Archive for the ‘International trade’ Category

Tumen Triangle tribulations: The unfulfilled promise of Chinese, Russian and North Korean cooperation

Thursday, November 12th, 2015

Andray Abrahamian has published a report with the US-Korea Institute on developments in the Tumen Triangle.

Here is the report description:

The Tumen Triangle region-where North Korea, China and Russia meet-is, in many ways, the story of regional integration being held back by the political concerns of Pyongyang, Beijing and Moscow. There are long-term forces at work here, such as Moscow’s concerns over Chinese dominance in the sparsely populated Russian Far East. This legacy of mistrust frames cross-border interactions and despite recent warm relations, major cross-border cooperation remains limited.

In this USKI Special Report, Andray Abrahamian, Director of Research at Choson Exchange examines historical legacies, contemporary relations and shifting strategic priorities between the three countries. The report then focuses trade and investment in the Tumen Triangle region, particularly how the Yanbian Korean Autonomous Prefecture and Primorsky Krai interact with and affect Rason Special City, the center of the Rason Special Economic Zone.

You can download the report here (PDF).


Camp 16 imagery update

Thursday, November 12th, 2015

UPDATE 1 (2015-11-18): There was some follow-up media coverage of this work that claimed Camp 16 is about half the size of Pyongyang. This is not the case. Here are the actual statistics comparing the geographical sizes of Camp 16 and Pyongyang [Measures are approximate using Google Earth measuring tools]:

Pyongyang has 230 mile (371km ) perimeter and area of 679 sq miles (1758 sq km).
Camp 16 has 72 mile (115 km) perimeter and area of 212 sq miles (548 sq km).

So Camp 16 is approximately 31% the current size of Pyongyang. If we included Sungho, Sangwon, and Junghwa, which were moved into North Hwanghae Province, the percentage would drop even further.

ORIGINAL POST (2015-11-12): I previously wrote about Camp 16 in Myonggan here (2013-7-19). Now Google Earth has updated the imagery of Camp 15 with satellite pictures dated 2015-11-2 and 2015-10-15. I reported some of the changes in this RFA report this week, but here they are again…

1. New small hydro power plant. The North Koreans built a dam, drainage canal and small power station near one of the camp’s production facilities:

 Camp-power-station-16-2013-10-3 Camp-16-power-station-2015-10-15

Here is a close up of the plant and a nearby factory that appears to be operational:


2. New housing and possibly a sports field. A new apartment block was built in the camp. It appears to be nearly 160m in length and is composed of just a couple of stories. The building behind it that is probably for livestock. The picture also reveals what appears to be a sports field of some kind next to the housing. The image is not very clear, so this could be something else, but I am not sure what.

Camp-16-New-Housing-2013-10-3 Camp-16-New-Housing-2015-10-15

Here is a closeup of the “sports field”. If you have a better idea what this is, please let me know.


3. New fish farm. The fish farm is small, just over 1,100 sq meters surface area.

Camp-16-fish-farm-2013-10-3 camp-16-fish-farm-2015-10-15

4. Housing Razed. Just north of the fish farm some buildings, which could be small homes or workshops, appear to have been razed:

Camp-16-Housing-razed-2013-10-3 Camp-16-housing-razed-2015-10-15

5. Evidence of continued mining and logging. Below we can see evidence of mining activity since 2013.

Camp-16-mine-activity-2013-10-3 camp-16-mine-activity-2015-10-15

Here are piles of felled trees which indicate the mine also exports lumber:


If the minerals that are mined and the lumber that is harvested are exported for hard currency, the transaction would likely involve a trade company under the control of the Ministry of State Security (MSS,  SSD, NSA), however, I am not privy to the details of those transactions.


North Korea’s “Epic Economic Fail” in International Perspective

Wednesday, November 11th, 2015

A new report by Nicholas Eberstadt has been published by the Asan Institute for Policy Studies. According to the summary:

This report brings to the table new research on the dimensions of economic failure in modern North Korea, offers a quantitative view of how nations develop in our modern world, and where North Korea’s awful slide downward fits within this global tableau; offers admittedly approximate long term estimates of overall net resource transfers to the DPRK, including estimates of net transfers from the major state benefactors; and some indications about the interplay between concessionary resource transfers from abroad and the DPRK’s domestic economic performance. It concludes with some observations about the implications of these findings

You can download a PDF of the report here.


NCNK on pending sanctions legislation

Tuesday, October 27th, 2015

The National Committee on North Korea (NCNA) has published a quick summary piece on sanctions legislation under deliberation in the US Congress. According to NCNK’s web page:

There are currently three related North Korea sanctions bills under consideration in Congress. H.R. 757, introduced to the House by Rep. Ed Royce in February 2015, is broadly similar to a bill that passed the House in the last session of Congress, but wasn’t acted upon by the Senate. In the Senate, S. 1747 was introduced by Senators Robert Menendez and Lindsay Graham in July of this year. Additionally, Senators Cory Gardner, Marco Rubio, and James Risch are co-sponsors of the recently-introduced bill S. 2144.

Although the three sanctions bills are generally similar in scope, there are several key differences among them, including their potential impact on humanitarian operations; the level of discretion the Executive Branch would have in applying sanctions; and language on sanctions targeting North Korea’s mineral industry.

NCNK’s new Issue Brief gives a detailed side-by-side summary of these three bills, noting key provisions and differences between the three.

You can download the Issue Brief here (PDF).


China – DPRK open new shipping route

Friday, September 25th, 2015

According to Xinhua:

A bulk cargo and container shipping route between China and the Democratic People’s Republic of Korea (DPRK) has been put into operation, focusing on coal import from DPRK and grocery export from China, authorities said on Friday.

The route, linking Longkou port of east China’s Shandong Peninsula to Nampo port of western DPRK was the first scheduled shipping line for bulk cargo and container between the two countries. It is serviced by seven ships, which complete one circuit of the ports every ten days, according to Longkou Port Group.

The route was jointly established by Longkou Port Group, Liaoning Hongxiang Industrial Group and a shipping company in DPRK in a bid to promote international trade under China’s “Belt and Road” initiative.

Located at the Bohai Sea coast and built in 1914, Longkou port handled 75.07 million tonnes of cargo and 550,000 TEU of containers last year.

“The opening of the route can help improve the service function of the port and is of great significance for the port’s transformation and upgrading,” said Zhang Haijun, general manager of Longkou Port Group.

Read the full story here:
Bulk cargo and container shipping route links China, DPRK


North Korea’s domestic impacts of lower coal prices

Tuesday, September 22nd, 2015

By Benjamin Katzeff Silberstein

North Korea is seeing some interesting impacts domestically from the lowered coal exports. DailyNK reports that market trade has picked up in intensity as a result of the lower exports of coal:

Amidst the growing private economy in North Korea, a number of people are growing wealthy by cashing in on the expanding distribution industry. Recently, a growing number of these newly rich are purchasing China’s Jinbei brand of small 2-3 ton load trucks to facilitate business operations, Daily NK has learned.

“Recently, Jinbei trucks coming in from Dandong Customs House through to the Sinuiju customs office in North Korea are becoming very hot items in the transportation market,” a source in North Pyongan province reported to Daily NK on September 16th. “Foreign-currency earning enterprises are importing these smaller Jinbei trucks which are quite different from the 20-30 ton load trucks that were previously the norm.”

This information was cross-checked via an additional source in the same province and a source in South Pyongan Province.

As North Korean coal exports have decreased and domestic market activity has picked up, the small trucks have become more useful for delivering goods to local markets. “Ordinary men use bicycles or motorbikes to distribute goods, but the rich are able to buy these small 2-3 ton load trucks and use those instead,” he explained.

These trucks, as with most vehicles in North Korea, are first imported by foreign-currency earning enterprises and sold unofficially to individuals with the cash to pay up front and in full–i.e. the donju. Because possession of vehicles is still officially forbidden in North Korea, the car remains registered under the name of the affiliated enterprise’s name; the entrepreneurial individual utilizing it kicks back a portion of his–or, less frequently, her– profits to the company.

Read the full article:


Jinbei trucks roll in, ‘donju’ distribution operations rise



DPRK – China Trade in 2015 (UPDATED)

Tuesday, August 11th, 2015

UPDATE 2 (2015-8-17): Marcus Noland weighs in on the H1 2015 KDI report.

UPDATE 1 (2015-8-11): KDI reports that DPRK-China trade continues to fall in 2015. According to Yonhap:

North Korea’s trade with China plunged more than 10 percent in the first five months of 2015 due mainly to a drop in raw material prices, a report showed Tuesday.

North Korea’s outbound shipments to its neighbor sank 10.3 percent on-year to US$954 million in the January-May period, while imports plunged 14.3 percent to $1.09 billion, according to the report by the Korea Development Institute (KDI).

“Bilateral trade was down 12.5 percent compared to the year before with exports of anthracite coal and iron ore affecting overall numbers,” KDI said. “Compared to the year before, when trade fell 4.8 percent, this year’s drop is more pronounced.”

The think tank based its assessment on data provided by the International Monetary Fund, the United Nations and the Korea International Trade Association.

North Korea’s exports of coal to China declined 1.6 percent in dollar terms, with the number for iron ore nosediving 70.3 percent.

Falling exports and a subsequent drop in earnings were probably felt by Pyongyang, which will have to consider other means of generating hard currency.

Compared to 2013, when the North’s exports of coal reached its peak, this year’s numbers represent a 24.6 percent drop.

“The contraction is noteworthy because the North actually diversified the places it shipped coal to in China,” the KDI said.

In regards to iron ore, exports declined, both in terms of volume and prices, with the weakening of China’s steel industry directly impacting trade. Exports stood at 600,000 tons, down from 1.11 million tons, with the value standing at $22.96 million.

The KDI said Pyongyang’s No. 1 import item from its neighbor was filament yarn, followed by cargo trucks and petroleum products. Imports of yarn and petroleum products were down, while shipments of cargo trucks rose.

In bold above I have highlighted what appears to be bad news for North Korean coal exporters. I was surprised to see this because an earlier report by Bloomberg indicated that North Korean coal exports to China had increased by 25% this year (over 2014).  However, it is worth pointing out that the Bloomberg report focuses on the actual quantity of coal crossing the border and KDI  reports on the value of the coal crossing the border. The only way both reports can be true is if the North Koreans are again taking lower prices from the Chinese for their coal compared to their international competitors. Another explanation for the conflicting reports could arise if there was a significant difference between Chinese customs data (Bloomberg) and that used by the International Monetary Fund, the United Nations and the Korea International Trade Association (KDI). I don’t have enough experience with these data sets to know how consistent they are.

Benjamin Katzeff Silberstein offers a link to the report here (in Korean only).

Read the full story here:
N. Korea’s trade with China tumbles this year: KDI

ORIGINAL POST (2015-4-26): Yonhap reports that DPRK – China trade has fallen in the first quarter of 2015:

Trade between North Korea and China, its economic lifeline, slipped 13.4 percent on-year in the first three months of this year amid frayed bilateral ties, data showed Sunday.

Bilateral trade volume fell to US$1.1 billion in the January-March period, compared with $1.27 billion for the same period last year, the Beijing unit of South’s Korea Trade and Investment Promotion Agency (KOTRA) said, citing Chinese customs data.

China is North Korea’s top economic benefactor, but its political ties with Pyongyang have been strained since the North’s third nuclear test in February 2013.

No crude oil was officially sent to North Korea from China for all of last year.

China’s shipments of crude oil to North Korea were also absent during the first quarter of this year.

South Korean diplomatic sources in Beijing, however, have cautioned against reading too much into the official Chinese trade figures because China has provided crude oil to North Korea in the form of grant aid in the past and such shipments were not recorded on paper.

Read the full story here:
N. Korea’s trade with China dips 13.4 pct in Q1


Friday fun: New stamps and wild speculation…

Friday, August 7th, 2015

Kim Jong-un has committed significant construction resources to improving the lives of children (particularly orphans) in the DPRK. Now you can share Kim Jong-un’s love of the children (sarcasm) with the people you know by collecting and sending stamps of the Songdowon International Children’s Camp and the new Pyongyang Baby Home and Orphanage:

STAMP-2015- Sondgowon-International-Children-Camp

STAMP-Pyongyang-Baby-Home Orphanage

Although the stamps are meant for foreign collectors, they are denominated as KPW 30. If the cost of a first class letter in the DPRK is 30 won, that translates into appx $.30 at the official rate and $.00375 at the black market rate (nearly 1/3 of a US penny).

But the Pyongyang Baby Home stamp booklet shows four stamps on a post card, so maybe the official price of sending a postcard is KPW120, or $1.20 at the official rate and $.015 at the black market rate. That seems a bit more reasonable, but it is still probably likely that, as in the USA, mail delivery is a drain on the government’s budget (subsidized activity). I wonder how hard it is to raise postal rates in the DPRK?

Luckily the Ministry of Post and Telecommunication (체신성) does not have to rely on the cabinet for its complete budget. There is always the international stamp-collecting market…and a small venture known as KoryoLink.

I also doubt that any of the money generated from the sale of these stamps actually goes to supporting the budgets of the Pyongyang Baby Home and Orphanage and Songdowon International Children’s Camp, but you never know.


Joint NK-Russia pharmaceutical company revamps operations

Tuesday, July 21st, 2015

According to the Daily NK:

Python, a joint company between North Korea and Russia, which had manufactured health supplements during Kim Jong Il’s era, has recently renewed its contract and is set to manufacture products using materials produced in North Korea, Daily NK has learned.

“Python closed down due to financial difficulties but has recently renewed its contract with North Korea,” a source in Russia told Daily NK. “On the 7th, the North Korean consul general and the deputy prime minister of Zabaykalsky Krai signed related contracts to operate the Python factory.”

An additional source in Russia confirmed this development.

The factory, located in Russia, is currently shuttered due to financial restraints, but the North Korean state authorities have been providing cadres dispatched to the facility for management with living expenses. The source said the factory is expected to give the Russian city Chita a boost in its local economy, helping to propel the deal.

“Before production ground to a halt, Python had been sending hefty sums of money to North Korea. Russia can also rake in profits from the company, so neither wants to give up on the endeavor,” the source speculated. “Once production begins, North Korea will select and dispatch workers to Russia who will produce medicine and health supplements.”

He added, “We can’t tell exactly how much was being made from the production, but former workers say under normal operations, the sum going to the North was significant,” the source said, noting that North Korea is surely hoping the deal can try to make in a dent in the dearth of state foreign-currency funds.

“In the past, Python mainly produced health supplements, such as ‘baljam’ (herbal wine) and ginseng extract,” he explained. “But after Russia was introduced to capitalism, financial, ideological, etc. difficulties emerged and operations took a toll. Over the past few years, only a few North Korean managers have been left behind.”

He added that the North Korean laborers who worked at Python were guaranteed housing and food in addition to receiving a monthly salary of 50 to 60 USD, and given that the organization is a pharmaceutical company, most of the Party cadres dispatched there are college graduates; some researchers were sent with their families as well.

Meanwhile, earlier on the 14th, Radio Free Asia [RFA], citing Russian internet publication ‘Business Buryatia,’ also reported that “North Korea and Russia are planning to co-produce medical products in Chita, a city in Eastern Siberia as early as before the end of this year.”

Read the full story here:
Joint NK-Russia pharmaceutical company revamps operations
Daily NK
Kang Mi Jin


DPRK coal shipments to China 2015

Sunday, July 19th, 2015

Back in 2014, Kevin Stahler argued that the DPRK’s anthracite coal exports were falling due to Chinese environmental and trade policies. This year Bloomberg reports that coal exports are showing heavy growth:


North Korea was the only country to boost coal shipments to China this year as Vietnamese supply slumped.

Chinese coal imports tumbled 40 percent in the five months through May, according to customs data. North Korean shipments jumped 25 percent, overtaking Mongolia and Russia to become China’s largest foreign source of coal after Australia and Indonesia, as Vietnamese imports dropped 91 percent.

An expanding power sector means Vietnam is preparing next year to start importing coal, ending its role as the world’s biggest supplier of a high-quality grade known as anthracite. North Korea’s benefiting from the rising exports as it needs foreign income amid a three-month drought that’s threatening harvests and raising the possibility that it will need to import food.

“It may be a replacement for the lack of exports from Vietnam,” Guillaume Perret, founder and director at Perret Associates, a coal research company in London, said by phone Friday. “It could be that some power plants or industrial sectors need high-quality anthracite for blending. There’s not so much anthracite in the world, so they may be replacing Vietnamese exports with North Korea.”

Vietnam Shipments

China’s shift to a more consumer-driven economy from heavy industrial investment has damped the nation’s demand for commodities from iron ore to copper. The country imported 7.5 million metric tons of coal from North Korea in January through May as Vietnam’s shipments fell to 180,000 tons and total foreign supplies dropped to 62 million tons. The customs data doesn’t distinguish between grades of thermal coal.

“North Korea is the new No. 1 exporter of anthracite,” Georgi Slavov, head of basic materials research in London at Marex Spectron, said Friday by e-mail. “Vietnam held the No. 1 spot for many years before that.”

Australia and Russia’s coal sales to China dropped as much as 45 percent in the period, while South Africa and the U.S. made no shipments at all in 2015, the customs data show. North Korea produced 43 million short tons (39 million metric tons) of coal in 2012, the last year for which the U.S. Department of Energy has estimates. That’s about 1 percent of Chinese output.

Anthracite in China closed unchanged on July 14 at 604 renminbi ($97.27) a metric ton, according to weekly data from the China National Chemical Information Center. Prices slid 12 percent so far this year.

NK News followed up with a separate story. You can read it here.

Here are comments by Marcus Noland.

Read the full story here:
North Korea Gains in China Coal Exports as Vietnam Bows Out
Alessandro Vitelli