Archive for the ‘China’ Category

Chinese officials telling companies not to hire North Koreans

Sunday, June 18th, 2017

By Benjamin Katzeff Silberstein

The sourcing for this story looks to be some quite thin gruel, but given the current context, it makes sense. Nikkei Asian Review:

According to a source who is familiar with China-North Korea diplomacy, Beijing began instructing Chinese businesses to refrain from hiring North Korean nationals in March 2016 — the month that the U.N. toughened sanctions on the country in response to Pyongyang’s fourth nuclear test.

The instruction has so far been given informally, and in some cases, orally. No formal notices have been issued, the source said.

The companies receiving the instruction are mainly in Jilin and Liaoning provinces, on the border with North Korea. Beijing appears to be gradually including more companies in its whisper campaign, the source said.

The informal sanction appears to contradict the Chinese foreign ministry’s position that the country should not impose any form of sanction against North Korea if it is not based on a U.N. Security Council resolution. At the same time, it is a means by which Beijing can register its displeasure with Pyongyang’s missile and nuclear testing.

Full article:
China telling companies not to hire North Koreans
Oki Nagai
Nikkei Asian Review
2017-06-18

This seems to be the pattern when it comes to Chinese sanctions enforcement against North Korea. Orders and directives are given in a vague, non-specific fashion, making them relatively easy to rescind and relax at a later time. In other words, news like this should not necessarily be taken as evidence of some grand Chinese push against North Korea. The way that policy directives like these are delivered, is itself indicative of their temporary nature. This current period is not the first (and probably not the last) time that China has restricted trade with North Korea, but that itself is not evidence of any long-term “squeeze”. It is probably safe to assume that these directives will be reversed or relaxed soon enough.

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Lower Chinese imports of North Korean coal hitting coal mine workers in the north

Friday, June 16th, 2017

Benjamin Katzeff Silberstein

Reports Daily NK:

“It has been four months since coal exports to China were blocked, and North Korea is in a war-like crisis. Hundreds of coal mine workers belonging to dozens of trading companies have lost their jobs and been pushed into a life-threatening economic crisis,” a source in South Pyongan Province recently told Daily NK.
“Local residents who were once making a living by running food stalls near the coal mines or carrying coal have all lost their jobs. As a result, regional economic activity has plummeted.”
The local businesses that once relied on the coal export industry, including restaurants, car washes, and fuel vendors, have all met a similar fate and the circulation of money has stagnated in the general markets, causing disarray.
As a flow-on effect, the price of coal purchased for domestic consumption (primarily as a fuel source for home cooking and heating) has also dropped, inflicting further losses on coal exporting companies.
“Coal trading companies that used to allocate 10 percent of their coal export profits toward management have either suspended production or are only producing small quantities of coal. As such, the trading companies, markets, and residents alike have all been driven into a crisis,” a source in North Pyongan Province explained.
Although the local economy is in serious trouble, the North Korean authorities are not taking any tangible steps to address the issue. According to the source, the coal produced at the state-run coal mine in Sunchon City continues to be sent to the Pyongyang thermal power plant, irrespective of the suspension of coal exports.
The sources reported that residents are eagerly hoping that coal exports will resume, but the authorities feel as long as the state-run enterprises remain operational, there are no problems to address. This is causing complaints from the residents who instead see the nation’s resources poured into weapons development.
Full article:

North Korean coal business in jeopardy after four months of export suspension
Seol Song Ah
Daily NK
2017-06-16

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Market prices up in North Korea, following Chinese trade restrictions and seasonal variation

Tuesday, June 13th, 2017

By Benjamin Katzeff Silberstein

DailyNK reports that prices on some markets, for certain goods, have gone up recently. The causes are two-fold: increasingly difficult import conditions with heightened scrutiny and more items being restricted on the Chinese side, and seasonal variations. May and June are the height of the so-called lean season in North Korea, when food is in particularly short supply:

According to Daily NK’s sources, the rice price has risen from 4,800 KPW to 5,200 KPW per kilo at Hoeryong Market in North Hamgyong Province. Similarly, 25 kg bags of flour have risen by 10 RMB to 13,000 KPW, while sugar (50 kg) has jumped by 50 RMB.
May and June mark an annual period of agricultural hardship in North Korea. To make matters worse, the farming season began a month late this year, sending the price of vegetables including cabbage and radish skyrocketing. China’s recent efforts to restrict the quantity of imported items is further exacerbating the situation.
“Most of the products that are normally imported through Chinese customs offices, including food and industrial goods, have become much more expensive. The price surge must have been influenced by China’s stricter measures,” a source in North Hamgyong Province said.
Until last April, China’s customs offices generally waved through most items for export to North Korea including food, daily necessities, and clothes, with inspections little more than a formality. But in a sign of worsening relations between Beijing and Pyongyang, an increasing number of items are being placed on the restricted list.
“Due to China’s implementation of stricter customs procedures, the volume of products coming into North Korea has fallen by half compared to the previous month (April). The period of spring poverty is a hard time for North Korean people in both the cities and rural areas, and China’s actions are adding to their problems,” added a source in North Pyongan Province.

Given all the scrutiny and debates about whether or not China is implementing sanctions on North Korea, decreasing trade and upping the economic pressure et cetera, it is important to remember that we’re really not seeing any full-scale blocking off of trade between China and North Korea, even in goods that no country is supposed to be trading with North Korea following UN sanctions. Seasonal variations matter a great deal too. Moreover, though price changes like these certainly are troubling for North Korean consumers, they don’t appear, at least not for now, significant enough to have any major impact on the economy as a whole. Last but not least, Chinese implementation of sanctions measures, scrutiny, surveillance of goods and other similar measures in trade with North Korea has historically waxed and waned, and rarely remained consistent.

Full article:
Market prices leap as China implements strengthened customs procedures
Lee Sang Yong
Daily NK
2017-06-13

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New report on North Korea’s proliferation financing system

Monday, June 12th, 2017

By Benjamin Katzeff Silberstein

The non-profit C4ADS has released a new report about the networks that North Korea uses to get around the international sanctions regime, and to continue trading and financing its weapons programs. Among the most interesting findings, in my opinions, is that of how interconnected and few the Chinese firms that trade with North Korean entities are:

North Korean overseas networks have been extremely adaptive to the combined pressures of international sanctions, in large part due to their ability to nest and disguise their illicit business within the licit trade. Like the cover material of iron ore over the RPG’s aboard the Jie Shun, or the dual role played by Dandong Hongxiang, the problem is particularly acute in the North Korean context where the state controls major aspects of the international trading economy. As early as 2006, former Undersecretary for Terrorism and Financial Intelligence Stuart Levey noted that, “the line between North Korea’s licit and illicit money is nearly invisible.” As North Korea has become ever more isolated internationally, it has had to confine nearly all of its trade to China. Data from 2016 shows that around 85% of total North Korean trade was conducted with China. According to Harvard-based North Korea specialist John Park, “what we are seeing now is the operation of sophisticated North Korean-run networks based in China.” In this relationship, North Korea has repeatedly taken advantage of the system of trade to conduct illicit activity nested within the licit system.

[…]

Although the regime has seen a boom in the sale of natural resources in recent years, the increased sale of fewer and fewer commodities to a single country has left its system of trade progressively more vulnerable. Analysis reveals that the scope of licit trade, in which North Korea nests its illicit networks, is surprisingly small. According to trade records, from 2013 to 2016, there were only 5,233 companies within China that either imported goods from or exported goods to North Korea. To put that number in perspective,as of 2016, 67,163 Chinese companies exported to South Korea. Additionally, these 5,233 businesses are not all unique actors: many of them have subsidiary relationships with companies within the dataset. For example, the network surrounding the DHID, the Liaoning Hongxiang Group, was made up of 18 companies in China alone, many of which appear within the dataset as unique entities.

The report mainly carries three findings:

In this report, we conduct a system-level examination of the North Korean overseas financing and procurement system. Our paper finds that this system is centralized, limited, and vulnerable, and that its disruption should greatly increase the pressure on the Kim regime to return to the negotiating table.

  • In Centralized, we examine key individuals and companies that connect networks from around the world. We discuss case studies of both regime “tactical controllers,” who conduct the operational tasks needed to move illicit goods, as well as “strategic chokepoints” through which these goods and their regime financing must flow.
  • In Limited, we explore trends within China-North Korea trade, the largest market exploited by North Korean overseas networks. Our data shows only 5,233 Chinese companies to have traded with North Korea from 2013 to 2016. Our analysis shows a small number of interconnected firms annually account for vast proportions of the trade, limiting the number of avenues in which North Korea can nest its illicit activity.
  • In Vulnerable, we analyze corporate structures and risk indicators that can be used to filter this data to identify potential dual-use transactions and networks of possible concern. Our priority lay in linking previously unidentified entities with known North Korean illicit actors to showcase the possibility of causing systemic disruption using targeted enforcement.

Full report:
Risky Business: A System-Level Analysis of the North Korean Proliferation Financing System
David Thompson
C4ADS
June 2017

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94,000 North Koreans working in China, Hong Kong news outlet says

Monday, June 12th, 2017

By Benjamin Katzeff Silberstein

Reports KBS:

Quoting data by the China National Tourism Administration, the broadcaster said that the number of North Korean workers in China increased from about 50-thousand in 2006, when the North conducted its first nuclear test, to 94-thousand-200 in 2015, earning the regime billions of yuan, or hundreds of billions of won, a year.

Full article:
Hong Kong Paper: 94,000 N. Koreans Working in China
Korean Broadcasting Service
2017-06-12

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Chinese imports of North Korean coal down since February ban, data says

Tuesday, May 23rd, 2017

By Benjamin Katzeff Silberstein

Reuters reported today on the most recent figures on China-North Korean trade. They show that coal imports have declined, to the lowest level in three years, according to Reuters. It must be remembered that coal trade (in volume terms, not necessarily in USD-numbers) has climbed for several years in a row since 2010, so a relative decline does not mean catastrophically low levels. Also, of course, Chinese customs data should be taken with a huge grain of salt.

Reuters:

The world’s second-largest economy bought goods worth $99.3 million in April from North Korea, the lowest monthly tally since at least June 2014, according to Chinese customs data. Previous data was not available.

That compares with $114.6 million in March and $167.7 million a year earlier.

A fifth of the April total was iron ore imports, which hit 285,000 tonnes, their highest since August 2014. That was up 10 percent from a month earlier and 2-1/2 times higher than a year earlier.

[…]

Cho Bong-hyun, who heads research on North Korea’s economy at IBK Bank in Seoul, said China’s imports from North Korea were likely to continue to decline due to Pyongyang’s repeated missile tests and the suspension of coal shipments to China.

“This won’t be disastrous for North Korea, but it will obviously hurt North Korea because it tends to export goods to China worth around $3 billion per year,” he said.

The value of imports from North Korea has fallen month-on-month since December, the data showed.

CHINESE SALES DOWN AS WELL

China’s exports to North Korea eased to $288.2 million in April, down 12 percent from March. Exports for the first four months of the year were up 32 percent at $1 billion.

Diesel shipments to North Korea in April more than halved from March to 2,606 tonnes and gasoline sales dropped 6 percent to 13,496 tonnes. North Korea gets most of its oil needs from China.

Crude oil exports from China to North Korea have not been disclosed by customs for several years, but sources have put it at about 520,000 tonnes a year.

Cutting off oil to North Korea for an extended period would be a crippling measure that analysts have said they don’t expect China would take.

[…]

Data released later on Tuesday showed China did not take any North Korean coal in April for a second straight month, after Beijing’s ban of such imports following repeated missile tests by Pyongyang.

China imported 1.53 million tonnes of coal worth $72.3 million from North Korea in April 2016.

Full article:
China’s imports from North Korea sink as coal ban bites
Josephine Mason
Reuters
2017-03-23

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Chinese imports of North Korean goods down by 35 pct in March 2017

Wednesday, April 26th, 2017

Benjamin Katzeff Silberstein

Yonhap reports a 35 percent drop in Chinese imports from North Korea in March this year, compared to February, citing decreased coal imports after the February ban as a reason:

Imports from North Korea declined to US$114.56 million last month from $176.7 million tallied the previous month, according to Chinese customs data.

In late February, China suspended North Korean coal imports through the end of the year in accordance with the U.N. Security Council resolution adopted in December to punish Pyongyang for its fifth nuclear test in September.

The resolution centers on putting a significant cap on North Korea’s exports of coal — the country’s single biggest export item and source of hard currency. The cap was set at whichever is lower between 7.5 million tons or $400 million.

North Korea heavily relies on coal exports to China for its foreign currency income. China imported $1.19 billion worth of coals from North Korea last year.

Full article:
China’s imports of N. Korean goods fall 35 pct in March
Yonhap News
2017-04-25

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China continues mineral imports from North Korea, despite sanctions

Thursday, March 30th, 2017

Benjamin Katzeff Silberstein

About that supposed “squeeze”….Yonhap:

China keeps importing from its traditional ally gold, silver, copper and zinc all of which are put on the U.N. sanctions list, with such imports last month alone amounting to US$650,000, Voice of America said, citing data from China’s General Administration of Customs.

Resolutions Nos. 2270 and 2321, which the U.N. Security Council adopted last year to punish the North’s nuclear and missiles tests, also ban U.N. member nations from importing titanium, vanadium and nickel from the communist country. Minerals are a key source of hard currency for the North to maintain its regime and develop weapons of mass destruction.

North Korean vessels presumably carrying minerals were spotted at Chinese ports, the broadcaster said, citing MarineTraffic, which provides live ship tracking intelligence worldwide.

The boats are moored at the ports of Lianyungang, Jiangsu Province, and Penglai and Yantai, Shandong Province, which handle minerals, according to the broadcaster.

As of Tuesday, the North Korean ship Haebangsan was docked at Lianyungang, and several other ships — the Sobaeksan, Rungna No. 1, Haoyu and Hungbong No. 3 — were also waiting for their entry on seas some 20 kilometers off the port, the broadcaster said.

The Uri Star, Jinhung, Kumgansan and Gumdae were staying near Yantai, and the Munsusan and Jonwon No. 67 were spotted on seas off Penglai, it added.

Full article:
China keeps importing U.N.-sanctioned minerals from N.K.
Yonhap News
2017-03-29

Now, it seems unclear whether this formally constitutes a breach of the $400 million cap specifically. Note that UNSC resolution 2321 only mentions coal specifically with regards to the $400 million cap (my emphasis):

Underlining that measures imposed by the resolution were not intended to have adverse humanitarian consequences for the country’s civilian population, the Council decided that the Democratic People’s Republic of Korea should not supply, sell or transfer coal, iron and iron ore, and that all States should prohibit the procurement of those materials from that country, with the exception of total coal exports to all Member States not exceeding $53,495,894 or 1,000,866 metric tons, whichever was lower, between today and 31 December; and $400,870,018 or 7,500,000 metric tons per year, whichever was lower, beginning on 1 January 2017.

Total exports to all Member States of coal originating in the DPRK that in the aggregate do not exceed $53,495,894 or 1,000,866 metric tons, whichever is lower, between the date of adoption of this resolution and 31 December 2016, and total exports to all Member States of coal originating in the DPRK that in the aggregate do not exceed $400,870,018 or 7,500,000 metric tons per year, whichever is lower, beginning January 1, 2017 …

I’m not sure whether China has paid these amounts for minerals other than coal from North Korea in the past. Perhaps it is paying a markup price for other minerals to make up for the decreased imports of coal. It does in any case suggest that abiding by the words and the spirit of UN resolutions on North Korea is far from China’s only or even main priority in these matters.

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The new Dandong-Pyongyang flight

Wednesday, March 29th, 2017

Benjamin Katzeff Silberstein

Rodong Sinmun carried a short/concise article announcing the new flight service’s premiere:

A Pyongyang-Dandong air service was opened. The plane will depart from Pyongyang at 9:00 Tuesday and Friday every week and arrive in Dandong at 9:50 (9:20 local time). And it will leave Dandong at 10:50 (10:20 local time) and arrive in Pyongyang at 11:40. The first plane with passengers aboard arrived in Pyongyang on Mar. 28.

The opening of the air service will provide conveniences to those wishing to tour the DPRK.

Meanwhile, Daily NK reports:

Liaoning province authorities are promoting the route’s low prices and short travel time as advantages for potential customers. One way fares are 800 yuan (approximately US $115), while round trip fares are 1,500 yuan (approximately $215), with the trip taking around 30 minutes. The Dandong-Pyongyang flight is listed as JS782, while the Pyongyang-Dandong flight is listed as JS781. However, the source notes that locals are unenthusiastic about flying with Koryo Airlines – North Korea’s state-owned carrier.
“Amongst themselves, residents are expressing concern about Koryo Airlines’ obsolete equipment, and wondering whether the company can guarantee passenger safety,” the source said during a telephone conversation with Daily NK on March 24. “People are sarcastically quipping, ‘North Korea has a special kind of charm that makes you worry.’”
Some are having trouble believing the airlines’ claim that the new line was opened because the number of people traveling back and forth between Pyongyang and Dandong is increasing.
A new bridge under construction on the Yalu River will link up China’s Dandong with North Korea’s Sinuiju, but has yet to be completed. Ever since the United States Justice Department sanctioned the Chinese company Liaoning Hongxiang on suspicion of evading US sanctions on North Korea, Dandong residents have become wary of engaging in business with North Koreans.
According to the source, Chinese residents in the area are saying that “Dandong has already been fooled multiple times by North Korea. Our residents don’t go to North Korea for vacations. Only naive people from the inner regions of China cross the border. So the pre-existing flights from Beijing to North Korea should suffice.”
Additionally, the new air route is also unpopular because Chinese residents are wary of North Korea’s continued obsession with nuclear weapons and missiles despite international condemnation, said an additional source close to North Korean affairs in China.

Full article:
Chinese residents sigh as Dandong-Pyongyang flights are unveiled
Kim Ga Young
Daily NK
2017-03-27

(UPDATE 2017-03-30): Yonhap on restrictive measures by Russia and China on DPRK-related air traffic:

Russia and China have recently adopted punitive measures affecting North Korea’s aviation industry in a bid to mount pressure on the regime following its series of military provocations, the foreign ministry here said Thursday.

“Last May, the European Union banned North Korean airplanes or airplanes that depart from North Korea from landing on the territory of or flying in the airspace of the EU member countries,” Cho June-hyuck, spokesman at the Ministry of Foreign Affairs, said in a press briefing.

He also referred to the U.S. and South Korea’s decisions in December to put North Korea’s sole airline Air Koryo on their sanctions lists as well as Australia’s on-going push to halt its flight service assistance to the North Korean air carrier, involving technology, training and financial support.

“As the outcome of the lead by South Korea, the U.S. and EU, Russian air carrier Aeroflot has recently suspended its code-sharing arrangement (with North Korea) and Air China, the only foreign airline servicing the North Korean route, is reportedly set to stop its flights to North Korea from mid-April,” the spokesman noted.

“This series of actions taken marks a meaningful step that took into account concerns that Air Koryo is being used in North Korea’s illegal activities,” he said, also referring to Thailand and Kuwait’s suspension of their air routes to the North last year.

Cho also pointed to growing sanctions efforts in the Central and South America with which, he said, North Korea is making a point of increasing ties in order to escape its worsening isolation from the rest of the world.

“Yesterday, the government of Ecuador announced withdrawal of its visa-waiver policy with North Korea,” he said. “It was a very notable action given that the Ecuadorian government has kept an ideological bond with North Korea.”

He said the recent action is in line with the condemnatory stances over North Korea’s recent provocations announced by the Caribbean community as well as Nicaragua, a traditional ally of North Korea.

Full article:
Russia, China adopt sanctions on N. Korea’s flight services: ministry
Yonhap News
2017-03-30

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Still too early to tell on Chinese imports of North Korean coal

Monday, March 27th, 2017

By Benjamin Katzeff Silberstein

It is still far too early to say anything of certainty or substance on Chinese compliance on the UN resolution cap of $400 million on coal imports from North Korea. A few figures have come out over the past week that are of interest on the issue. Altogether, the statistics suggest that two parallel processes are at play. While China certainly seems to have imposed the coal ban at least in part to comply with the UN-mandated $400 million import cap, it also continues to shift its consumption to domestic coal in the face of a drive to draw down on coal consumption altogether.

As UPI reports, one angle is that China instituted the ban to pre-emptively ensure compliance with the cap, knowing that deliveries early in 2017 would come close:

The official, who spoke to local news service Newsis on the condition of anonymity, said a Chinese decision announced Feb. 18 to suspend all North Korean coal imports included an accounting of “excess” North Korean coal that was delivered to China in late 2016, according to the report.

“China is of the mind to carry over the excess of December [imports] to this year’s upper limit,” the official said.

Resolution 2321 also bans North Korea sales of copper, nickel, silver, zinc and even statues.

China agreed to play a key role in the agreement. All exports of North Korea coal would not exceed $400 million per annum or 7.5 million tons yearly.

In 2017, China has so far imported about $126 million of coal in January and $100 million in February.

While the total number of coal imported appears to be well below the annual quota, when the December data is included China reaches the upper limit of coal restrictions, the South Korean official said.

Full article:
Report: China suspended North Korea coal imports to not exceed quota
Elizabeth Shim
2017-03-23
United Press International

Bloomberg reports the same figures, but give an added context. It is not only coal imports to China from North Korea that have fallen. Those from Australia and Mongolia have dropped, too:

China’s imports of North Korea anthracite coal in February fell 18.7 percent from a year ago to the lowest since January 2015, after a ban on imports as a result of the reclusive nation’s missile program. Imports of anthracite coal, a hard coal with a high energy content used in steel mills, dropped to 1.23 million tonnes in February from 1.45 million tonnes in January, data from the General Administration of Customs released on Thursday.

Waning shipments from North Korea follows Beijing’s decision in late February to ban coal imports entirely after Pyongyang tested an intermediate-range ballistic missile in a direct challenge to international efforts to stabilise the Korean peninsula.

The ban has also sent steel mills who use anthracite as a feed stock to find alternatives in the domestic market. Chinese anthracite prices gained more than 50 yuan($7.26) per tonne to around 780 yuan($113.26) in February, data provided by China Sublime Information Group showed. Imports from China’s top supplier Australia <COA-AUCN-IMP> in February plunged 29 percent from January to 5.16 million tonnes, the lowest since May. Still, Australian imports were 16.8 percent higher than a year ago, the data showed. The decline adds to speculation that China is trying to control coal imports to aid the country’s efforts to reduce overcapacity at domestic mines.

The head of China’s quality supervision agency vowed to crack down on low-quality coal import. Traders in southern Chinese ports also reported cases of cargoes delayed due to customs checks. Coal shipments from Mongolia <COA-MNCN-IMP> tumbled 37 percent from January to 1.97 million tonnes, though it more than doubled from the same period last year.

Full article:
China’s North Korean coal imports drop to two-year low on ban
Reuters
2017-03-23

In other words, it is not only imports of North Korean coal that have dropped. Imports from other countries have fallen too. The “import ban” and fall in imports, rather than being linked by direct causation, may stem from a combination of factors that were already at play. Any conclusions that “China is putting the squeeze on North Korea” or the like are still premature.

On a different note regarding China-North Korea-trade, NK Economy Watch editor Curtis Melvin notes on Radio Free Asia that the Nampo port oil terminal has been upgraded. Perhaps a sign of long-term expectations on the North Korean side of long-run trade ties with China…

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