To punish NKorea, US weighs sanctions on Chinese companies


It’s an approach that’s paid off for the US in the past, especially with Iran, where American economic penalties helped drive Tehran to the nuclear negotiating table. Yet there are significant risks, too, including the possibility of opening a new rift with Beijing that could complicate US diplomatic efforts on other critical issues.

The renewed look at "secondary sanctions" comes as Washington seeks a forceful response to North Korea’s test this week of an intercontinental ballistic missile that could strike the United States. Few are advocating a military intervention that could endanger millions of lives in allied South Korea across the border. But options for turning the screw on the North financially also are imperfect.

Already, a wide array of US and international sanctions target North Korean entities and officials, making it illegal for Americans to do business with them.

The US also has pursued companies outside North Korea accused of surreptitiously helping the communist country, such as a small Chinese bank the US penalized last week for allegedly laundering money for North Korea.

The sanctions effectively deterred European firms from doing business with Iran and commercial powers such as China and India were encouraged to buy less Iranian petroleum.

North Korea’s isolation, which is far greater than Iran’s was, could make it even more susceptible to such pressure. China accounts for about 90 percent of North Korea’s trade.

But China has leverage, too, which is why previous US administrations have held back. China is now the world’s second-largest economy, it holds trillions of dollars in US debt and its companies are increasingly tied financially with the West.

And angering Beijing could lead to unpredictable responses in places like the South China Sea, where Beijing has various territorial disputes with America’s allies and partners in Southeast Asia.

"It will put a magnifying glass on Chinese businesses that the Chinese government may not want," said Doreen Edelman, an attorney at Baker Donelson who specializes in sanctions compliance.

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