China state media says US will 'pay' for 'unjust' sanctions

Key Points
  • China has come out strongly against new U.S. sanctions to pressure North Korea
  • China says it opposed "long-arm jurisdiction" imposed by any other country on Chinese entities and individuals
Chinese vendors sell North Korea and China flags on the boardwalk in the border city of Dandong, China.
Kevin Frayer | Getty Images

China has come out strongly against new U.S. moves to pressure North Korea with its foreign ministry opposing the "long-arm jurisdiction" of President Donald Trump's administration, arguing that Beijing has always met international obligations in containing its reclusive neighbor.

The Treasury Department on Tuesday announced new penalties against 10 entities and six individuals, mostly Chinese and Russian, for providing support to North Korea in ways that aided the rogue state's missile and nuclear weapons programs. The Treasury characterized the targets of its new sanctions as "third-country companies and individuals."

The decision came just a few weeks after Beijing and Moscow agreed to fresh United Nations sanctions on the North. It also came less than two months after the Treasury imposed sanctions on a bank, a shipping company and two individuals from China.

"The Chinese side opposes the unilateral sanctions outside the framework of the UN Security Council, especially the 'long-arm jurisdiction' imposed by any other country on the Chinese entities and individuals based on its own domestic laws," Chinese foreign ministry spokeswoman Hua Chunying said at a press conference on Wednesday.

"Long-arm jurisdiction" is a term for when authorities exercise jurisdiction over foreign entities. There has been considerable debate over the U.S. use of that practice.

China, Hua said, "always" implements North Korea-related resolutions of the United Nations Security Council "in their entirety" and fulfills its international obligation.

"Our efforts are there for all to see. We will investigate and deal with the Chinese enterprises and individuals in accordance with our own domestic laws and regulations provided that they are suspected of violating the relevant resolutions of the UN Security Council," she said.

State media joined the fray with, China Daily on Thursday saying the sanctions are "not a silver bullet."

"The US has long believed that sanctions are a silver bullet. But the majority of sanctions have not only failed but also caused humanitarian disasters in other countries," the newspaper said, adding that such "secondary sanctions" will have "little effect" in persuading North Korea.

Nationalistic Global Times was more aggressive, saying the U.S. will "pay for unjust ban on Chinese firms," which it claimed "severely violates international law."

"So far the U.S. sanctions have exerted little impact on China, but it breaks the rules and offends China," it added.

"The U.S. has acted beyond its authority and its unilateral sanctions are unreasonable. For one thing, how could Washington be confident about the illegal trade between China and North Korea? For another, who grants Washington the right to make judgments on which companies violate UN Security Council resolutions?" asked the paper.

International trade scholar Alex Capri said the Global Times claim of U.S. violating the law is complicated to assess.

"Any country, technically, can impose sanctions against another state as a form of 'coercive diplomacy', however, there is a considerable body of scholarly work that argues convincingly that this is a violation of international law," said Capri, who is a visiting senior fellow at the National University of Singapore's business school.

However, "only the U.S. and a handful of other states can effectively resort to this sort of realpolitik without real consequences," Capri added.

However, he noted, China has chosen to ignore The Hague Tribunal's ruling on its claims in the South China Sea, illustrating Beijing's "selective" interpretation of international law.

In its editorial on Thursday, the Global Times said that with new the sanctions, the U.S. aims to "tarnish the international image of China" and is not acknowledging its own responsibility in the North Korean issue.

"China has made the most efforts in sanctioning North Korea, while the U.S. has never shown appreciation to Chinese companies which suffered losses from the sanctions," it added.

Washington, Global Times warned, "had better restrain itself" as China "can choose whether and how to retaliate against the U.S. given how Chinese companies are hurt. The Chinese government has the obligation to speak for the country's legitimate companies."

While there may be contention about the fresh U.S. sanctions, IHS Markit's Asia-Pacific chief economist Rajiv Biswas said the superpower "can argue that it is acting to uphold sanctions on North Korea approved by UN Security Council Resolutions in its recent rounds of secondary sanctions announced in June and August."

This is as the third-country entities and persons targeted were assessed by the U.S. government to have breached the UN Security Council sanctions, which have to be implemented by all member states.

Meanwhile, China's strong response came as data pointed to a sharp slowing of trade between the two allies.

China imported and exported goods worth $456 million in July, down from $489 million in June.

The data, released by China's General Administration of Customs and analyzed by Reuters, showed that just 120 tonnes of gasoline were shipped from China to North Korea in July, 97 percent lower than a year ago. By comparison, the June figure was 8,262 tonnes.

Capital Economics said in a Monday note, however, that "China does not have a good record of maintaining sanctions on North Korea."

"China's 'carrot-and-stick' approach to North Korea is well documented," Capital Economics chief commodities analyst Caroline Bain wrote, citing a drop in petroleum product exports after missile tests.

"China has also banned imports at times to register its displeasure at North Korea's military aggression, only for trade to quietly resume after a cooling-off period," she added.

—Nyshka Chandran contributed to this article.