WASHINGTON • US Treasury Secretary Steven Mnuchin warned that the United States may impose additional sanctions on China if it does not follow through on a fresh round of United Nations restrictions against North Korea.
"If China doesn't follow these sanctions, we will put additional sanctions on them and prevent them from accessing the US and international dollar system - and that's quite meaningful," he said during an event at CNBC's Delivering Alpha conference in New York on Tuesday.
"North Korea economic warfare works. We sent a message that anybody (who) wanted to trade with North Korea - we would consider them not trading with us."
Another senior official of the Trump administration said any such "secondary sanctions" on Chinese banks and other companies were on hold for now to give time for China to show that it is prepared to fully enforce the latest and previous rounds of sanctions.
The UN Security Council added new sanctions against North Korea on Monday, banning its textile exports and capping fuel supplies, after leader Kim Jong Un's regime conducted its sixth and most powerful nuclear test on Sept 3.
A tougher initial US draft was weakened to win the support of China and Russia, both of which hold UN veto power. Significantly, it stopped short of imposing a full embargo on oil exports to North Korea, most of which come from China.
North Korea economic warfare works. We sent a message that anybody (who) wanted to trade with North Korea - we would consider them not trading with us.
MR STEVEN MNUCHIN, US Treasury Secretary.
"We think it's just another very small step, not a big deal," US President Donald Trump told reporters. "I don't know if it has any impact, but certainly it was nice to get a 15-to-nothing vote. But those sanctions are nothing compared to what ultimately will have to happen."
Asked if Mr Trump was considering other actions, including cutting off Chinese banks from the US financial system, White House spokesman Sarah Huckabee Sanders said: "All options are on the table."
In June, the US Treasury Department set sanctions on the Bank of Dandong in China, severing it from the US financial system, as it accused the bank of laundering North Korean cash.
Washington so far has mostly held off on new sanctions against Chinese banks and other firms doing business with the North, given fears of retaliation by Beijing and possibly far-reaching effects on the world economy.
Russia and China both say they respect UN sanctions and have called on the US to return to negotiations with North Korea.
North Korea said its test on Sept 3 was of an advanced hydrogen bomb and it was its most powerful nuclear blast by far. It has also tested a missile capable of reaching the US, but experts say it is likely to be at least a year before it can field an operational nuclear missile that could threaten the US.
The latest UN resolution calls on countries to inspect vessels at sea, with the consent of the flag state, if they have reasonable grounds to believe the ships are carrying prohibited cargo to North Korea.
It also bans joint ventures with North Korean entities, except for non-profit public utility infrastructure projects, and prohibits countries from bringing in new North Korean workers.
BLOOMBERG, REUTERS, AGENCE FRANCE-PRESSE