Hawks in Washington want to impose sanctions on Chinese banks that may have dealings with North Korean companies, the SCMP reports.
Chinese banks will be closely watching the ongoing slanging match between Washington Pyongyang over sanctions by the US on North Korea, as they could be hard hit should hawkish voices prevail and economic measures on the DPRK become tighter.
Some of these voices in the United States have suggested that so-called secondary sanctions should be imposed on Chinese banks that hold money for companies that do business with the DPRK .
Senator Chris Van Hollen told US cable news network MSNBC on Thursday: „We say to China, ‚You have a choice whether you do business with North Korea, or you do business with the US‘, but you can’t do both.“
In July, Van Hollen sponsored a bill that would impose secondary sanctions targeting banks that did business with North Korean entities.
Sino-North Korean trade was worth US$2.6 billion in the first half of this year, according to Chinese customs figures, with trade in oil and coal being key components.
A UN report from earlier this year alleged that North Korean banks and firms have maintained access to international financial markets through a network of Chinese-based front companies.
Coal exports from North Korea have since been stopped under UN sanctions, and the UN Security Council (including China) unanimously agreed further sanctions last Saturday.
The most recent agreement seems to have protected the Chinese banks in the short term.
„The decision by the Chinese to sign up to UN sanctions on Saturday was a trade off to prevent secondary sanctions being imposed by the US on large Chinese corporates or banks, “ said Andrew Gilhom, director of analysis greater China and North Asia, at Control Risks.
However, with the rhetoric coming out of the White House growing increasingly intense, the United States may return to the topic of secondary sanctions if it feels the Chinese authorities are not providing the help the US believe it needs.
„If secondary sanctions were brought in against Chinese banks, they may have little choice but to comply, “ said Jessica Bartlett, a senior associate at Freshfields Bruckhaus Deringer based in Hong Kong.
„US regulators have the ultimate weapon of forbidding a bank from clearing US dollars, and since the vast amount of trade is conducted in dollars that would make it near impossible for many Chinese banks to do business, “ she said.
