published Sep 1st 2016, 5:00 pm, by The Editors

(Bloomberg View) —
Barack Obama and Xi Jinping have obvious disagreements over how to handle North Korea’s illicit weapons program. China is angry about U.S. plans to deploy advanced missile defenses in South Korea to counter the threat, while Obama faces pressure to sanction Chinese banks and companies that help sustain Kim Jong Un’s nuclear ambitions. But the two presidents still have plenty of room to cooperate on this issue, if they can zero in on actions that are in both countries’ interests.

North Korea’s successful recent launch of a sea-based ballistic missile is depressing proof that the country continues to improve its weapons systems, despite the punishing additional sanctions that the United Nations imposed in March. And it is indeed tempting to blame China.

Yet the evidence that China isn’t upholding the most recent sanctions is, at best, mixed; along the border, there are as many signs that China’s longstanding commercial ties with the North have frayed. While violations no doubt continue, at least some of them are probably due to local officials’ ignoring central government diktats — an all-too-familiar problem.

North Korea’s Nukes

In any case, it’s unrealistic to expect China to squeeze Kim hard enough to cause the North Korean regime to collapse. That’s simply not in China’s interests. Yet China does share the U.S. desire to prevent key nuclear and ballistic-missile technology from reaching the North.

The bad news, as new research points out, is that North Korea has recruited more sophisticated and capable Chinese middlemen to source and deliver such so-called dual-use technology. Rather than travel back and forth across the border, North Korean agents now live in China and work almost entirely through these intermediaries, using Chinese banks.

The good news is that this in theory makes it easier to disrupt the agents’ operations. Rather than demand that Chinese leaders abandon Kim’s regime, the U.S. should press them to rein in these middlemen as energetically as they would any other citizens who defy their authority. Xi’s busy anti-corruption investigators could expand their campaign to border areas to pursue bank officials, customs agents and others involved in the illicit weapons trade. Directing sting operations at counterfeiters and drug dealers could address a domestic law-and-order problem, as well as cut off some of the North’s sources of hard cash. Stronger signaling from Beijing could help discourage businessmen who might be tempted by North Korean money.

If the U.S. were to blacklist a Chinese bank or company, it would be better to first consult quietly with Chinese leaders, to prevent needless friction between the two countries. Other gestures might be more productive: The U.S. could offer to bolster China’s ability to inspect cargo at ports near the border and to track ship traffic to and from North Korea. American officials would want to simultaneously do more to help Southeast Asian governments monitor North Korean agents operating in their countries, so the weapons trade doesn’t just move south.

China may be in no mood to cooperate. But if its leaders really want to undermine the case for missile defense, they’d be wise to do all they can to make sure Kim’s missiles don’t work.

–Editors: Nisid Hajari, Mary DuenwaldTo contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net .

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