North Korea Profile:
According to the OEC, North Korea is ranked the 132nd largest exporter in the world. Its export revenue totalled $5.37 Billion and imports revenue totalled $6.29 billion, resulting from a trade deficit of $913 million. North Korea mostly exports Coal Briquettes ($1.1B), Non-Knit Men’s Coats ($132M) and Molluscs ($131M). North Korea is the 152nd largest importer in the world. Its main source of imports is Synthetic Filament Yarn Woven Fabric and Delivery Trucks. North Korea has a GDP of $28.5 billion and GDP per capita of $1,300. 7
According to the OEC, China is the largest exporter in the world. In 2016, China’s export revenue totalled $5.29trillion and import revenue totalled $3.41 trillion, resulting in a trade surplus of $1.88T. GDP in China is $11.2trillion and its GDP per capita is $15.5k in 2016. The top exports in China are Computers ($182 billion), Broadcasting Equipment ($169 billion), and Telephones ($126 billion). China’s top imports are Integrated Circuits ($218 billion), Crude Petroleum ($109 billion)and Gold ($86.6 Billion) 8
On the 6th October 1949, China and North Korea have started a diplomatic relationship. China has given support to North Korea for the Korean War during 1950-1953. After the end of the war in 1953, China and the Soviet Union have provided immense economic and political support to reconstruct North Korea’s economy. 1 China had strong diplomatic ties with the North Koreans compare to small disputes with its other trading neighbours such as Japan and South Korea. They operate double-win trade relationship due to the advantage of its geographic proximity and no historical disputes.9 However, recently the relationship started to cool off due to North Korean’s action of seizing the Chinese fishing boats in the Yellow River, its nuclear ambition and continuous missile launches. During 2012, the North Koreans took over the Chinese fishing boats and ask for large fines in return. 5 Moreover, with the North Koreans having nuclear power, it can be dangerous to all the Asian countries. 9 This creates a change in China’s attitudes towards North Korea, it has given support to the UN’s action of penalising North Korea after its latest missile launch in November 2017. China held a ‘Six-Party talk’ to negotiate the nuclear weapon issue with the other countries including Japan, South Korea, US and Russia. Though, in 2009, North Korea declared it’s withdrawal from the Six-Party talk and continual plan to test its nuclear weapon. 2 11 Moreover, the murder of Kim Jong-Un’s exiled oldest brother Kim Jong-Nam in Malaysia, the son of the previous North Korean leader Kim Jong-il, shows increasing worries on North Korea’s leadership and political and economic stability. The US Department of State accused the North Koreans behind Kim Jong-Nam’s massacre. 3
Trade Relationship with North Korea
Despite China’s cooling relationship with the DPRK, China is North Korea’s main trading partner and source of food and energy. China accounts for 85%($3.47 billion) of its imports and 83%($2.83 billion) of its exports. 4 While North Korea is only ranked the 82nd on China’s trading list.
During 2015, the two countries opened a ‘bulk-cargo and container shipping’ and to increase North Korea’s coal exports and increase bilateral trade relationships. China opened the Guomenwan border trade zone in Dandong, Liaoning Province during October 2015 to increase trade linkage with North Korea. 40% of Dandong’s total trade is with North Korea in 2015 and 70 per cent of trade imported and exported out of North Korea was conducted through Dandong and Sinuiju in 2016. Though, it is noted that China and North Korea had anticipated plans to construct a $350 million bridge across the Yalu River to link the two cities and increase trade. However, this project remained incomplete near the North Korean border, indicating breaking relationship between the two countries. 2
Furthermore, China, America and Russia have announced trade restrictions on its main exports of coal, iron, lead and seafood. It is estimated this will decrease revenue for the North Koreans about $1 billion a year, around a third of their total foreign income. Two million tons of coal was spotting shipping back to North Korea from China on February 26, 2017. Restrictions also include abuse of usage of North Korean workers as it is believed that Kim ‘pockets most of their wages’. Though, North Korean business is evidently still operated in China. 6 Interestingly, China’s trade with North Korea increased in the first quarter of 2017 by 37.4%, with 270% increase in iron. 9
Though China strongly opposes North Korea’s nuclear ambition, it’s the greatest fear is to
the break down of Kim Jong-un’s regime which will result in millions of North Korean refugees escaping in to China. This can be detrimental to China’s economic and political instability. It is not only very expensive to provide food and shelter for these refugees but it can result in theft, robbery and riots causing chaos in the border cities of China. The refugees may later diffuse in to the rest of China causing further catastrophic damage.
Some experts believe that with China joining the opposition team and exerting economic pressure on the North Koreans, it can quickly put an end to the ‘North Korean crisis’. However, China still plays the role of the ‘peacemaker’ between the US and the North Koreans. Some take the view that another reason is that China claims to be the dominating power in Asia, therefore it has to stand up to the US for any neighbouring countries. 10
According to the latest new in March 2018, Kim Jong-un made his first visit outside the country to Beijing, the two leaders held a secret meeting and Kim Jung-un gave reassurance on his commitment to stop nuclear actions. Moreover, China has persuaded other world powers not to exert too much pressure on the North Koreas for the fear of failure of Kim Jong-un’s leadership resulting treacherous military actions as he could be ‘unexpected’ and ‘out of control’. 2 Therefore, future trade relationship between China and North Korea is still undetermined in the unforeseeable future.