Signal of Secondary Boycott?
According to international news agencies, the local police authorities of the Liaoning Province of China began to investigate the Liaoning Hongxiang Group on September 16, claiming that its subsidiary Dandong Hongxiang Industrial Development has been involved in economic crimes for an extended period of time in trade relations with North Korea. The police authorities also froze the assets of Dandong Hongxiang Industrial Development, its founder Ma Xiaohong and her relatives and business partners.
Until recently, the Chinese government was rather passive in the face of the international community’s demand for sanctions on Chinese enterprises doing business with North Korea. Its different stance at this time is because of hard evidence presented by the United States. Recently, C4ADS, a Washington-based nonprofit research organization, said in its report that the Chinese company continued to export aluminum, aluminum oxide, ammonium paratungstate and tungsten trioxide to North Korea in spite of the possibility that these materials could be used for nuclear weapon and missile development. The report added that the company recorded a volume of trade with North Korea of US$532 million from January 2011 to September last year.
It is said that the Chinese government’s move is also to prevent secondary boycott that could have a negative effect on Chinese enterprises. Secondary boycott can be defined as pressure put on the private sector of a third country in trade relations with a country under international sanctions. The U.S. Senate is currently urging the Barack Obama administration to adopt the measure against Chinese enterprises and organizations supporting North Korea.
The Barack Obama administration was granted the discretion from the U.S. Congress in January this year, but has not used it for concerns about disputes with China. However, its position is expected to change as China showed a lukewarm attitude even after the fifth nuclear test of the North lately.