North Korea’s Complex Sanctions-Evading Network Could Be Defeated by ‘Targeting a Few Chinese Firms’

June 13, 2017, 5:34 AM UTC
This undated picture from North Korea's official Korean Central News Agency (KCNA) on May 22, 2017 shows North Korean leader Kim Jong-Un (C) inspecting the test-fire of a ground-to-ground medium-to-long range strategic ballistic missile Pukguksong-2.
KCNA—AFP/Getty Images

North Korea’s effort to circumvent international sanctions on its nuclear and missile programs is complex but could be defeated by targeting relatively few Chinese firms, a report said on Monday.

The Washington-based C4ADS think tank said a small number of interconnected Chinese firms accounted for the vast proportion of trade with North Korea, leaving the impoverished country’s procurement network vulnerable to targeted, enforced sanctions.

The report said it was a mistake to think that sanctions could not succeed against a country like North Korea, which was less isolated than it appeared.

“A concerted effort by the international community to target specific sanctions-violating entities is needed,” it said.

U.S. President Donald Trump’s administration has become increasingly alarmed about North Korea, which says it is working to develop a nuclear-tipped missile capable of hitting the United States.

Washington has been pressing China, North Korea’s neighbor, ally and main trading partner, to further curb trade with the country, but has so far stopped short of an all-out campaign of “secondary sanctions” against Chinese entities violating U.N. sanctions by dealing with Pyongyang.

The C4ADS report said a relatively small number of Chinese companies—5,233—traded with North Korea from 2013-2016, compared with the 67,163 that exported to South Korea.

A disproportionate amount of the total trade with North Korea was conducted by an even smaller number of trading firms, with 10 Chinese importers of North Korean goods in 2016 accounting for 30% of the market.

It said the top 10 Chinese exporters to North Korea had held that status for at least three or four years since 2013.

For more on North Korea and China, watch Fortune’s video:

“By isolating firms that have sent potential dual-use weapons technology to the regime, it may be possible to identify sanctions violations and the North Korean overseas networks that surround them,” the report said.

It pointed to one Chinese firm, Dandong Dongyuan Industrial Co. Ltd., which according to Chinese trade figures sent $28.5 million worth of material to North Korea from 2013-2016, including a shipment of $790,000 of “radio navigational aid apparatus” in June 2016.

It quoted experts at the James Martin Center for Nonproliferation Studies in the United States as saying the category of goods could cover guidance devices for ballistic missiles.

The report also said that, according to the Hong Kong business registry, the firm’s owner, Chinese national Sun Sidong, owned a firm that used to own a ship seized last year by Egyptian authorities carrying 30,000 North Korean-made rocket propelled grenades hidden under a cargo of iron ore.

C4ADS said that when the vessel, the Jie Shun, was seized, its registered owner was a firm owned by Sun Sihong, who listed her residential address as an apartment in the same complex as Sun Sidong.

Asked about the report, the U.S. Treasury declined to discuss future sanctions plans but said Washington would “continue to target individuals and entities responsible for financing and supporting North Korea’s nuclear weapons and ballistic missile programs.”

“Treasury is working with our allies to counter networks that enable North Korea’s destabilizing activities, and we urge our international partners to take parallel steps to cut off their funding sources,” the spokesman said.