China’s largest state-owned bank closed North Korea's Foreign Trade Bank account on Tuesday over accusations that the bank was funding Pyonyang weapons programs. This step comes as a definitive sign that Chinese-North Korean relations are growing increasingly icy.
The U.S. Treasury has called the North Korean bank a “key financial node” helping Kim Jong-un's regime finance missiles and nuclear weapons development.
While China has historically stood as a stoic ally among North Korea's dwindling network of supporters, Beijing has signified a noticeable shift in policy in recent months. China joined U.S. Secretary of State John Kerry in April to issue a statement asking Pyonyang to abandon nuclear programs, and supported United Nations sanctions in an unprecedented move to pressure the former ally. China's recent support for such sanctions has, however, been perceived as wavering.
The recent closing of a major North Korean account provides some hope that China is growing increasingly wary of supporting the rogue regime. Bank of China is one of China's largest state-owned financial operations, and government authorities are said to provide political direction for its endeavors. The Wall Street Journal reports the recent decision to cut ties with North Korea's account was likely approved by top-level government officials under growing pressures regarding the unsavory practices of the North Korean bank. Chinese and U.S. actions against the bank have already had far-reaching impact for North Korea's bank, as Japan and Australia have recently followed suit and closed off accounts with the North Korean bank.
It remains unclear, however, just how influential this move will turn out to be. As Reuters reports, it is still unclear just how much of Chinese-North Korean trade (estimated to be a figure of around $6 billion) runs through North Korea's Foreign Trade Bank.
While many hope the key to normalization in the North Korean issue lies in squeezing the already crippling North Korean economy, the power of this most recent Chinese move may be more symbolic than financial. John Park of Harvard University’s Belfer Center sees the issue as a sign of diplomacy at work, recently claiming, “Bank of China, of all the Chinese banks, has to adhere to international sanctions because they have a reputation to uphold.’’
China's recent move provides hope that international diplomatic pressures may still prove useful tools in this otherwise hard-power crisis that continues to surprise many in its escalation thus far.