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Global Geo-political Series: PBoC warns banks against doing business with North Korea

People’s Bank of China (PBoC) has reportedly asked Chinese banks to stop dealing with North Korea and abide by the resolution adopted by United Nation’s Security Council. Banks have been asked to strictly implement the sanctions according to sources familiar with the matter. The sources said that banks have been asked not to provide new loans to North Korean customers and wind up the existing loan given to customers. China is North Korea’s biggest trading partner accounting for 80-90 percent of all trades. North Korea relies deeply on China for its commodities and textile exports and relies solely on China for its energy needs.

In recent months, the Trump administration has increased its diplomatic pressure on China to reign on North Korea in order to bring the isolated regime to the negotiating table. Both Trump and the U.S. Treasury Secretary Steven Mnuchin has warned that Chinese banks could be sanctioned over dealings with North Korea and may be denied access to the U.S. financial system and the dollar. President Trump has even threatened to cut off any trade relations with the country that deals with North Korea.

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