Archive for the ‘China’ Category

Causes for skepticism on China’s coal suspension

Tuesday, February 21st, 2017

By Benjamin Katzeff Silberstein 

As Yonhap reports, Chinese coal imports from North Korea exceeded the ceiling mandated by UN sanctions by almost three times in December last year (2016):

The volume of North Korea’s coal exports reached nearly three times what the United Nations Security Council has allowed in its latest punitive resolution imposed on the communist country, an update on the U.N. website showed Tuesday.

The report indicates huge shipments of the energy resource were sent before China announced its ban last week. The data did not specify which country imported North Korean coal over the months, but put the number of reporting member states that bought North Korean coal at one, apparently meaning China.

The latest update of the U.N.’s 1718 Sanctions Committee, which oversees the implementation of UNSC sanctions on North Korea, showed North Korea exported a total of just over 2 million tons of coal in December, which is worth US$183.89 million.

In terms of value, the monthly export volume is well over the import ceiling of $53.5 million which the UNSC imposed in Resolution 2321 for the period of Nov. 30 to Dec. 31.

Denouncing North Korea’s fifth nuclear test in September last year, the UNSC approved Resolution 2321, putting import ceilings on North Korean coal, the biggest source of foreign currency earnings for the reclusive country, which is believed to buttress its development of nuclear and missile programs.

The annual import ceiling for 2017 was set at 7.5 million tons or $400.87 million in value.

The sanctions committee update also showed that the monthly export of North Korean coal for January stood at 1.44 million tons, which accounts for over 19 percent of the annual total.

The data also suggests that China stockpiled on North Korean coal before its announcement on Saturday to suspend imports through the end of the year. China said the decision was made in accordance with the latest UNSC resolution.

Asked to comment on the figures, South Korea’s foreign ministry spokesman Cho June-hyuck said “China is explaining that the North Korean coal import suspension adopted on Saturday is part of its implementation of a UNSC resolution.”

Full article:
U.N. report: N. Korea’s coal exports far exceed U.N. ceiling in Dec.
Yonhap News
2016-02-21

This, I would argue, is part of a longstanding pattern, one that gives cause for skepticism on China’s recently announced ban on coal imports from North Korea through the rest of 2017.

It is important to remember that China is already obligated to suspend most mineral imports from North Korea under the UN Security Council Resolution 2270. The resolution was adopted in early March last year, after the first of the two nuclear tests of 2016, and mandated the ban on member states on imports of North Korean minerals, including coal.

The resolution, however, contained a massive loophole and excluded imports whose proceeds went to humanitarian purposes. Needless to say, determining precisely what coal imports from North Korea would generate revenue going toward humanitarian purposes inside the country – and what exactly counts as “humanitarian” – is close to impossible. Though the sanctions under resolution 2270 were by far the strongest ever adopted by the council against North Korea, in retrospect, the humanitarian exemption appears to have been designed specifically to give China the wiggle room to choose its own trade policy vis-à-vis North Korea, regardless of what sanctions mandate. By continuing its imports of North Korean coal, China can perhaps credibly point to the humanitarian exemption clause, but at the very least, this behavior would seem to go counter to the spirit of the sanctions.

After the sanctions were adopted, a familiar pattern set in. In the first few weeks after the sanctions were adopted, tangible signs suggested that Chinese authorities were serious about implementing the sanctions framework. For example, coal shipments from North Korea were reported to be sitting in limbo out at sea, unable to land at their Chinese ports of destination. On April 7th 2016, the Chinese Ministry of Commerce formally announced an embargo against imports of coal, iron and iron ores from North Korea, “in order to carry out relevant resolutions of the UN Security Council.”

Still, during the summer, things looked relatively normal along the border. On a visit to the Sino-Korean border area in late June last year, I spoke to several people involved in the border trade who said that goods were flowing just as normal. Trade was bustling, and around a total of 200 trucks – the number commonly estimated for a regular day before the sanctions were put in place – either crossed the bridge connecting North Korea and China or waited in line to cross.

Some told me that Chinese imports of coal had gone down, but that this was more due to a decline in domestic demand for North Korean coal than the UN sanctions. Trade in coal between the two countries fluctuates for a whole host of reasons other than sanctions. A change in demand from Chinese firms has historically often been the most important explanation for changes in Chinese coal imports from North Korea. Domestic considerations probably loom large in the suspension announcement as well. Remember, for example, that Chinese authorities are already trying to cut down on domestic coal consumption and production to combat smog and pollution.

At first, the summer did see a significant drop in trade between North Korea and China. In July, trade as measured in terms of dollar value plunged by 27 percent for July 2016, compared with the same month in 2015. This came after a smaller decrease in April, the same month that Chinese authorities formally announced the embargo.

This trend, if should even be called it a trend, did not last long. In August, China bought around 2.5 million tonnes of coal from North Korea, the highest figure ever recorded for a single month. This more than made up for any previous declines. All in all, imports of North Korean coal rose the same year that sanctions were supposed to prohibit it almost completely.

In other words: after tightening the screws in the beginning, seemingly to make a point and a symbolic show of compliance, China’s sanctions regime appeared to let up almost completely, and things went back to normal.

Will this time be any different? It is possible, but we should not be surprised if news of continued coal shipments surface later in the year. Though trade in coal could reasonably be expected to decline for some time, as it has in the past, it would not be wholly surprising if it returned to normal levels after a short and symbolic embargo period.

(Part of this post is an excerpt from a piece I published in The Diplomat Magazine on February 20th.)

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China says it is suspending imports of North Korean coal for the rest of the year

Saturday, February 18th, 2017

By Benjamin Katzeff Silberstein

In yet another so-called “strong signal”, China’s commerce ministry said on Saturday it won’t be importing any more coal from North Korea for the rest of the year. Remember, that coal that was already basically supposed to not be imported after last year’s sanctions (save for that generating revenue for humanitarian purposes). And the imports of which was already supposed to be capped at a low monetary limit. And so on and so forth.

Of course, as a usual caveat this time could be different but whether or not this decision will be enforced, and how strictly, remains to be seen, to put it mildly. China has other concerns in its relationship with the Korean peninsula and North Korea than signalling its commitment to the international community. Moreover, as I have written before, there are many factors that impact Chinese imports of North Korean coal than central government decisions. Domestic demand is one, and has probably played a greater role than diplomatic considerations over the past few years.

Other than the missile launch, one could suspect this is also a signal against the killing of Kim Jong-nam, who lived under Chinese protection.

Yonhap:

China’s commerce ministry said Saturday it will suspend the import of North Korean coal, apparently in response to the latest provocations made by Pyongyang.

Beijing’s Ministry of Commerce said the decision, which comes into effect on Sunday, is in line with the United Nation’s sanction against North Korea. The suspension will be valid through Dec. 31, the ministry added.

“As coal takes up a significant portion of Pyongyang’s trade with China, the decision is anticipated to have a significant impact on North Korea,” an expert on China said.

Coal is estimated to take up 40 percent of North Korea’s exports to China.

China had banned imports of coal from North Korea in April last year, but had been making exceptions for those intended for household use, which led to criticism over the regulation’s effectiveness.

North Korea fired a new intermediate-range ballistic missile (IRBM) called the Pukguksong-2 on Sunday from an air base in the country’s northwestern province toward waters off its east coast.

Full article:
China suspends imports of N.Korean coal
Yonhap News
2017-02-18

(Update 02-19-2017): an analysis from Choson Exchange:

When the UN Security Council imposed the cap on coal trade, China was left with the question of how such a cap could be implemented. Would there be an auction system for quotas? Is it able to track forward contracts or does it only know belatedly the level of coal trade after import figures come out? This problem came to the fore last year when the Chinese were unable to meet their commitments regarding the import cap as they wrestled with these problems.

China has generally chosen to ensure adequate flexibility in the wording of UNSC sanctions to give it wiggle room, rather than outright violating those rulings. Allowing a coal cap to pass at the UNSC indicates their willingness to adhere to the ruling. In imposing a ban for 2017, China probably took into account rapidly rising coal prices and a probable rush by companies to frontload sales ahead of the cap to predict that the coal cap would be breached far earlier in the year. Rather than risk a violation of the coal cap limit, China is proactively clamping down on trade.

Domestic concerns might also play a part. China is restricting domestic production of coal. Between domestic producers and North Korean ones, China obviously prefers the former.

Full article:
Why China imposed a ban on North Korean coal imports
Choson Exchange blog
2017-02-19

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North Korean issues more exit visas for people earning money in China

Wednesday, February 15th, 2017

By Benjamin Katzeff Silberstein

Reports Daily NK, with interesting details (3rd paragraph) on North Korean visa routines:

As the North Korean authorities prepare for the 75th anniversary of Kim Jong Il’s birthday (February 16), the regime has discretely issued passport visas to residents that are able to earn foreign currency in China, in order to fund the expansion of a greenhouse full of Kimjongilia (a flower named after Kim Jong Il).

“In South Pyongan Province, the regime secretly recruited individuals who can earn money for the greenhouse expansion project, regardless of whether they have connections in China. Although the process of visa issuance is usually complicated, the regime has handed out visas to anyone who is likely to earn money,” a source close to North Korean affairs in China told Daily NK on February 7.
“The provincial governments have instructed the foreign affairs unit of the State Security Department (SSD) to distribute allotments of passport visas to each region. Those recruited are waiting for their departure to China, assigned only with the duty to ‘secure funds,'” the source added.
Visa issuance in North Korea is subject to strict regulations for ordinary citizens. Applicants must have relatives in China and a document with a confirmation seal from Chinese immigration officials confirming that the relatives have extended an invitation. The law stipulates that ▲relatives should be closer than a first cousin once removed, ▲a visit cannot exceed either 40 days or two months and, ▲visa applications can only be submitted three years following the previous visit.
Normal applications are only open to those over 55 years of age who have a spouse and children. A confirmation process by the people’s unit, town office, state enterprise, the Party, the SSD, and the Ministry of People’s Security is then needed to show that there is no problem in regards to ideology. In particular, it is important that the applicant has no relatives who are defectors or who were sent to correction camps. If all of these requirements are met, then bribes of more than 500 USD are demanded from the foreign affairs division.
However, this rigorous procedure has been thoroughly disregarded as the provincial governments dispatch individuals to China to earn money. The Workers’ Party has issued instructions that each province should prepare the materials needed for the expansion of the Kimjongilia greenhouse.
Full article:
North Korea issues more visas ahead of Kim Jong Il’s birthday
Seol Song Ah
Daily NK
2017-02-15
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Sino-North Korean trade suffering from the Amnok river being frozen

Sunday, February 12th, 2017

Benjamin Katzeff Silberstein

Reports Daily NK:

Smuggling and some trading activities between North Korea and China have been temporarily suspended due to the freezing of the Amnok (Yalu) River. Cross border exchange between the two countries often relies on the use of small boats to ferry goods between Sinuiju, North Pyongan Province, and Dandong, Liaoning Province.
“The Amnok River began to freeze due to plummeting temperatures from last November, so trade and smuggling activities have been suspended. Residents are waiting for the winter cold to pass at the end of February, and are repairing their ships,” a source in North Pyongan Province told Daily NK on February 5.
“The authorities have issued administrative instructions to the state fisheries including the Amnok shipping office to suspend all trade as well as fishing, and focus on repairs. But the fishermen themselves are more interested in smuggling because the state isn’t paying for the repairs.”
“Even the state fisheries offices are engaged in smuggling in order to survive and make loyalty contributions to the regime. Some managers of state-run fisheries have recently been approaching private smugglers, who reportedly earn around 200,000 RMB a year, for business propositions,” the source added.
According to the source, the state fisheries eschew official trade and resort to smuggling when official operations are suspended, because their primary concern is a loss of market competitiveness. Moreover, smuggling is critical in offsetting the costly customs tariffs incurred during official trade.
Operations are supported by border patrol officials who collude with the smugglers. Border guards, who are in charge of border security and preventing defections, are bribed heavily in return for allowing the smugglers to operate freely.
“The ones who are suffering the most from the recent freezing of the Amnok River are the officials manning the border posts. They are having a hard time because bribes have dwindled,” added a separate source in North Pyongan Province.
“Most smuggled goods are traded in Dandong and Dongjiang, and merchants there are also affected. There are literally hundreds of Chinese vessels anchored at Dongjiang Port in Dongjiang City waiting for smuggling to resume.”
Article source:
North Korea-China trade suspended due to frozen Amnok River
Seol Song Ah
Daily NK
2017-02-11
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North Korean rice prices have dropped drastically one year after the sanctions. Why?

Wednesday, February 8th, 2017

By: Benjamin Katzeff Silberstein

Prices for rice have fallen in North Korea. Daily NK, which tracks prices of rice and foreign currency in three North Korean cities, reported in the beginning of this week that rice prices have fallen thanks to continued development of the market economy and a steady flow of goods to and from China. This has happened despite expectations that the sanctions that the UN passed one year ago would cause inflation.

In theory, the sanctions were supposed to curb trade with China because they targeted North Korea’s crucial minerals trade. In practice, a steady stream of news from the border suggests that trade has continued, albeit with periodic squeezes, following a familiar pattern of China’s sanctions implementation waxing and waning.

This makes a lot of sense. A better functioning and more efficient market should logically lead to lower prices, as should increased trade with China, given the increase in supply. But neither of these two factors explains the timing. There are several other elements to take into consideration when analyzing price changes in North Korea. I am not making any certain claims here about the relatively drastic shift in prices, but rather, pointing to a few factors that may have contributed.

First, one must ask: how big is the drop? The short answer is: pretty big, but not unprecedented. The following graph shows the last and first price observations in the Daily NK market prices database for every year since 2010–2011. (I’ve excluded 2009–2010 because of the distortions that the 2009 currency reform creates in the data.) It shows that a similar price drop happened between 2011 and 2012 as well.

Graph 1: rice prices in North Korea, last and first year observations. Graph by NKeconwatch.com. Data from Daily NK.

This latest price point, however, is not a historic low-point. We’ll see if prices continue to drop over the weeks, but as of now, there are fairly near time points when prices have been lower, such as April 2014 (see graph further down).

Prices are seasonal to a degree. Though the market system and the public distribution system (PDS) obviously function under very different mechanisms, the following graph from the World Food Program’s 2013 food and crop assessment (the latest exhaustive one they published, to my knowledge) underscores the point that supply varies depending as the harvest draws farther and closer, and suggests that overall supply tends to be particularly good in December and January in other years as well:

Figure copied from World Food Program Food and Crop Assessment in the DPRK, November 2013, showing seasonal variations in government grain distribution.

Overall, the story under Kim Jong-un’s tenure seems to be one of price stability. Since around the spring of 2014, prices have moved in a fairly delineated fashion (as visible in the right half of this graph):

Rice prices, average of three cities, 2012–2017. Data from Daily NK, graph by NKEconwatch.com.

Second, though it would be intuitively easy to conclude that the drop in prices was caused by better functioning market mechanisms and agricultural management changes, this doesn’t seem to be the whole story. Again, such changes are crucial and may well have played a large role in the greater price stability of the past few years. But they would not explain this sudden shift.

Instead, the story seems to partially be the opposite, one of government action. A few days ago, Voice of America reported that PDS distributions in January of this year have, according to a World Food Program official, gone up by around ten percent as compared to the same period last year. Both in September and November, the North Korean government imported significantly larger quantities of rice than usual. These imports presumably go out through state channels rather than the private markets.

So while it’s impossible to isolate different effects from one another, it looks like the state can still have a significant impact on the food economy, even with the strong and continuously evolving market sector. This impact seems particularly likely this time around, given the sudden drop in prices. Only time will tell whether drop continues, or if prices continue to bounce within the limits of the past few years.

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Rice prices on steady decline

Monday, February 6th, 2017

According to the Daily NK:

Rice prices in North Korea’s markets are reportedly on a downward trend. It was originally expected that the sanctions implemented by the international community would lead to inflation due to trade reductions, but a year after the sanctions were implemented, prices have instead fallen due to the steady development of marketization and active trade with China.

According to recent findings by Daily NK, rice is trading at 4,000 KPW (per kg) in Pyongyang, 3970 KPW in Sinuiju, North Pyongan Province, and 4190 KPW in Hyesan, Ryanggang Province. This represents an approximate 1,000 KPW reduction from a year ago (Pyongyang 5019 KPW, Sinuiju 4970 KPW, Hyesan 4980 KPW).

A source in North Hamgyong Province told Daily NK on January 30, “I know that China donated a large amount of rice after the flood damage in September last year. I also heard that rice farming in North and South and Hwanghae Provinces and South Pyongan Province went well.”

The price of rice in Hoeryong City (North Hamgyong Province), which suffered severe flood damage last year, is at approximately 3,600 KPW. “Rice was about 5,000 KPW in January, but prices have fallen now, so women preparing for the New Year’s holiday were fairly pleased,” she said.

“Rice prices have also been slowly dropping since the end of last year at the Pyongyang markets and reached 4,000 KPW this year. Traders (who purchase products to sell elsewhere) lining up at the market entrance to buy rice coming in from the countryside are saying that the amount of rice circulating in the markets has definitely increased compared to January last year,” a source in South Pyongan Province said.

“Rice prices in most markets in Pyongyang are declining, with more than 70% of rice being imported from China. People usually mix Chinese rice with Korean rice because Chinese rice is too dry (as if it has been in storage for a year), unlike the sticky Korean type.”

VOA (Voice of America) reported on January 26 that North Korea’s total rice imports from China amounted to 4.2 million tons last year (2016), a 2.4-fold increase over the previous year (2015). This statistic was put forward by Kwon Tae Jin, Director of East Asia Research at the GS&J Institute, citing an analysis of data published by China’s General Administration of Customs.

Sources within North Korea have consistently pointed out that revitalized market activities have played a role. “In the past (Kim Jong Il’s time), rice prices increased whenever the regime cracked down on market activities, but people are now able to do business without many restrictions. In the current situation, it’s unlikely that the price will suddenly jump,” a source in Ryanggang Province said.

Market stability has been a hallmark of Kim Jong Un’s rule and is thought to be reducing backlash from the general public as their quality of life improves.

However, the ongoing decline in rice prices is likely to lead to livelihood instability for farmers. If rice prices fall while the prices of other commodities (Chinese imports) remain the same, issues are likely to arise.

“The prices of commodities other than rice have mostly increased. As a result, a growing number of farmers are worrying that they will be unable to survive on farming alone,'” the Ryanggang-based source said.

Read the full story here:
Rice prices on steady decline
Daily NK
Kang Mi Jin
2017-2-6

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North Korea Sells South Korean Cookware Seized at Kaesong

Monday, February 6th, 2017

Benjamin Katzeff Silberstein

Reports Radio Free Asia:

South Korean cookware seized illegally by North Korean authorities after the Kaesong joint industrial park was closed last year are being found for sale in large quantities in Chinese cities near the North Korean border, sources say.

Formerly viewed as a symbol of cooperation between the two halves of the divided Korean peninsula, Kaesong was closed in February 2016 after North Korea ordered all South Koreans out of the complex, seized South Korean assets there, and declared the area under military control.

The move came a day after South Korea announced it was pulling out of Kaesong in retaliation for North Korean nuclear and long-range missile tests earlier in the year.

Now, electric rice cookers produced by South Korean firms in Kaesong are turning up for sale across northeastern China, a source in Kaifeng, in central China’s Henan province, told RFA’s Korean Service.

“North Korea began to sell South Korean products left behind in Kaesong starting in mid-December,” said the source, familiar with trade in the northeast and speaking on condition of anonymity.

“Their exact number is unclear, but it’s known to be in the hundreds.”

Electric cookers bearing the Kaesong markings “Made in Korea” are among the most popular items offered for sale in Korean stores located in cities in China’s northeast, sources said.

“Those buying the cookers are mainly South Korean businessmen.  Then resell them to Korean merchandise stores located in Shenyang, Yanji, and other places,” RFA’s source in Kaifeng said.

‘A complicated problem’

Speaking separately, the operator of a shop in China near the border with North Korea told RFA that he was approached in early December by four North Koreans he had never seen before.

“They asked if I would be interested in buying electric cookers made in Kaesong for a low price,” the source said, also speaking on condition he not be named.

“They said there were about 6,000 of these that they could sell.”

“At first, I thought that I could make a lot of profit by selling them, but then I refused the offer because I thought this could become a complicated problem for me later on,” he said.

While the same rice cookers are also made in Qingdao, in China, and labeled “Made in China,” those made in Kaesong are more popular with consumers because of their “Made in Korea” markings, he added.

 

Full article:
North Korea Sells South Korean Cookware Seized at Kaesong
Reported by Joonho Kim for RFA’s Korean Service. Translated by Soo Min Jo. Written in English by Richard Finney.
2017-02-06

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More North Korean coal shipments going into China, says VOA/Yonhap

Wednesday, January 4th, 2017

By Benjamin Katzeff Silberstein

As in the past, Chinese sanctions enforcement appears to have been a waxing and waning phenomenon. Yonhap reports, citing Voice of America:

China seems to have resumed imports of North Korean coal by lifting a temporary ban on them which it employed early last month, a U.S. broadcaster, monitored here, reported Wednesday.

On Dec. 11, China’s Commerce Ministry announced that it would ban imports of North Korean coal through the end of that month to comply with the U.N. Security Council Resolution 2321 adopted on Nov. 30 to punish the North for its fifth nuclear test. Coal is the North’s single largest export item, and China accounts for nearly 40 percent of the shipments.

Three North Korean vessels — Kumreung No. 5, Kumsan and Wonsan No. 2 — are confirmed to have moored in seas about 10 kilometers off the China’s leading coal port of Qinhuangdao, Hebei Province, from Sunday through Tuesday, the Voice of America said, citing MarineTraffic, which provides live ship tracking intelligence worldwide.

On top of that, North Korean ships Kumhae and Kumho No. 1 berthed at the ports of Longkou and Penglai, Shandong Province, respectively, and Susong and Jonwun No. 68 were also on standby for entry near the ports, the broadcaster said.

Eight other North Korean boats were anchored in seas near Yantai, Rizhao and Lanshan, Shandong Province.

The ships, which are believed to have left the North starting Sunday and arriving in the Chinese ports on Monday or Tuesday, are bulk carriers capable of transporting coal, the broadcaster said, citing MarineTraffic.

Satellite images show heaps of black objects at the Chinese ports without exception, it said.

The Resolution 2321 is aimed largely at significantly curtailing the North’s coal exports — a source of hard currency for its nuclear program — by putting a cap on its total export amount.

The cap, set at whichever is lower between 7.5 million tons or US$400 million, is aimed at cutting the North’s annual coal export revenue by more than 60 percent or about $700 million, a huge sum that accounts for nearly a quarter of its total exports estimated at $3 billion.

Article source:

China appears to have resumed imports of N. Korean coal: VOA
Yonhap News
2017-01-04

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Summer trailings along the Sino-North Korean border, in search of sanctions: photo essay

Tuesday, December 20th, 2016

By Benjamin Katzeff Silberstein

This November, just like every  time that new sanctions are levelled on North Korea, the first question tends to be: what will China do? Unsurprisingly, the same question followed after UN resolution 2270 in March this year, when the international community adopted the strongest sanctions against North Korea to date, most crucially targeting its minerals exports. This time, some believed, would be different. China was finally fed up and would take measures to hit North Korea’s economy, and official; statements and some bureaucratic action reinforced this impression. Now, some hope that the “cap” measure on imports of North Korean coal will remove the loophole created by the “humanitarian exemption” in the previous sanctions.

By now, after the THAAD, other geopolitical developments and the sheer passing of time, the question of China’s degree of sanctions enforcement has almost faded into the background. As the Washington Post’s Anna Fifield showed in a dispatch from Dandong a few weeks ago, sanctions are at most one factor among many that impact trade between China and North Korea.

This summer, I visited Dandong, Yanji and Hunchun, three Chinese cities along the border. I got a very similar impression: sure, some people involved in border trade told me, things had gotten a little more complicated, though not much. But sanctions were rarely mentioned as the reason for any added difficulties or downturns in trade.  At the time, China’s enforcement of sanctions was very much a topic of debate, and most analysts were skeptical of any squeezing going on, while some claimed trade had virtually ceased. At my visit, on the contrary, I saw fairly vigorous trading activity, and few people I spoke to thought any changes had occurred since sanctions were enacted. Posting these impressions and pictures has been a project in the pipeline for a while, so while much has happened since this summer regarding China-DPRK relations and trade, I hope that the reader will find it interesting to see how things looked at a time when some concluded that China was finally squeezing North Korea in a way that hurt. To be clear: all impressions and pictures below are from late June of 2016.

Trailing the China-DPRK border, in search of sanctions

Dandong 

Entrance to the Dandong customs inspections area. Photo: Benjamin Katzeff Silberstein

Earlier this year, the UN Security Council adopted the strongest sanctions that North Korea has faced to date. As with previous rounds of sanctions, one of the major questions is China’s degree of enforcement. Going back a few months, some suggested that major shifts had taken place, and that trade between North Korea and China had declined radically.

By the actual border, this summer, things looked very different. In contrast to the image of a desolated trading environment, I encountered bustling traffic during a visit earlier in the summer. During one morning in late June, around 85 trucks crossed the border from North Korea into China in only about one and a half hours. Virtually all trucks were registered to northern Pyongan province, the home province of Sinuiju. In addition, 19 cars and buses, one long freight train and one passenger train crossed the bridge during the same time. After this first stint of traffic, the flow reversed and a steady flow of trucks began pouring into North Korea from China. Only during the 15 minutes when I observed the traffic going from China, into North Korea, 35 trucks and 13 buses and cars crossed the bridge.

The traffic flowed in sequences, one direction at a time. And this was only the morning traffic. The flow may have continued throughout the day, as the traffic moved in intervals. Walking back to the customs area from the bridge crossing in the early afternoon, what was previously a calm intersection by Chinese inner-city standards had turned busy: trucks lined the entire street leading up to the customs office and some flowed over into the adjacent street, waiting to drive into the inspection area. All in all, more than 80 trucks lined the roads waiting to cross into North Korea. Most carried Chinese license plates.

Trucks lined up on both sides of the street at one of the main intersections in central Dandong, waiting to go into the customs inspection area to cross into North Korea. Photo: Benjamin Katzeff Silberstein

Trucks, trucks and more trucks. Photo: Benjamin Katzeff Silberstein

Trucks lined up for customs inspection along the streets of Dandong before crossing into North Korea. Photo: Benjamin Katzeff Silberstein

Trucks lining up for customs inspection before crossing into North Korea from Dandong. Photo: Benjamin Katzeff Silberstein

The never-ending line of trucks. Photo: Benjamin Katzeff Silberstein

Truck driving into the Dandong customs area. Photo: Benjamin Katzeff Silberstein

Another picture of the never-ending line of trucks. Photo: Benjamin Katzeff Silberstein

North Korean trucks crossing into Dandong from Sinuiju. Photo: Benjamin Katzeff Silberstein

It is commonly estimated that around 200 trucks go between China and North Korea on a regular day. In sheer numbers, virtually nothing seemed to have changed regarding the traffic since the latest round of sanctions. Only the trucks observed in plain sight during this morning amount to a little under 200, and this merely during the first few hours of the day. At least 10–20, probably far more, were already in the customs inspection area waiting to cross. In short, things looked very regular and busy.

Trucks waiting to cross from North Korea into Dandong. Photo: Benjamin Katzeff Silberstein

Some of the trucks going into Dandong from Sinuiju looked empty. Photo: Benjamin Katzeff Silberstein

Of course, one must be careful not to draw too drastic conclusions from one day of observations. Things may have changed throughout the summer and surely during the fall, and channels such as ship transports are not visible from the border bridge area. Moreover, according to reports from inside North Korea, the authorities have expressed concerns about potentially shrinking trade volumes as a result of sanctions, and some traders now smuggle goods that are covered by the sanctions rather than transporting them openly, as they have in the past, according to Daily NK. In short, sanctions did appear to be having some degree of impact, even during the past summer.

Most North Korean trucks crossing into Dandong were registered to North Pyongan province ( 평안북도도, here abbreviated to 평북), the province bordering Dandong. Photo: Benjamin Katzeff Silberstein

Another truck registered to North Pyongan province. Photo: Benjamin Katzeff Silberstein

However, the truck traffic across the Chinese border through Dandong suggested that the picture was mixed. At the very least, observations from the border area showed that even though trade in certain goods may have gotten more difficult, North Korea was by no means economically cut off from China, and still is not. Prices for food and foreign currency on North Korean markets, too, remained relatively stable through the summer from when sanctions were put in place, indicating that the economy as a whole is not feeling any drastic impact of the sanctions.

Factory materials going into North Korea from China. Photo: Benjamin Katzeff Silberstein

Factory materials going into North Korea from China. Photo: Benjamin Katzeff Silberstein

Most trucks transporting factory materials into North Korea appeared to be Chinese-registered. Photo: Benjamin Katzeff Silberstein

Another Chinese truck transporting factory materials into North Korea. Photo: Benjamin Katzeff Silberstein

If the North Korean economic elite was worried about the sanctions, it certainly did not show at one hotel in central Dandong. Sinuiju in North Korea is only a few minutes drive over the Yalu River, on the bridge connecting the two countries. The hotel was packed with North Korean guests, many of whom have presumably come over for purchasing and meetings with Chinese business partners. They came and went in a steady stream, wearing luxury brand clothing, watches and carrying expensive bags and wallets.

They paid everything in cash, and at least one person per travel party spoke Chinese. One man held a car key with a logo from KIA, the South Korean car manufacturer. One woman sported a Hello Kitty handbag. As some got ready to depart, bags piled up in the lobby, seemingly filled with goods from shopping sprees around town. Some of it seemed to be meant for re-sale in North Korea. Many stores around the flood banks cater specifically to a North Korean clientele, and sell items like kitchenware that are not easily accessible across the river.

Many stores in Dandong cater specifically to North Korean consumers. The sign at the left bottom of the picture reads “조선백화점,” translating into “Korea department store.” Photo: Benjamin Katzeff Silberstein

Travelling to Dandong, it was particularly apparent why the Chinese government would be reluctant to clamp down too hard on border traffic, even if it would want to do so. Political reasons aside, trade between North Korea and China matters for cities such as Dandong. One can see it in the flesh: the streets are packed with companies dealing in imports and exports to and from North Korea. One company trades steel; another sells construction equipment such as tractors. Several sell cars and buses, and others deal in refrigerators, dishwashers, washers and dryers. One, called “Pyongyang Tongshin (평양통신),” judging by its name, offers cell phone services for traders travelling into North Korea. Should trade between the two countries drastically dive, the local economy would take a hit.

Advertisements for North Korean cell phone service Koryolink in Dandong. Photo: Benjamin Katzeff Silberstein

“Pyongyang Communications.” Sign in Dandong. Photo: Benjamin Katzeff Silberstein

One could turn these observations on their head: if so many trucks were lining up and only moving slowly into the customs area, could that not mean that inspections had gotten tighter? Was the line of trucks actually a sign that Chinese authorities did what they have promised to do?

Perhaps. But not according to people around the border crossing and customs area. I asked several individuals involved in the cross-border trade about the long lines and waiting times for border crossings. No one seemed to believe that the traffic commotion and lines were anything out of the ordinary. Both Chinese and North Koreans involved in import-export business said traffic had not changed at all during the past year or so. Overall trade had declined a bit, one person said. The trucks carried a little less than they did before, but only marginally. Coal was not traded as frequently as it was before the sanctions were put in place.

This sign lists services for one Dandong firm that offers, among other things, UPS transport services and solar-powered appliances, which have become popular in North Korea in recent years. Photo: Benjamin Katzeff Silberstein

But the timing of the early 2016 round of sanctions made such statements difficult to assess. China had in fact been decreasing its coal imports from North Korea at different points in time several years before the latest round of sanctions. Between 2013 and 2015, for example, the value of Chinese coal imports from North Korea shrank by almost 25 percent. Only between January and February 2014, the value of trade between the countries dropped by 46 percent. The statistics are often clouded by the fact that global market prices for commodities such as coal fluctuate heavily. There may also be a variety of seasonal factors at play. In sum, isolating sanctions as a variable is notoriously difficult, and often, numbers do not tell the full story. As of June this year, North Korean coal could still be ordered through the Chinese online shopping mall Alibaba.

Moreover, even if Chinese authorities wanted to check all goods cross with minute rigidity, one can question whether it would even be practically feasible. The customs area is not particularly large and did not appear to be overflowing with staff. Checking around 200 trucks per day for their exact goods, and determining whether its revenues could be used to fund North Korea’s weapons program – the condition stated by the latest sanctions – seems like a gargantuan task in practice.

 

Hunchun

Tourists and a truck waiting by the Hunchun-Rason border crossing (Quanhae). Photo: Benjamin Katzeff Silberstein

The Dandong-Sinuiju is the main point of trade between China and North Korea, but not the only one. An one-hour drive from the Chinese city of Hunchun, trucks and people come and go to and from the North Korean northeast. At the border crossing, most seem to be going to the special economic zone in Rajin in North Korea. On one gloomy Thursday in late June, around 40 Chinese trucks waited to cross. One Chinese-Korean waiting for the gates to open to the customs area told the present author that business is going very well these days. He runs a hotel in Rajin, catering mostly to Chinese tourists and business people. He has seen no dip in customers over the past year – rather, more people are coming than before. This single testimony may not be fully indicative of trade as a whole, but it does suggest that Chinese tourism remains an important and fairly viable source of revenue for North Korean businesses in Rason.

The Quanhae border crossing from afar. Photo: Benjamin Katzeff Silberstein

Trucks lining up to go into North Korea. Photo: Benjamin Katzeff Silberstein

More trucks at Quanhae. Photo: Benjamin Katzeff Silberstein

Trucks at the border crossing. Photo: Benjamin Katzeff Silberstein

Chinese tourists lining up to have their passports checked before heading into Rason. Photo: Benjamin Katzeff Silberstein

This was certainly the way things looked at the border crossing. Chinese tourists came and went in great numbers, many carrying North Korean shopping bags. Trucks, too, continuously crossed the border throughout the afternoon. All in all, 80­­–100 trucks drove into North Korea during this afternoon. One was adorned with a logo from the Dutch shipping company Maersk. A few trucks came out of North Korea as well, many seeming to carry seafood destined for cities such as Hunchun and Yanji.

A truck adorning a logo from the Dutch shipping company Maersk having just crossed into North Korea from Hunchun. Photo: Benjamin Katzeff Silberstein

In addition, a large number of buses and minivans carrying tourists and traders went in from China. Many minivans carried driving permits for Rajin clearly visible through their front windows. Given the amount of truck traffic only during the afternoon, it seems a reasonable estimate that perhaps twice the amount of traffic went through during the day as a whole. One person with good knowledge of the border area estimated that around 200 trucks go through at this crossing on a regular day, though this figure is obviously neither exact nor certain.

Customs office on the North Korean side of the border crossing. Photo: Benjamin Katzeff Silberstein

Chinese tourists waiting to head into North Korea. Photo: Benjamin Katzeff Silberstein

The two bridges connecting Rason to China (particularly the newly constructed one in the back). Photo: Benjamin Katzeff Silberstein

These observations did not fully prove that China was not enforcing sanctions on North Korea during the summer of 2016. However, they did show that trade and traffic between the countries was still very much alive. Some goods may have be traded less, but neither sanctions nor souring relations between North Korea and China seemed to have reduced trade as much as some observers have claimed. The North Korean economy may be impacted by sanctions, but it is not and rarely has been fully isolated from the rest of the world.

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Korean-Chinese business delegations visit DPRK

Monday, December 19th, 2016

Various overseas groups of Koreans are visiting the DPRK to mark the fifth anniversary of the death of Kim Jong-il. Most of them are mentioned fairly regularly in the official media, but a couple of the business groups were new to me. According to Rodong Sinmun (2016-12-19):

Delegation of Korean Business Persons in China Arrives

A delegation of the Association of Korean Business Persons in China led by Chairman Phyo Song Ryong arrived here Friday to commemorate the fifth anniversary of demise of leader Kim Jong Il.

Earlier, arriving was a delegation of the Association for Economic and Cultural Exchange of Korean Nationality in Dandong City of China headed by Chairman Kim Thaek Ryong.

UPDATE: They reportedly left on 2016-12-21.

Here is a link to a PDF of the original article.

If anyone knows anything about these groups (Chinese names, affiliated businesses, etc) please let me know.

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