As you might remember, in response to a thermonuclear atomic weapons test by North Korea Treasury Secretary Steven Mnuchin is now in the process of writing additional sanctions he will guide into the hands of U.N. Ambassador Nikki Haley.
However, as a direct result of the escalation from the DPRK, we can easily predict the final draft will not just target North Korea, but will more substantively target North Korea’s economic enablers.
This is where things get super interesting because all prior U.N. action has built upon itself to these specific ‘enabler’ state sanctions.
Through two rounds of Security Council resolutions both China and Russia have supported the economic sanctions, knowing they would use various workarounds to continue their duplicity. However, now those sanctions become a risk to the economies of China and Russia because Secretary Mnuchin is likely to use the weight of the dollar in trade contracts as the trigger for sanctions against China and Russia.
Here’s where the real fun begins.
There’s no way China is going to stop supporting their proxy province, North Korea. The entire Beijing approach (to fighting Trump’s economic battle against them) has been through the use of Kim Jong-un to try and gain some economic leverage.
As a consequence there’s no way China will support sanctions against DPRK enablers; that would essentially be against Beijing itself.
So now, with sanctions anticipated to target the enablers, China must break away from supporting the Security Council; but they can’t break away freely without running the risk of dropping the panda mask. So they need Russia to keep up pretenses on their behalf.
New York – The United States on Monday flatly rejected a proposal from China and Russia on how to lower tensions on the Korean Peninsula, which is likely to make it difficult for the United Nations Security Council to agree on a response to North Korea’s hydrogen bomb test over the weekend.
U.S. Ambassador to the U.N. Nikki Haley said the U.S. would be circulating a proposed resolution on North Korea this week, and would push for a vote next week.
While it’s not clear what that language will say, both China and Russia made it clear they were unlikely to support more sanctions, and instead played up their joint call for North Korea to stop its military aggression in return for both South Korea and the U.S. to stop their military exercises.
Haley called that idea “insulting.”
“The idea that some have suggested, a so-called freeze for freeze, is insulting,” she said. “When a rogue regime has a nuclear weapon, and an ICBM pointed at you, you do not take steps to lower your guard. No one would do that. We certainly won’t.”
Instead, she hinted at the idea of tough sanctions that would be imposed on any country that does any business with North Korea.
But after she spoke, both Russia and China made it clear they don’t like that idea. (read more)
Communist Beijing has boxed themselves into this inescapable cycle. The reason they keep authorizing Kim Jong-un to take action is simply because China has no alternative leverage to use against President Trump. China has nothing in their economic arsenal they can use to hit back against President Trump, so Beijing keeps using North Korea in an attempt to create leverage.
However, President Trump doesn’t play along with the bluff, he knows every card China is holding. Trump knows China has no substantive economic leverage against the U.S., and Trump also knows China has boxed themselves into this cycle. It’s a ridiculous three step process.
¹China tells DPRK to do stupid thing. ²DPRK does stupid thing. ³Trump hits China with economic punishment for stupid thing.
This cycle has been ongoing for months now, yet the media apparently doesn’t notice it. Each time Kim Jong-un does a stupid, Donald Trump slaps Xi Jinping.
The reason this Trump economic approach is so effective is because there’s an endless supply of economic things President Trump can do to punish China (closer economic ties and better trade deals w/ India; removal of China’s MFN trade status; recognition of Taiwan; increased economic relations with ASEAN, etc.), and yet virtually nothing China can do economically in return.
Communist China’s geopolitical economic relationship with the U.S. can be replaced with Democratic India and/or a host of ASEAN allies (S-Korea, Japan, etc.)
Remember, China is seeking conquest through economic power. China must be confronted economically. China must be defeated economically. The moment China sees economic defeat, it will act differently. China will call for six party talks.
President Trump can play out this action/response dynamic as long as it takes to reach economic victory. There is no substantive downside in the economic battle for the U.S.
Beijing is referencing what has worked for them in the past without realizing they are not up against the same adversary. The resulting economic damage in this cycle hurts China more each time by weakening Beijing’s economy.