Chinese Trade with North Korea Slumps
By Isla LaMont
Chinese trade with North Korea has fallen sharply as sanctions have increased. China says the U.N. Security Council agreed to the successive rounds of trade restrictions, which were designed to incentivize North Korea to deescalate nuclear activities.
Beijing is considered Pyongyang’s “economic lifeline” as it supplies approximately 85 percent of all external trade. According to Reuters, the sanctions could cut off one-third of North Korea’s total annual exports.
China’s General Administration of Customs informs that imports from North Korea fell 37.9 percent in September, continuing a seven-month long period of economic decline. Exports are declining more modestly with a 6.7 percent drop in September. According to an article by the Washington Post, 90 percent of North Korea’s publically reported exports will eventually be cut. However, experts believe that while trade is indeed slowing, China’s self-reported data should be taken with caution.
Certain North Korean industries are experiencing the sanctions differently. Fuel and textiles are taking the biggest hit. The garment industry has been specifically targeted and is projected to bring an annual $700 million loss for North Korea. Additionally, all coal and liquefied natural gas imports from North Korea have been banned. China’s central bank has prohibited domestic financial institutions from continuing business with North Korea, and all joint ventures between the two countries will be shut down in the upcoming months.
In comparison, the seafood industry reports that smuggled products are still crossing the border, while a spokesman for the Chinese customs department said that “there are no records of seafood imports from North Korea”. There are also reports that Russia may be supplying North Korea with fuel, and that Pyongyang uses shell companies to outsmart restrictions, according to Reuters.
The Diplomat explains that North Koreans mostly earn their income from market activities, describing the class of “the new rich” as enjoying an “entrepreneur-bureaucrat symbiosis”. Keeping this upper class happy is of high strategic importance for Kim, since the current reform under which he holds power was made possible by unsuccessful attempts to curb market activities in the late 2000s. Kim may ultimately be unable to justify the current Byungjin policy, which simultaneously pursues both economic development and nuclear capability. Therefore, some experts theorize that in addition to economic sanctions, the U.S. and China must align to empower the North Korean people via information channels.
The United States claims responsibility for the slump, having put economic and political pressure on Beijing following Pyongyang’s six nuclear and over a dozen ballistic missile tests. Noted U.S. ally, Japan, is especially vulnerable to these attacks due to its geological proximity.
The Daily Caller confirms that the Trump administration threatened to cut bilateral trade between the U.S. and China if the sanctions are not fully implemented. Deputy Assistant Director for the CIA for the Korea Mission Center, Yong Suk Lee, stated that China has only ever put pressure on North Korea when “[they] were absolutely convinced the U.S. was ready to go to war on the Peninsula,” and praised President Trump for his “tough rhetoric”. NPR exemplifies President Trump’s famous rhetoric through reports of the U.S. President calling Kim Jong Un “rocket man” and threatening to “totally destroy” North Korea, and Kim replying by calling Trump a “mentally deranged U.S. dotard” and comparing him to a “frightened dog”.
The U.S. has also implemented its own sanctions against North Korea as of October.