Trade War | Beijing criticizes possible US penalties against banks

China yesterday criticized Washington’s efforts to enforce U.S. law abroad following a news report three Chinese banks might be penalized over dealings with North Korea.

The banks named by The Washington Post as facing possible loss of access to the U.S. financial system denied they were under investigation.

The Post said a court found three Chinese banks in contempt for ignoring demands for information about possible violations of sanctions imposed over North Korea’s nuclear program. The newspaper said the court didn’t identify the banks but their details fit the identities of Bank of Communications, China Merchants Bank and Shanghai Pudong Development Bank.

“We consistently oppose the so-called long-armed jurisdiction of the United States on Chinese companies,” said a foreign ministry spokesman, Geng Shuang. Geng gave no confirmation of the Post’s report.

The order comes at a time of U.S.-Chinese tension over technology and trade disputes. The two governments have raised tariffs on billions of dollars of each other’s imports. Washington has threatened to reduce Chinese tech giant Huawei’s access to U.S. components and technology.

The ruling by a federal judge in Washington means U.S. authorities can terminate the banks’ ability to process transactions in U.S. dollars, the Post said.

The Post said the judge rejected arguments based on Chinese privacy law due to Beijing’s “dismal compliance record” with such requests and Washington’s interest in countering North Korea’s nuclear and missile programs.

Beijing, long the isolated North’s only major ally, has supported U.N. sanctions intended to force leader Kim Jong Un’s government to give up nuclear and missile development.

The Chinese banks said they comply with U.N. sanctions on North Korea.

“China Merchants Bank has consistently and strictly complied with Chinese laws and relevant U.N. resolutions and other applicable sanctions and has not been investigated for alleged violations,” the bank said in a statement reported by Chinese media.

A statement by Pudong Development Bank said it is legally barred from releasing customer information without permission. China Merchants Bank said requests should be made in line with a U.S.-Chinese judicial assistance agreement.

Also yesterday, Geng Shuang said China hopes a meeting later this week between President Donald Trump and his Chinese counterpart Xi Jinping will help build trust and resolve “outstanding issues.”

Geng Shuang gave no details at a daily briefing, but there are hopes the planned encounter at the G-20 summit in Japan will help lower the temperature in the trade war between the world’s two largest economies.

As part of preparations, U.S. Trade Representative Robert Lighthizer spoke by phone earlier this week with the top Chinese negotiator, Vice Premier Liu He.

“We certainly hope that the meeting will help the two states to promote mutual trust, resolve their differences, and resolve some of the outstanding issues we are facing now,” Geng said.

China remains “committed to working with the U.S. to develop China-U.S. relations based on coordination and cooperation,” Geng said.

The meeting in Osaka is the first opportunity for the two leaders to discuss the trade dispute face-to-face since Trump said he was ready to target the $300 billion in Chinese imports that he hasn’t already hit with tariffs, extending them to everything China ships to the United.  MDT/AP