US, China agree to cooperate on N. Korea

Both sides are also targeting the finances of a Chinese firm suspected of assisting the North

NEW YORK • United States President Barack Obama and Chinese Premier Li Keqiang have agreed to step up cooperation in the United Nations Security Council and in law enforcement channels after North Korea's fifth nuclear test, the White House said.

China and the United States are also targeting the finances of Liaoning Hongxiang Industrial, a Chinese conglomerate headed by a Chinese Communist Party cadre which the Obama administration thinks has a role in assisting North Korea's nuclear programme, the Wall Street Journal (WSJ) reported on Monday.

UN diplomats say the two countries have started discussions on a possible UN sanctions resolution in response to the nuclear test earlier this month, but Beijing has not said directly whether it will support tougher steps against North Korea.

Mr Obama met Mr Li on Monday on the sidelines of the annual UN General Assembly session in New York. "Both leaders condemned North Korea's Sept 9 nuclear test and resolved to strengthen coordination in achieving the denuclearisation of the Korean Peninsula, including by invigorating cooperation in the United Nations Security Council and in law enforcement channels on North Korea," a White House statement said.

The US Department of Justice (DOJ) is preparing as early as this week to announce legal action against Chinese firms suspected of providing financial assistance to Pyongyang, the WSJ reported, citing officials familiar with the matter.

It said DOJ prosecutors visited Beijing twice last month to make their Chinese counterparts aware of alleged criminal activities being committed by Liaoning Hongxiang Industrial.

A social media post last week for the police in the north-eastern border province of Liaoning said that they were investigating the firm's alleged long-term involvement in "serious economic crimes" and that relevant suspects were cooperating.

China's Foreign Ministry said relevant departments were investigating the Liaoning Hongxiang Group and following the provisions of a UN resolution that imposed tighter sanctions on North Korea in March.

A report by the Asan Institute for Policy Studies in Seoul and the Centre for Advanced Defence Studies in Washington says it identified more than US$500 million (S$681 million) in trade from January 2011 to September 2015 between the North and the Liaoning Hongxiang Group.

"While no judgment is being made on the final use of these funds, trade at this volume is of particular note. By one estimate, this amount would have been almost enough to both fund North Korea's uranium enrichment facilities, and to design, make and test its nuclear weapons," the report said.

Certain assets related to the company, its founder and top executive Ma Xiaohong, and some of her relatives and associates have been frozen by the Chinese authorities in recent weeks, according to government and corporate filings cited by the WSJ. Government records say Ms Ma's investment in Hongxiang was frozen on Sept 2.

The Liaoning Hongxiang Group is also heavily involved in North Korea-related shipping, with Ms Ma and other people associated with the group owning and operating a combined fleet of 10 ships that regularly sail between the North and China.


A version of this article appeared in the print edition of The Straits Times on September 21, 2016, with the headline 'US, China agree to cooperate on N. Korea'. Print Edition | Subscribe