China applies pressure on North Korea, winning praise from visiting Rice

Friday, October 20th 2006, 5:49 am

By: News On 6

BEIJING (AP) _ An exasperated China took a newly tough approach to communist ally North Korea on Friday, siding with the United States in saying the North must back away from nuclear confrontation, and moving to cut Pyongyang's vital supply of hard currency.

Chinese banks have stopped financial transfers to North Korea under government orders, bank employees said Friday. And at an appearance with Secretary of State Condoleezza Rice, China's foreign minister nudged the North to resume negotiations over its nuclear program and assured Washington that China would carry out United Nations sanctions on Pyongyang.

``We hope all relevant parties will maintain coolheadedness, adopt a prudent and a responsible approach and adhere to peaceful dialogue,'' Li Zhaoxing said as Rice concluded crisis talks in Asia following the North's Oct. 9 nuclear test blast.

China, which is North Korea's longtime protector, has been reluctant in the past to use economic pressure for fear Kim Jung Il's government might collapse.

But Chinese leaders were stung when the North ignored their warnings not to test-fire missiles over the summer, and again when it defied Beijing by detonating the underground blast this month. China previously had reduced food aid to North Korea amid complaints that Pyongyang had ignored Chinese interests.

The move by China's banks could deal a significant blow to the already impoverished North. China is North Korea's top trading partner _ accounting for more than half its total foreign trade of less than $4 billion last year _ and is a key conduit for its hard currency.

China's actions are considered key to enforcing U.N. sanctions on the North over the test, and to coaxing the North to back away from the nuclear brink and rejoin talks.

Rice told reporters China has new resolve against the North that shows it has re-evaluated its relationship with Pyongyang. Last week's U.N. Security Council vote to impose sanctions on Pyongyang, which Beijing supported, proves the point, Rice said.

``In this entire 30-year history of the North Korean nuclear program, this is the first time that the international system has been able to actually impose a cost on North Korea for its nuclear behavior,'' Rice said. ``It's able to impose that cost because China has been brought into the process in a way that China never was before.''

The U.S.-backed sanctions were watered down partly at China's request, but China's vote in favor of punishment still represents a shift for Beijing.

All four major Chinese state-owned banks and British-owned HSBC Corp. have stopped financial transfers to the North, according to bank employees in Beijing and the northeastern Chinese city of Shenyang.

China has also been inspecting North Korean trucks at some points along the two nations' 880-mile border, and it dispatched a top envoy to Pyongyang this week to warn the North against a second nuclear test and try to bring it back to the arms talks.

Discussions over Pyongyang's nuclear program have been stalled for a year because of a boycott by the North over U.S. financial sanctions. The talks involve the United States, host China, the two Koreas, Japan and Russia.

Beijing was the final and most important stop on Rice's hastily arranged tour of Asian capitals. She continues to Moscow on Saturday for talks on the dual nuclear challenges posed by North Korea and Iran.

In Beijing, Rice appealed to North Korea to return without condition to stalled international talks over its nuclear program. She downplayed differences among the U.S., China and South Korea over the strength and tone of world response to Pyongyang.

The U.N. sanctions ban trade with the North in major weapons and materials that could be used by its ballistic missile and unconventional weapons programs, and in luxury goods enjoyed almost exclusively by elites around Kim.

The U.N. restrictions call for inspections of all cargo leaving and arriving in North Korea, but it is not clear how that will work in practice. Rice has stepped gingerly around that point this week, saying all nations are obligated to enforce the sanctions but leaving the details vague.

Several Defense Department officials said Friday that the U.S. Navy is tracking a North Korean cargo ship that left port and was headed south from the Korean Peninsula. One of the officials, who requested anonymity because of the sensitivity of the information, said the U.S. does not know what the ship is carrying or its destination.

South Korean news reported Friday that Kim said Pyongyang doesn't plan to carry out any more nuclear tests and expressed regret about the country's first-ever atomic detonation last week. Kim told a visiting Chinese envoy, State Councilor Tang Jiaxuan, that the North had ``no plans for additional nuclear tests,'' Yonhap news agency reported, citing an unnamed diplomatic source in Beijing.

Rice met with Tang in Beijing on Friday and later told reporters that he had carried a ``strong message to North Korea about the seriousness of what has happened.''

Rice would not provide details of Kim's response, but White House press secretary Tony Snow told reporters in Washington that the North had not offered to return to six-nation arms talks stalled since late last year.