[Annotated] American efforts to control Chinese firms abroad are dangerous

North Korea highlights^[각주:1] a faultline in^[각주:2] the world's business architecture

Wars are fought with^[각주:3] weapons, but also with money. To understand the global balance of power^[각주:4] in the coming decades, it helps to pay attention to the commercial subplot of^[각주:5] the North Korean crisis. For the first time, America is attempting to use its full legal and financial might to^[각주:6] change the behavior of Chinese companies and banks, which it believes are propping up^[각주:7] North Korea by breaking UN and American sanctions. Some American politicians have concluded that, as China's firms have integrated with^[각주:8] the global economy, they have become more vulnerable to Uncle Sam's wrath^[각주:9]. America has potent weapons^[각주:10], but the trouble is that China can retaliate^[각주:11] in devastating fashion^[각주:12]. 

North Korea is highly dependent on^[각주:13] China. Some 60~90% of its trade is with its northern neighbor. China's state-run^[각주:14] energy giant, CNPC, is thought to^[각주:15] have sold it oil in recent years - and is the parent of PetroChina, which has depositary receipts^[각주:16] listed in New York. North Korean banks and firms operate in^[각주:17] China, and it is likely that Chinese banks have dealt with them or their proxies^[각주:18]. 

After months of American pressure, on September 21st China's central bank^[각주:19] was reported to have told the country's lenders^[각주:20] to stop writing new business with North Koreans. But America's Treasury^[각주:21] is still on the warpath^[각주:22]. On September 26th it blacklisted^[각주:23] 19 North Korean bankers^[각주:24] working in China and eight North Korean firms. In private it is excoriating^[각주:25] China's largest lenders, which own $125bn of assets in America, equivalent to 14% of^[각주:26] their total capital^[각주:27]. On September 28th a Senate committee^[각주:28] demanded an ever tougher crackdown on^[각주:29] Chinese banks.

Such extraterritorial reach^[각주:30] by^[각주:31] American regulators^[각주:32] (and courts) is a feature of international business. Misdeeds^[각주:33] anywhere can be punished, if the firm in question^[각주:34] issues securities in^[각주:35] America, has a subsidiary there^[각주:36] or makes electronic transactions^[각주:37] in dollars. America has pursued eight of^[각주:38] Europe's biggest 50 companies by market value for^[각주:39] breaking sanctions in the past decade, and 18 of them for corruption. After the attacks of September 11th 2001 America stepped up efforts to^[각주:40] police^[각주:41] the global dollar payments system. It aggressively enforced sanctions against^[각주:42] Iran. European financial firms faced $13bn of related fines and France's BNP Paribas and Britain's Standard Chartered almost list their American licences, which would probably have put them out of business^[각주:43].

Yet until a year ago, big Chinese firms were exempt^[각주:44], at least informally^[각주:45]. America probably worried about starting a trade war^[각주:46]. Sanctions in 2013 on four small Chinese firms that traded with^[각주:47] Iran met a furious response from^[각주:48] China's foreign ministry^[각주:49]. In some cases Uncle Sam's relaxed attitude^[각주:50] was obvious. In 2015 China Construction Banks's New York office was found by the Federal Reserve^[각주:51] to have deficient^[각주:52] anti-money-laundering processes^[각주:53] but was forgiven^[각주:54]. In 2014-15 Agricultural Bank of China's New York office processed over $100bn of payments^[각주:55] without adequate controls^[각주:56]. It got a token $215m fine^[각주:57]. When PetroChina listed in New York in 2000, it sidestepped sanctions by^[각주:58] transferring assets in Sudan to^[각주:59] CNPC, according to the memoirs of^[각주:60] Hank Paulson, a Goldman Sachs banker who was later treasury secretary^[각주:61]. 

Now China Inc^[각주:62] would appear to be a sitting duck^[각주:63]. Hundreds of firms have securities listed in America. There is lots of graft in^[각주:64] China and it is a large trading partner not only of North Korea but of Iran, Syria and Cuba, which also face American sanctions. A sharp change of mood was signaled in March when Wilbur Ross, the commerce secretary^[각주:65], announced a $1.2bn fine on ZTE, an IT company which had done business with^[각주:66] Iran and North Korea. Huawei, a rival, is under scrutiny for^[각주:67] a possible breach of^[각주:68] American trade controls on^[각주:69] Iran and Syria. While China may hope that its recent order to its banks may calm things^[각주:70], there is a fever in Washington to punish its firms, both for patriotic reasons and because protectionists are newly influential^[각주:71].

China's banks run large businesses in dollars as well as in yuan, which has made them especially vulnerable to American pressure. The four largest - Agbank, Bank of China, CCB, and ICBC - have $940bn of dollar liabilities^[각주:72], including debt and deposits raised from international markets. If America excluded them from its financial system^[각주:73], they would face big problems as global investors shied away^[각주:74]. China's central bank might need to help fund them^[각주:75]. For American lawmakers^[각주:76] they are thus a tempting target^[각주:77] - especially since America's big banks, with only $54bn of loans in China and few liabilities in^[각주:78] yuan, hardly need China.

Taking it to the brink^[각주:79] 

Yet China, no stranger to^[각주:80] the dark arts of^[각주:81] bullying firms for^[각주:82] geopolitical^[각주:83] ends, has other means of^[각주:84] retaliation^[각주:85]. In 2009, for example, BP was warned to abandon^[각주:86] an offshore^[각주:87] oil project near Vietnam. If it did not, the word was, all of its contracts in China would be reconsidered^[각주:88] and China would be unable to guarantee the safety of its staff, according to "Asia's Reckoning", a new book by Richard McGregor. Today General Motors and Apple together make $20bn of profits a year in China. Fining them heavily or prohibiting their operations^[각주:89] would hit American interests hard^[각주:90]. China could escalate^[각주:91] by putting pressure on^[각주:92] its autonomous territory of^[각주:93] Hong Kong to punish large Americans banks based there.

North Korea is a geopolitical flashpoint^[각주:94] and a humanitarian catastrophe^[각주:95]. But it also highlights a faultline in the world's business architecture that will cause problems for decades to come. It is almost inconceivable that^[각주:96] China will accept the extraterritorial reach of^[각주:97] America's legal and financial system in the same way that America's allies in Europe, and Japan, have done.

Perhaps America will later decide to limit its reach. For its part^[각주:98], China is erecting defences to^[각주:99] avoid the long arm of^[각주:100] Uncle Sam, such as its own cross-border^[각주:101] payments system, which it began around a decade ago, but this will take years. Until then, simmering tension^[각주:102] and the risk of mutually^[각주:103] assured financial destruction^[각주:104] are bound to continue^[각주:105]. The only consolation^[각주:106] is that commercial war does not necessarily come with a mushroom cloud^[각주:107].

1. highlight ; 1. (특히 사람들이 더 많은 관심을 기울이도록) 강조하다 [본문으로]
2. fault line ; 의견이 첨예하게 대립하는 문제, 갈등의 원인 ; (지질) 단층선(斷層線) [본문으로]
3. be fought with ; ~를 가지고 싸우다 [본문으로]
4. the global balance of power ; 전세계 힘의 균형 [본문으로]
5. subplot ; [명사] (연극・소설 등의) 부차적 줄거리 ; [NOUN] The sub-plot in a play, film, or novel is a story that is separate from and less important than the main story. [본문으로]
6. might ; [U] 힘, 세력, 권력, 실력; 완력; 우세 ;; 동의어 ; power [본문으로]
7. prop up ; 1. ~을 받쳐 넘어지지 않게 하다 2. (흔히 못마땅함) (사람을) 지원하다 [본문으로]
8. integrate with ; …와 통합하다. [본문으로]
9. wrath ; [U] (구식 또는 격식) (극도의) 분노, 노여움 [본문으로]
10. potent ; 2. (힘이) 센[강한] ;; 참고 ; impotent [본문으로]
11. retaliate ; [자동사][V] ~ (against sb/sth) | ~ (by doing sth/with sth) 보복하다, 앙갚음하다 [본문으로]
12. in (a)... fashion ; … 방식으로 ; in a particular way [본문으로]
13. be dependent on ; ~에 의존하다 [본문으로]
14. state-run ; [형용사] 국영의 [본문으로]
15. be thought to ; ~한 것으로 생각되다, 평가되다 [본문으로]
16. depositary receipts ; (증권) 주식예탁증서 [본문으로]
17. operate ; 4. OF BUSINESS/ORGANIZATION | [자동사][V] (사업체・기관 등이 특정한 방식으로 또는 특정한 곳에서) 영업[작업]하다 [본문으로]
18. proxy ; 2. [C , U] ~ (for sb) 대리인 [본문으로]
19. central bank ; [명사] (한 국가의) 중앙은행 [본문으로]
20. lender ; [명사] (금융) 빌려주는 사람, 대출 기관 ;; 참고 ; borrower, moneylender [본문으로]
21. treasury ; (pl. -ies) 1. [sing.+ sing./pl. v.] the Treasury (영국・미국・ 일부 다른 국가들에서) 재무부 [본문으로]
22. warpath ; [명사] (북미 인디언의) 출정의 길; [구어] 적대 행위, 적의 [본문으로]
23. blacklist ; [타동사][VN] (이름을) 블랙리스트에 올리다 [본문으로]
24. banker ; 1. 은행가, 은행 간부 [본문으로]
25. excoriate ; 1. (의학) (피부가) 벗겨지게 하다, 찰과상을 입히다 2. (격식) 혹평하다, 맹비난하다 ;; 미국∙영국 [|eks|kɔ:rieɪt] [본문으로]
26. be equivalent to ; ~와 같은, 상응하는, 대등한 [본문으로]
27. total capital ; [명사] 총자본 [본문으로]
28. senate committee ; 상원 위원회 [본문으로]
29. a crackdown on ; …에 대한 엄중한, 강한 단속. [본문으로]
30. reach ; 2. OF POWER/INFLUENCE | [sing., U] (세력・영향력 등의) 범위[권한] [본문으로]
31. extraterritorial ; [형용사] 법률이 법역 외의(그 법이 제정된 국가 밖에서도 유효한) [본문으로]
32. regulator ; 1. (산업・상업 분야의) 규제[단속] 기관[담당자] [본문으로]
33. misdeed ; [명사] (주로 복수로) (격식) 비행, 악행 [본문으로]
34. in question ; 2. 의심스러운[불확실한] [본문으로]
35. securities ; [명사] 증권 [본문으로]
36. subsidiary ; [명사] 자(子)회사 [본문으로]
37. transaction ; 1. [C] ~ (between A and B) 거래, 매매 [본문으로]
38. pursue ; pursue ; 2. (논의・조사・관여 등을) 계속하다 3. [타동사][VN] (붙잡기 위해) 뒤쫓다[추적하다] [본문으로]
39. market value ; [U , sing.] 시장 가치 [본문으로]
40. step up ; ~을 증가시키다[강화하다] [본문으로]
41. police ; 2. (위원회 등이) (규칙 준수를) 감시하다 [본문으로]
42. enforce ; 1. ~ sth (on/against sb/sth) (법률 등을) 집행[시행/실시]하다 [본문으로]
43. put ... out of business ; ...를 망하게 하다, 사업을 하지 못하게 하다 [본문으로]
44. exempt ; [형용사] (명사 앞에는 안 씀) ~ (from sth) (…이) 면제되는 [본문으로]
45. informally ; 1. 비공식으로, 약식으로 2. 형식에 구애되지 않고 3. 구어(口語)로 [본문으로]
46. trade war ; [명사] 무역 전쟁. [본문으로]
47. trade with ; …와 무역[거래]하다. [본문으로]
48. furious ; 2. 맹렬한 [본문으로]
49. foreign ministry ; [보통 the F- M-] 외무부 [본문으로]
50. relaxed ; 3. ~ (about sth) (규율 등에 대해) 관대한[너그러운] [본문으로]
51. the Federal Reserve ; 연방 준비 은행 [본문으로]
52. deficient ; 2. (격식) 결함이 있는, 모자라는 [본문으로]
53. anti money laundering ; 자금세탁방지 [본문으로]
54. be forgiven ; 용서를 받다. [본문으로]
55. process ; 2. (문서・요청 사항 등을 공식적으로) 처리하다 [본문으로]
56. adequate ; [형용사] ~ (for sth) | ~ (to do sth) (특정한 목적이나 필요에) 충분한[적절한] [본문으로]
57. token ; [명사 앞에만 씀] 1. 형식적인, 시늉에 불과한 [본문으로]
58. sidestep ; (-pp-) 1. [타동사][VN] (대답・문제 처리를) 회피하다 [본문으로]
59. transfer ; 4. PROPERTY | [타동사][VN] ~ sth (to sb) (재산의 소유권을) 넘겨주다[이전하다] [본문으로]
60. memoirs ; [NOUN] A person's memoirs are a written account of the people who they have known and events that they remember. ;; 미국∙영국 [memwɑ:rz] [본문으로]
61. treasury secretary ; [명사] 재무 장관 (cf. the Treasury Department (미국) 재무부) [본문으로]
62. Inc ; [약어] 주식회사(Incorporated: 미국에서 회사명 뒤에 씀) [본문으로]
63. sitting duck ; [명사] 공격하기 쉬운 대상, 봉 [본문으로]
64. graft ; 4. [U] (특히 美) 뇌물 수수; 뇌물 [본문으로]
65. Secretary of Commerce ; (미국) 상무장관 [본문으로]
66. do business with ; …와 거래하다 [본문으로]
67. be under scrutiny ; 조사를 받는 중이다 [본문으로]
68. breach ; 1. [C , U] ~ of sth 위반 [본문으로]
69. trade control ; (무역) 무역통제, 업자의 무역활동에 대한 국가의 지도 강화가 무역의 통제(control of trade)이며 한 나라의 무역의 방향과 활동이 국가의 전면적 통제를 받는 형태가 통제무역(controlled trade)이다. [본문으로]
70. calm ; [타동사][VN] 진정시키다 ;; 참고 ; traffic calming [본문으로]
71. influential ; [형용사] ~ (in sth/in doing sth) 영향력 있는, 영향력이 큰 [본문으로]
72. liabilities ; (회계) 부채 [본문으로]
73. financial system ; 금융(재정)제도. [본문으로]
74. shy away (from) ; (불안하거나 무서워서) (~을) 피하다 [본문으로]
75. fund ; [타동사][VN] 자금[기금]을 대다 [본문으로]
76. lawmaker ; [명사] 입법자 [본문으로]
77. tempting ; [형용사] 솔깃한, 구미가 당기는 [본문으로]
78. liabilities ; (회계) 부채 [본문으로]
79. brink ; [sing.], (참고: teeter) 1. the ~ (of sth) (아주 새롭거나 위험하거나 흥미로운 상황이 발생하기) 직전 2. (문예체) (벼랑・강가 등의) 끝 [본문으로]
80. be no stranger to ; ~에 익숙한[~을 많이 겪어 본], …을 (잘) 알고 있다 [본문으로]
81. art ; 7. [C , U] 기술 [본문으로]
82. bully ; [타동사][VN] (bul・lies , bully・ing , bul・lied , bul・lied) ~ sb (into sth/into doing sth) (약자를) 괴롭히다[왕따시키다]; 협박하다 [본문으로]
83. geopolitical ; [형용사] 지정학의, 지정학적인. (또는 geopolitic) [본문으로]
84. means ; (pl. means), (참고: end n. , fair adj. , way n.) 1. [C] ~ (of doing sth/of sth) 수단, 방법, 방도 [본문으로]
85. retaliation ; [U] ~ (against sb/sth) (for sth) 보복, 앙갚음 [본문으로]
86. be warned to ; ~하도록 경고 받다 [본문으로]
87. offshore ; [주로 명사 앞에 씀], (참고: inshore , onshore) 1. 앞바다의, 연안의 [본문으로]
88. reconsider ; [동사] 재고하다, 번복하다, 재검토하다 [본문으로]
89. prohibit ; [~ sth | ~ sb from doing sth], (격식) 1. [흔히 수동태로] (특히 법으로) 금하다[금지하다] 2. …하지 못하게 하다 [본문으로]
90. interests ; [명사] 이익, 이해관계 [본문으로]
91. escalate ; [동사] ~ (sth) (into sth) 확대[증가/악화]되다[시키다] [본문으로]
92. put pressure on sb (to do sth) ; (~을 하라고) ~에게 압박[압력]을 가하다 [본문으로]
93. autonomous ; 1. (국가・지역・기관이) 자주적인, 자치의 [본문으로]
94. flashpoint ; [C , U] 일촉즉발의 상황; (비유적) 화약고 [본문으로]
95. humanitarian catastrophe ; 인도주의적 재난, 파국 [본문으로]
96. inconceivable ; [형용사] 상상[생각]도 할 수 없는 [본문으로]
97. extraterritorial ; [형용사] 법률이 법역 외의(그 법이 제정된 국가 밖에서도 유효한) [본문으로]
98. for one's (own) part ; 자기로서는, 자기에 관한 한, …로서는, …만은. [본문으로]
99. erect ; (격식) 3. 만들다, 확립하다 [본문으로]
100. the long arm of ; 1. 긴 팔; [비유] 멀리까지 미치는 힘, ~의 힘[권한] [본문으로]
101. cross-border ; [형용사] (명사 앞에만 씀) 국경을 넘는 [본문으로]
102. simmering ; [형용사] <노염·반란 등이> 당장에라도 폭발할 것 같은 [본문으로]
103. mutually ; [부사] 서로, 상호간에, 공통으로 [본문으로]
104. mutually assured destruction ; (군사) mutually assured destruction (MAD) ▶핵 공격시 적의 핵미사일 도착 전에 격멸하는 핵보복 전략 ;; 흐름상 "두 국가간에 경제적인 부분에 있어서 상호 핵공격과 그 보복에 비견할 만한 경제적인 타격" 을 의미 [본문으로]
105. be bound to ; 의무가 있다, 틀림없이 ~할 것이다(=be sure to), 반드시 …하다; 《미국·구어》 …하려고 마음 먹다 [본문으로]
106. consolation ; [U , C] 위안[위로](을 주는 사람・것) [본문으로]
107. mushroom cloud ; [명사] (핵폭발 후의) 버섯구름 [본문으로]