Chinese Traders Feel the Pinch From Sanctions

As Beijing enforces the latest North Korean sanctions, Chinese traders are beginning to feel the pinch—and they’re not happy about it. Financial Times:

Protests broke out among Chinese seafood importers on the border with North Korea this week as trucks bearing fresh crabs, molluscs and squid from the reclusive regime were turned away as new sanctions begin to bite.

“It was completely laughable,” said Lang Yulin, an importer from Hunchun, a Chinese city that borders North Korea. “We received the notice of the customs ban only half an hour before everything was totally shut down.”

Mr Lang said that because of the lack of warning, he has Rmb5m ($750,000) of seafood products held up on the North Korean side of the border.

Angered by the sanctions, Chinese seafood importers took to the streets this week to protest, some holding red banners saying: “Money earned from our blood and sweat is sitting on the bridge. Please, customs, let us go.”

A handful of protesting seafood importers may not make Xi Jinping quake in his boots, but the protests do illustrate Beijing’s larger sanctions dilemma. As North Korea’s largest trading partner, China has by far the most to lose from a vigorous application of sanctions (apart from the regime in Pyongyang itself). And though Beijing can surely weather the storm, the latest export bans will have an impact: they mean less seafood going to Chinese restaurants and consumers, less cheap coal powering China’s massive industrial sector, and a whole lot more angry businessmen who now find their livelihoods threatened.

For now, China seems to have calculated that such short-term economic pain is worth it. Cooperating with the export bans helps Beijing placate the United States, and the Chinese received important assurances from the American side in exchange for signing on to the sanctions. But as I wrote last week, that cooperative posture is conditional, dependent in part on U.S. intentions going forward. Secretary of State Rex Tillerson reportedly gave the Chinese reassurances that they described as the “Four Nos”: No desire for regime change, no desire to see the regime collapse, no accelerated reunification of the peninsula, and no desire to deploy U.S. troops into North Korea.

For that reason, the Chinese have surely noted with great interest the words of President Trump’s now-former chief strategist Steve Bannon, who admitted in an off-the-cuff interview with The American Prospect earlier this week that a military solution to the North Korean crisis is not in the cards. “There’s no military solution [to North Korea’s nuclear threats], forget it,” Bannon said. “Until somebody solves the part of the equation that shows me that ten million people in Seoul don’t die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about, there’s no military solution here, they got us.”

It’s hard to know with any certainty what probabilities Beijing was putting on Trump’s “madman” gambit with regards to North Korea, how they they will weigh Bannon’s apparent admission that it’s all just theater, and how all of that ultimately influences their calculus on playing ball.

China is unlikely to enforce sanctions simply to do the Trump Administration a favor—especially not when that same Administration is plotting a major trade war against China itself. That said, this does not mean that Beijing will suddenly stop enforcing sanctions, either. Beijing has its own reasons to keep doing so: China is clearly exasperated with its erratic neighbor and has shown some willingness to squeeze the regime, as with its restriction of fuel exports earlier this year. With Pyongyang acting more irresponsibly than ever, Beijing may believe that these further punitive sanctions are an effective instrument at this juncture to bring the North Koreans to the bargaining table and re-start the stalled six-party talks.

Still, history cautions against trusting China to strictly implement sanctions. If Beijing concludes that Trump is a paper tiger, and the sanctions’ economic pain mounts (along with public opposition to them), the Chinese leadership may decide not to vigorously enforce them. It would hardly be the first time that Beijing has proven a less-than-reliable partner in solving the crisis, and it will likely not be the last.

The post Chinese Traders Feel the Pinch From Sanctions appeared first on The American Interest.