TEHRAN, Young Journalists Club (YJC) - Washington had alerted other businesses in June that it planned to take the action, but it finally went into effect on Thursday, just as President Donald Trump was to set off on an Asian tour.
China "strongly opposes the long-armed jurisdiction imposed by any country," Chinese foreign ministry spokeswoman Hua Chunying told a regular press briefing.
China has been "comprehensively, actively, meticulously and strictly" implementing UN sanctions, she added.
Trump has demanded that Beijing do more to push its neighbour North Korea to stop efforts to build a nuclear-armed missile capable of reaching American cities.
He will bring this message to President Xi Jinping in Beijing next week, but China is reluctant to push too hard and risk destabilising Kim Jong-Un's North Korean government.
Along with the ban on Bank of Dandong, the US Treasury also issued new guidance to international banks' risk and compliance officers to help them spot North Korean attempts to infiltrate world finance.
Banks from China and around the world find it hard to operate if they are barred from the US financial system, which is a clearing house for most dollar-denominated transactions.