Rumblings from Dandong: Banks and Bayonets

By | February 24, 2016 | No Comments

Bank of Dandong | Image: Matthew Bates

Bank of Dandong | Image: Matthew Bates

In the wake of two galling North Korean nuclear and missile tests in early 2016, things are now moving awfully fast with respect to information emerging about China’s role in putting pressure — specifically, economic pressure — on the DPRK.

In the past few days, discussions at the United Nations in New York City and between Foreign Minister Wang Yi and US Secretary of State John Kerry in Foggy Bottom have brought some urgency to the task. How much has China already done when it comes to putting the screws on North Korea?

As ever, one has to read sources from along the Chinese-North Korean border to get a marginally better sense of what has been happening on the ground, as opposed to what is being said over conference tables in national capitols. Reporting on the border economic issues in the past three days seems to have been driven almost entirely a single report from the Dong-A Ilbo, a South Korean daily paper. Its February 22 report about a Chinese branch bank in Dandong clamping down on North Korean transactions seemed herald a kind of victory for sanctions advocates. 

The key claims of the report were based on two telephone conversations with a single employee in the Dandong branch of Industrial and Commercial Bank of China (中国工商银行; 중국공상은행), and an interview with a Chinese entrepreneur in Shenyang who was said to be involved in minerals deals with suddenly-nervous North Korean partners. The report has been discussed at some length by the ubiquitous sanctions advocate Joshua Stanton, a Washingtonian jurist and tireless blogger who makes some very good points about the possibility of tainted info: He notes that Chinese strictness with North Korea may have been “back-dated” and that elements of the Dong-A report are possible “Chinese misinformation,” ideas which I’ll engage with below.  

More importantly, the question of restrictions on North Korean financial transactions and business ties in Dandong has finally been engaged by Chinese state media itself. Yonhap provides a quick summary in English of the key source, a Huanqiu Shibao article from February 23 entitled “South Korean Media Says Some Chinese Banks have Frozen North Korean Accounts; ICBC Says it Will Respond After Checking” [韩媒称部分中国银行已冻结对朝业务工行称会核实后回应].

In it, we can see expressed by the “responsible official with a foreign trade portfolio” in Dandong that trade can “return to normal in May… depending on North Korea’s attitude.” Another person quoted involved in the import of North Korean coal also expresses his hope that “things can get back to normal.” No one is impolite enough to mention Jang Song-taek, but there was indeed a rebound in that spring of 2014. Bonnie Glaser makes the point more succinctly:

Meanwhile, yesterday, the PRC Foreign Ministry Spokesperson neither confirmed nor denied another rumor about Chinese firms ceasing cooperation with North Korean mineral interests in Dandong, simply saying she “didn’t understand” anything about it whatsoever.

As for the Dong-A report, it’s quite easy to find sources in Shenyang who will complain or otherwise pour scorn on the North Korean minerals business; a Friedmanesque two out of four taxi drivers I spoke with there in 2012 were positively loquacious (or was it vicious?) on the subject. In other words, there are plenty of people in the Xiyang minerals firm alone who would like to make Pyongyang squirm and would probably be more than happy to be interviewed without attribution to say whatever they need to say, particularly if those comments were useful to friends with good contacts in the provincial or central government.

It is also worth asking: if the North Korean accounts in China had been frozen or otherwise restricted back in “late December,” as per Dong-A Ilbo, wouldn’t we have heard about this well before the middle of February? Perhaps the Chinese news media is truly that watertight, thanks to increased guidance from the man China Daily modestly calls “the New Helmsman,” Xi Jinping. Maybe Daily NK and other outlets do not have access to the traders they ought to be speaking to. Maybe the North Korean state media did not want to display the Chinese knife in their collective back, even obliquely.

Andrei Lankov, who, typically, was not in the least clear about if he was physically in the city or not, says his contacts in the city of Dandong in late January 2016 seemed more worried about “slowdown in the Chinese economy and a decline in demand for North Korean exports, i.e. coal and other raw materials.” His point about commodities is well taken, and mirrors some further excellent long-range analysis by Christopher Green. Lankov, however, makes no mention of new difficulties in banking, which in the Dong-A narrative would have already been causing pain for a whole month.

Ultimately, the focus on banks and sanctions is somewhat limiting. After all, China is in the middle of reorganizing its military regions, and this means that things are shifting in the Shenyang Military Region which abuts North Korea.

Intelligent analysts in Pyongyang are surely trying to parse the studied ambiguity of this shift, and what it means for their future. Meanwhile, Chinese security writers like Wang Haiyun send out smoke signals that could mean anything about China’s changing plans for war on the Korean Peninsula — and Taiwanese commentators read his words as preparing for a “three-sided war” or a unilateral occupation of Pyongyang. But Wang also noted a need to bulk up forces on the northeastern frontier, and other bureaucracies like the oft-abused Ministry of Environmental Protection are doing their part to sound the alarm about the dangers of North Korea to the Chinese public.

Money matters, and suitcases of cash are indeed necessary and inconvenient for the regime in Pyongyang. But for the North Koreans who ply their trades south of the Tumen river, there are bayonets as well as banks over the border which need to be considered.

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