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[Editorial] China’s double face

Liaoning Hongxiang case could be tip of the iceberg

The case of Liaoning Hongxiang Group, a Chinese conglomerate suspected of engaging in banned business activities with North Korea, is yet another piece of evidence that China is allowing loopholes to develop in the UN-led sanctions against the North’s nuclear and missile provocations.

According to a South Korea-US joint study, six subsidiaries of the Chinese conglomerate have transacted with sanctioned Burmese and North Korean entities, have been associated with North Korean cyber operators, and have traded in various goods and services that raise proliferation concerns.

The report filed by the Seoul-based Asan Institute for Policy Studies and the Washington-based Center for Advanced Defense Studies said that one of the subsidiaries, Dandong Hongxiang Industrial Development Co., engaged in $532 million worth of trade with the North between 2011 and 2015.

What’s more noteworthy is that the subsidiary sent at least two shipments of aluminum oxide to North Korea as recently as September last year. Aluminum oxide can be used as a component to resist corrosion in gas centrifuges in the process of uranium enrichment.

This obviously breaches UN resolutions. News reports back up the findings, saying that Chinese authorities – at the request of the US — recently launched an investigation into the Liaoning Hongxiang Group.

A spokesman for the Foreign Ministry in Beijing confirmed the investigation. He said that China was investigating the “financial crimes and other unlawful acts” of the company in relation to UN resolutions against North Korea.

One can easily guess, however, that if it had not been pressed by the US, the Beijing government would not have thought about targeting the conglomerate. Given that the Chinese conglomerate is heavily focused on trade with North Korea, it is widely thought that Chinese authorities must have known about the recent transactions between the two sides.

This suggests that the case of Liaoning Hongxiang could just be the tip of the iceberg. Obviously, China wore two faces in dealing with North Korea.

In his farewell address to the UN General Assembly, US President Barack Obama said that “When North Korea tests a bomb, that endangers all of us and any country that breaks this basic bargain must face consequences.“

Shortly before Obama took the UN podium, North Korea claimed it had successfully tested what is believed to be a higher-caliber engine for an intercontinental ballistic missile. There is a pressing need to pressure China to plug the loopholes. While putting up international pressure on the Beijing government, key players like South Korea, Japan and the US may as well try to uncover a second and a third Liaoning Hongxiang so that Chinese authorities cannot avoid a crackdown.

Without these efforts, Obama’s pledge to make North Korea face the consequences of what it has done will go nowhere.
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