The United States blacklisted a small Chinese bank accused of illicit dealings with North Korea on Thursday, escalating the pressure on Beijing to rein in its wayward ally amid increased signs of frustration among President Trump and his top advisors with China's diplomatic efforts.
The Treasury Department declared the Bank of Dandong a "primary money-laundering concern," proposing to sever it entirely from the U.S. financial system, pending a 60-day review period. Although Trump's treasury secretary said the move didn't target China, it comes a week after the president lamented that China's promise to help with North Korea "has not worked out."
Trump had been leaning on President Xi Jinping to help stop the North's development of nuclear weapons before they can threaten the U.S. homeland. A main focus of the coordination has been getting China to fully enforce international sanctions intended to starve North Korea of revenue for its nuclear and missile programs.
The U.S. action is likely to anger China, which handles about 90% of North Korea's external trade and whose banks and companies are said to provide Pyongyang access to the U.S.-dominated international financial system.
The sanctions bar Americans from doing business with Bank of Dandong, which is based in a northeastern Chinese city on the North Korean border that serves as a gateway for trade with the isolated nation. The U.S. on Thursday also slapped sanctions on a Chinese shipping company and two Chinese people that it said have facilitated illegal activities by North Korea.
Treasury Secretary Steven T. Mnuchin said the U.S. still wants to work with Beijing on combating the North Korean threat.
"We are in no way targeting China with these actions," Mnuchin said at a White House news briefing.
The punitive steps were presaged by a tweet from Trump last week reflecting dissatisfaction with Beijing's efforts.
"While I greatly appreciate the efforts of President Xi & China to help with North Korea, it has not worked out. At least I know China tried!" Trump tweeted on June 20.
The Trump administration may be struggling to maintain international pressure on Pyongyang.
The president was to meet for the first time Thursday with South Korea's new leader, President Moon Jae-in, who has long advocated outreach to North Korea. His predecessor had staunchly backed Trump's harder line.
Mnuchin said the Bank of Dandong has facilitated millions of dollars of transactions for companies involved in North Korea's weapons of mass destruction and ballistic missile programs.
Anthony Ruggiero, a sanctions expert and former Treasury Department official, described it as a small Chinese bank "sitting at the heart" of trade between North Korea and China.
"This is a strong message to Chinese leaders that the Trump administration will act against North Korea's sanctions evasion in China," he said.
The other targeted Chinese entities are:
—Dalian Global Unity Shipping Co., which the Treasury Department accused of transporting 700,000 tons of freight annually, including coal and steel products, between China and North Korea. It cited a United Nations expert panel as saying the company has violated a ban on trade in luxury goods with the North.
—Chinese national Sun Wei, said to have been running a cover company for North Korea's Foreign Trade Bank, which is already subject to U.S. sanctions.
—Chinese national Li Hong Ri, said to have established several front companies that end up benefiting Koryo Bank, a U.S.-sanctioned conduct for financial transactions on behalf of North Korea.