U.S. Readies More Sanctions Against Chinese Entities Over North Korea

By Ian Talley Features Dow Jones Newswires

The U.S. soon will issue new sanctions against Chinese entities for violating United Nations sanctions against North Korea, a senior State Department official said Tuesday.

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Susan Thornton, acting assistant secretary of the State Department's East Asian bureau, told a Senate Foreign Affairs subcommittee the Treasury Department shortly will be targeting more Chinese entities involved in supporting Kim Jong Un's regime.

Ms. Thornton said the escalation in economic pressure follows the failure of Beijing to take action on its own against Chinese firms and individuals the U.S. warned were in violation of the U.N. sanctions.

The U.S. is pushing the U.N. Security Council to approve fresh punitive actions against North Korea in the aftermath of a July 4 test of a new intercontinental ballistic missile with the potential to reach Alaska.

But amid complaints by the U.N.'s own experts that sanctions compliance among the institution's member countries has been inadequate, many U.S. analysts say such a multilateral strategy has failed to put a dent in Mr. Kim's aspirations for a nuclear weapon that can strike the U.S.

That is one reason Congress has rallied behind legislation that will require the administration to levy tougher sanctions against North Korea as part of a larger sanctions bill that also targets Russia and Iran. It also accounts in part for the unilateral U.S. action.

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"We're definitely in the process of trying to elevate that pressure and change the calculus," Ms. Thornton said.

China, a North Korean ally that shares a long border with the country, is the nation's biggest trade partner. Analysts say cutting off financing for Pyongyang's weapons program and military requires ratcheting up sanctions on Chinese banks, firms and individuals.

"The Chinese are now very clear that we're going to go after Chinese entities if need be," Ms. Thornton said.

The Chinese embassy in Washington didn't respond to requests for comment, but Beijing has said it opposes U.S. unilateral sanctions against North Korea.

Although administration officials have said they are not targeting China's government, the State Department's senior East Asia official said Beijing needed to do "a lot more work" implementing U.N. sanctions, including stopping illicit cross-border trade flows and tracking financial transactions.

But while many U.S.-based analysts are calling the administration to roll out a comprehensive sanctions strategy, Ms. Thornton said Washington will move gradually.

"Ratcheting up sanctions pressure is not like a cobra strike, it's definitely a slow squeeze, a slow tightening of the screws," she told the subcommittee.

In a major new phase of unilateral sanctions, the U.S. Treasury last month move to cut off Chinese Bank of Dandong from U.S. financial markets. The move, while only targeting one small bank, is meant to chill financing for North Korea more broadly by sending a signal to other institutions facilitating the regime that they could lose access to the world's most important financial market.

But many U.S. analysts say only an Iran-style sanctions regime -- where the administration effectively cut off the flow of dollars into the country over the last decade -- will force Pyongyang to negotiate a halt to his nuclear and ballistic missile development.

Write to Ian Talley at ian.talley@wsj.com

(END) Dow Jones Newswires

July 25, 2017 20:30 ET (00:30 GMT)