Posted July 14, 2017 22:14:15

Photo: Donald Trump ahas signalled growing impatience with China over North Korea. (Reuters: Carlos Barria)

Frustrated 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 US officials say.

The US 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, one of the officials said, declining to name the targets.

It would leave larger Chinese banks untouched for now, the official said.

The timing and scope of the US action will depend heavily on how China responds to pressure for tougher steps against North Korea when US and Chinese officials meet for a high-level economic dialogue in Washington on Wednesday, the administration sources said.

President Donald Trump and his top aides have signalled 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.

US officials have also warned China could face US trade and economic pressure — something Mr Trump has held in abeyance since taking office in January — unless it does more to restrain its neighbour.

Australia could present a "tactical opportunity" for North Korea because we don't have a missile defence system. And that's just the start of our problems.

The so-called secondary sanctions now being considered are a way for the US to apply targeted economic pressure on companies in countries with ties to North Korea by denying them access to the US market and financial system.

Word of the sanctions plan comes as US ambassador to the United Nations Nikki Haley seeks to overcome resistance from China and Russia to a UN 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 Mr Trump shared with Chinese President Xi Jinping at a Florida summit in April and which US experts have continued to compile for review, according to one of the officials.

Trump 'losing patience' with China

The Trump administration has yet to see what it considers a sufficient response from China.

"The President is losing patience with China," the official said, adding there would be a "more aggressive approach to sanctioning Chinese entities … in the not-too-distant future".

The White House declined to comment.

In Beijing, Chinese Foreign Ministry spokesman Geng Shuang reiterated China's opposition to unilateral sanctions outside the framework of the UN and said China had been fully enforcing UN resolutions.

Getting China's help on passing UN resolutions and then putting unilateral sanctions on China was like "abandoning one's benefactor upon achieving one's goal", Mr Geng added.

"What China enforces is United Nations resolutions, not the domestic law of certain countries."

US and UN sanctions have failed to deter North Korea from pursuing its nuclear and missile programs, and on Friday it justified its ICBM test as an exercise of its legitimate right to self-defence.

Photo: North Korea has been escalating its missile testing program. (Reuters: KCNA, file)

The North's KCNA news agency quoted an unidentified foreign ministry spokesman as denouncing US efforts for a new UN resolution as a "racket" fabricated by the US to evade its responsibility for having driven the North to "bolster its nuclear force".

"Should the UN 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 sounds warning on secondary sanctions

Though the sources stressed 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 US with a nuclear-tipped missile.

During a UN Security Council meeting last week, Ms Haley threatened secondary sanctions if the council could not agree on new sanctions — though she did not cite China by name.

Analysts and officials have described North Korea as "unpredictable", but Stan Grant writes that the Kim regime is anything but.

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 US 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 Mr 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 secondary sanctions were "not acceptable".

"Such actions are obstructing cooperation between China and the US and lead to questions about the real intentions of the US side," according to a transcript of his remarks from the Chinese embassy.

'We're not going to be paralysed into inaction'

The threat of further secondary sanctions on Chinese companies could complicate next week's US-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 US sources said.

North Korea could have a weapon capable of striking the US west coast within four years, according to a former CIA officer.

"They'd have to show they're really serious," the second official said.

"We're not going to be paralysed into inaction."

Mr 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 Mr Xi.

Shortly after their meeting, Mr Trump said he had told Mr Xi China would get a better trade deal if it reined in North Korea.

But in recent weeks, Mr 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 US Senate Banking Committee, Democrat Chris Van Hollen and Republican Pat Toomey, announced on Wednesday they would soon introduce legislation for North Korea modelled on the Iran secondary sanctions laws passed by Congress.

Photo: North Korea justified its ICBM test as an exercise of its right to self-defence. (Supplied: KCTV)

Reuters

Topics: donald-trump, world-politics, unrest-conflict-and-war, united-states, korea-democratic-people-s-republic-of, china