China rejects North Korean coal shipments after missile test and U.S. pressure

China is turning back shipments of North Korean coal from its ports, a sign of Beijing’s growing concern over the nuclear weapons capability of its wayward neighbor.

On April 7, Chinese trading firms received orders to send coal shipments back to North Korea, according to a Reuters report. Two million metric tons of North Korean coal are now stuck at ports in China. The orders came after North Korea fired a ballistic missile that landed in the Sea of Japan on April 5, the latest in a series of similar tests that have heightened worries the hermit kingdom will launch a nuclear attack.

North Korea is heavily dependent on China to buy its coal – which is by far its most important export, comprising around 40 percent of its total exports. Most of that coal goes to China, making Beijing’s compliance with U.N. sanctions key to curbing North Korea’s nuclear ambitions.

The decision to reject North Korean coal shipments underscores China’s delicate balancing act: it hopes to avoid the isolated nation’s total collapse but remains unwilling to support its military ambitions.

China fears that harsher sanctions may destabilize its northern neighbor, which could potentially send millions of refugees over the border. But recent missile tests – and growing international pressure – have only narrowed Beijing’s options.

North Korea relies heavily on China to keep its sick economy on life support but relations between the two communist countries are fraught. Beijing has no desire to be drawn into conflict with South Korea or the United States, North Korea’s sworn enemies. Meanwhile, ideological divisions between the two countries have widened since China began to open and reform its economy in the late 1970s, reducing Beijing’s political sway over its totalitarian neighbor though their economic relationship remains strong.

The new directive ordering Chinese firms to reject North Korea coal coincided with President Donald Trump’s meeting last week with Chinese President Xi Jinping. Prior to the meeting, the first between the two leaders, senior State Department officials emphasized that encouraging China to use economic leverage to curb Pyongyang’s nuclear program would be a priority for the U.S. president, and that coal would be an important conduit of leverage.

Late last year, the United States warned that it would blacklist Chinese firms dodging sanctions to do business with North Korea. In March, Secretary of State Rex Tillerson called for a “new approach” to Pyongyang but gave no details. But Beijing’s tougher showing against North Korean coal likely has more to do with the looming geopolitical spectre of a nuclear-capable Pyongyang than with U.S. pressure.

China has not historically fully cooperated in choking off economic support for North Korea. In December, China exceeded the new U.N. cap on North Korean coal exports, citing a “time lag” in implementing new policy. That month, North Korea exported two million metric tons, more than double the allowed amount.

Then in February, China announced a ban on all imports from North Korea. But a confidential U.N. report obtained by Foreign Policy in February revealed that, while Beijing has given lip service to international sanctions over the past year, numerous Chinese firms have served as front organizations allowing North Korea entry to international financial markets – a state of affairs to which Beijing may have turned a blind eye.

China’s bloated steel industry relies in part on North Korean coal, and has turned to the United States to bridge the gap created by sanctions. In February, Chinese imports of U.S. coking coal shot up to more than 400,000 metric tons, a shot in the arm for the weak U.S. coal industry and for President Trump, who has promised to revive it.