US Risks Possible Economic War with China over DPRK Sanctions

As the US continues to desperately look for a way to punish the Democratic People’s Republic of Korea (DPRK) for working towards a means to defend itself from US imperialist aggression, they’ve decided that they’ll place pressure on other countries. Right now they’ve gone to the UN Security Council and demand new sanctions against the country.

The new sanctions cap the current number of workers overseas but do not force those already abroad to return home. Interestingly the US claims that the money from foreign workers goes into the weapons program, a claim with no evidence, and frankly a logical basis. Exports have also been banned including coal, iron, iron ore, lead ore and seafood. A cap of 2 million barrels of oil has been placed on the country which threatens to affect all sectors of the economy. The DPRK’s textile industry was also targeted.

The DPRK has adamantly rejected these actions and has refused to flinch on their weapons program. “Neither shall we flinch even an inch from the road to bolstering up the nuclear forces chosen by ourselves unless the hostile policy and nuclear threat of the U.S. against the DPRK are fundamentally eliminated,” said the DPRK’s foreign minister, Ri Yong-ho.

Due to the refusal of the DPRK to lay itself open to invasion by the US, the US has decided to pressure other countries into harming the DPRK. The US has threatened to place sanctions on the DPRK’s closest trading partner, China. repeatedly they have accused China of violating sanctions they are legally obligated to enforce. As usual, no evidence of any such violations has been made public. The US has gone so far as to have U.S. Treasury Secretary Steve Mnuchin threaten to cut off Beijing’s access to the US financial system.

“North Korea economic warfare works,” Mnuchin said Tuesday at the Delivering Alpha Conference in New York City. “We sent a message that anybody who wanted to trade with North Korea – we would consider them not trading with us.” Mnuchin added, “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.”

The idea of blocking China from the US financial system is simply facetious. China and the US are each other’s largest trading partner. Currently, the US has a $347 billion trade deficit with China. Any attempt to destabilize that flow of goods and services would be practically suicide for the US. Others have suggested that Mnuchin was referring to Chinese purchases of US dollars or an ownership of $1.10 trillion as of July 2017. China needs to make purchases of these dollars to boost its value. Doing so makes Chinese exports to the US more would spark a retaliation from China which could be devastating. In such a situation it is laughable that the US could actually harm China in this way.

The most likely response from China would be to sell a portion of the massive US debt it holds. Doing so would drastically increase interest rates slowing US economic growth hurting the entire economy. How widespread and intense the damage would be is reliant upon how much debt China sold off. China has did it before, trading off US debt to purchase gold holdings. but it couldn’t call it all in, doing so would destroy the global economy along with China.

It seems for the most part that the US is playing a dangerous game in threatening China. It’s a game that eventually no one would win in the long run.