Businesswoman's fate a test of China's resolve on North Korea

The Friendship Bridge to North Korea in Dandong, China, the city where businesswoman Ma Xiaohong conducted trade that American officials say violated international sanctions.
The Friendship Bridge to North Korea in Dandong, China, the city where businesswoman Ma Xiaohong conducted trade that American officials say violated international sanctions.PHOTO: NYTIMES

DANDONG, China (NYTIMES) - Not long ago, Ma Xiaohong was the public face of China's trade with North Korea.

By age 44, she had built a commercial empire accounting for a fifth of trade between the communist neighbors. She was appointed to the provincial People's Congress, granted special privileges to export petroleum products to the North and feted by officials as a "woman of distinction."

Now, Ma's fate has become a test of China's willingness to support US President Donald Trump's efforts to throttle North Korea's nuclear ambitions.

Last year, US prosecutors indicted Ma on charges of using her companies to help North Korea evade international sanctions. After a briefing by US diplomats in Beijing, the Chinese announced their own investigation into Ma's main company.

Fifteen months later, however, it is unclear what has become of Ma. The government says it has not found evidence to support the US charges that she or her partners aided North Korea's weapons program. Although she remains under investigation for "economic crimes," it is not clear whether she was ever arrested or where she is now.

A review of Ma's case - involving interviews with officials, diplomats and others, as well as searches in corporate registries - underscored China's deep ambivalence as it has come under increasing pressure to enforce sanctions against North Korea.

While China is on the record opposing the North's pursuit of nuclear weapons, it is wary of being seen imposing punishments at the bidding of the United States, especially against its own citizens.

North Korea's agreement on Tuesday to send athletes to the Winter Olympics in South Korea next month, and to hold talks and other exchanges with the South, may have been symbolic and perhaps a cynical effort to buy time. Yet it suggested that the rising diplomatic and economic pressure, meant to deny it the financial and material resources needed to develop nuclear weapons and ballistic missiles, may have had some effect on the North's leader, Kim Jong Un.

Kim has given no signal that he would give up his nuclear ambitions, but after the North's initial overtures, Trump wrote on Twitter that the talks were evidence that "sanctions and 'other' pressures are beginning to have a big impact on North Korea."

China has shown a willingness to support tougher sanctions at the UN Security Council over the past year, but it has done so grudgingly. The reasons for that are historical and strategic. North Korea has long counted on China as its only real ally, for example, but some analysts argue that economic factors also play a part.

"The Chinese don't want to have to be doing this," said Ken E. Gause, an expert on North Korea with CNA, a research organization in Arlington, Virginia.

"There's a lot of money to be made on that border, and there are a lot of connections between the operators on the border and their patrons back in Beijing."

Ma's fate remains shrouded in mystery. There have been rumors of political intrigues and of sweeping arrests of customs officials, but few hard facts.

China has taken steps to shut down at least some of Ma's trading empire, freezing her shares of her main company, Dandong Hongxiang Industrial Development Co. Ltd., for example, according to a government registry.

The shares of three colleagues who were also charged by the United States were frozen for a time but later released, suggesting they no longer face criminal charges.

In the government's first statement on the case in a year, the State Council Information Office responded to questions from The New York Times by saying that Ma and others face investigation for "economic crimes."

However, the statement went on to say, referring to Ma's main company, that investigators "have not yet found evidence that the Dandong Hongxiang company and Ma Xiaohong et al are directly involved in North Korea's nuclear missile development activities."

The company's headquarters in Dandong, on the border with North Korea, has been shuttered since last spring, when the decorations for the Year of the Rooster that are still hanging on the entrance were put up for good luck.

Other subsidiaries linked to Ma continued to operate until very recently, providing revenue directly to the North Korean government. One is a joint venture with the North Korean government to operate a hotel, the Chilbosan, in Shenyang, the provincial capital 150 miles north of Dandong.

Ma is still listed as the deputy chair of the consortium between Dandong Hongxiang and the North Korea Liujing Economic Exchange Group.

After reporters from The New York Times visited and made inquiries about Ma's businesses, however, the hotel restaurant closed. That appeared to be in keeping with the latest round of sanctions, adopted by the Security Council in December.

China joined the council's other 14 members in imposing the new sanctions, which would also severely limit shipments of refined petroleum. Chinese officials point to such steps as a demonstration of its commitment to halting North Korea's weapons program.

China has already slashed imports of coal, silver and other commodities from North Korea, according to customs records. While North Korea continued to sell $270 million worth of prohibited goods in the six months that ended in August, according to the latest UN report on sanctions, trade along the border has witnessed a significant drop, distressing traders and plunging the region into recession.

The once-thriving trade across the border was what fueled Ma's rise, and the throttling of it now seems to have contributed to her fall.