summit in Dalian that a survey conducted by the company found that the country's consumers had little appreciation for steak.
“It will take time to develop this market because usually the beef that is consumed goes into hotpots or cold dishes and the percentage of steak consumption is still low. Maybe in 10 years there will be an increase in consumption, but it will not be a rapid one.”
The largest markets for containerized US beef exports, which rose 5.9 percent year over year in the first five months of 2017 to 28,000 TEU, are Japan, South Korea, Hong Kong, and Taiwan, which together controlled 78.8 percent of the market in 2016, according to PIERS, a sister product of JOC.com. Total containerized US beef exports rose 12.8 percent year over year in 2016.
Most of the beef imported by China goes into the meat processing factories with just 20 percent consumed by the public. But the beef being imported from the United States is far more expensive than from Brazil or Australia, China’s main suppliers.
US Meat Export Federation president and CEO Philip Seng explained why. He said it was important to note that the market-opening agreement included requirements that would involve a period of adjustment for the US industry.
Those requirements include insistence from China’s General Administration of Quality Supervision Inspection and Quarantine that the US beef is from cattle younger than 30 months and that the animals must be traceable to their birth farm to ensure the safety and quality of the imported meat. The regulator said cattle should be born and raised in the United States, or born in Canada or Mexico and slaughtered in the United States, and should not be the offspring of those that were suspected of having mad cow disease.
“Meeting these requirements will add costs and this will mean that US beef is priced at a premium compared to other suppliers in the market,” Seng said. “With that said, China holds exciting potential for the US beef industry and for buyers in the market who have waited a very long time for the return of high-quality US beef.”
Yang Miao, director of Meat International Group, said US beef was labeled as high quality and a premium product and as a result was expensive, and Chinese consumers had higher expectations of quality and safety of the meat than they did for Brazilian or Australian products.
“With the US market opened there will be less smuggled beef entering China and that will help with food safety,” he said. “But in the short term, the demand for US beef imports will not be very high, although it will grow and China will in the future become a large procurer of beef,” he said.
US beef exporters can also benefit from rising Chinese wages, which on average rose 7 percent year over year in urban areas last year, according to IHS Markit data.
Frank Fang, senior director supply chain for Wal-Mart (China), said even though US beef cost more than meat imported from other countries, it would not slow a growing taste for steak among more affluent consumers.
“The beef is good quality and there is increasing demand from the high end of the market,” he said. “We may be a pork-eating nation but China is consuming more meat and beef consumption is increasing.”
http://www.joc.com/regulation-policy/trade-policy/international-trade-policy/no-rapid-rise-us-beef-exports-china-expected-market-opens_20170713.html?destination=node/3335541
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More Ports Look to LNG Bunkering
Jul 13, 2017 | The Maritime Executive
Port of Ningbo-Zhoushan, Port of Marseille Fos and Port of Vancouver have joined the Port of Singapore and seven other organizations to participate in an international LNG bunkering port focus group.
The aim of the group is to strengthen the network of LNG bunker-ready ports and to bolster efforts towards enabling the uptake of LNG as marine fuel.
With this expansion, the network will comprise a total of eleven ports and maritime administrations across Asia, Europe and North America. The focus group was first formed in 2014 by Maritime and Port Authority of Singapore (MPA), Antwerp Port Authority, Port of Rotterdam and Port of Zeebrugge. In 2016, Asian representation in the LNG bunkering focus group increased with the joining of Ministry of Land, Infrastructure, Transport and Tourism, Japan and Ulsan Port Authority, Republic of Korea.
SEA/LNG
Separately, Yokohama-Kawasaki International Port Corporation (YKIP) has joined SEA\LNG, the multi-sector industry coalition aiming to accelerate the widespread adoption of LNG as a marine fuel.
SEA\LNG and its member organizations continue to advocate for the need to collaborate, demonstrate and communicate on key areas such as safety, regulation, emissions and the economic case, to provide the confidence and demand required for an effective and efficient global marine LNG value chain by 2020.
SEA\LNG chairman and executive vice president of TOTE Inc., Peter Keller said: “Ports around the world are taking LNG seriously. As customers begin to adopt LNG as a viable, scalable solution, ports are recognizing that it’s an essential part of a strong future fuel offering.”
Japan is the world’s biggest importer of LNG, with 35 regasification terminals. In 2016, it accounted for about 34 percent of global imports, representing some 86 million tons of LNG. As such, Japan, is well placed in terms of both infrastructure and supply to become a major LNG bunkering hub.
Masamichi Morooka, President and CEO of Yokohama-Kawasaki International Port Corporation said: “From a geographical perspective, the ports of Yokohama and Kawasaki are perfectly placed to serve as the first or last bunkering points on the Asian side of the Trans-Pacific route. Since August 2015, the port of Yokohama has accommodated an LNG-fuelled tugboat, NYK-owned Sakigake, which has provided us with LNG bunkering experience and enabled YKIP to develop its understanding of technical improvements and safety management. Working with the SEA\LNG coalition, we aim to play our part in encouraging adoption of LNG across the globe and increase awareness of the advantages for ports.”
YKIP is the second Japanese organization to join the SEA\LNG coalition in a matter of weeks, following the recently announced addition of Marubeni Corporation. This takes the latest membership tally to 26 and highlights the industry’s growing recognition of LNG as a cost effective, safe and more environmentally friendly long-term fuelling solution.
SEA\LNG brings together key players from across the supply chain, including shipping companies, classification societies, ports, major LNG suppliers, downstream companies, infrastructure providers and original equipment manufacturers to address market barriers and transform the use of LNG as a marine fuel.
SEA\LNG is a not for profit collaborative industry foundation and its members include: ABS, Bureau Veritas, Carnival Corporation & plc, Clean Marine Energy, DNV GL, Eagle LNG Partners, ENGIE, ENN Group, Gas Natural Fenosa, GE, GTT, JAX LNG, Keppel Gas Technology, Lloyd’s Register, Marubeni Corporation, Mitsubishi Corporation, NYK Line, Petronet LNG, Port of Rotterdam, Qatargas, Shell, Total, TOTE Inc., Toyota Tsusho, Yokohama-Kawasaki International Port Corporation (YKIP), and Wärtsilä.
The SEA\LNG coalition was established by Xynteo, a platform for galvanising leaders and catalysing ideas – and fusing them into new projects, for new growth.
https://www.maritime-executive.com/article/more-ports-look-to-lng-bunkering
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