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).

Share

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:

Camp-16-2015-10-15-power-plant-factory

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.

Camp-16-sports-field-close-up

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:

Camp-16-lumber-2015-11-2

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.

Share

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.

Share

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).

Share

DPRK used as Chinese smuggling route

Friday, October 23rd, 2015

According to the Siberian Times:

SWAT team ambush illegal cargo at night in open seas off coast of the Democratic People’s Republic.

The high-quality jade from the Republic of Buryatia was being exported to China without export documents. Its value was put at 50 million roubles or $800,000. Customs spokeswoman Tatiana Shichanina said: ‘We had a tip off that the smuggling was planned and decided to arrange ambush.’

The operation was led from customs vessel ‘Petr Matveev’. Officers seized ten sacks of jade. The crew were detained and taken to Vladivostok.

In China, this mineral is considered a ‘sacred rock’ and it can command a higher price than gold. The value of the ornamental rock in China encourages criminal gangs to collect and smuggle it.

Read the full story here:
Customs seize 3 tons of Siberian jade being smuggled by sea to North Korea en route to China
Siberian Times
2015-10-23

Share

KOTRA data on DPRK-China trade

Wednesday, October 14th, 2015

Below are charts published by KOTRA of North Korea – China trade.

North-Korean-China-Trade-from-KOTRA

North-Korean-Exports-and-Imports-from-KOTRA

North-Korean-Trade-including-North-South-Trade

Here is the source.

Share

Kaesong Complex’s cumulative output reaches USD$3 billion

Monday, October 12th, 2015

Institute for Far Eastern Studies (IFES)

The Kaesong Industrial Complex has reached 3 billion USD (3.5 trillion won) in cumulative output since it started operation 11 years ago. According to the Ministry of Unification, between 2005 (when operation went into full swing) and July 2015, the complex’s total output reached 2,996,160 USD.

This year the Kaesong complex recorded a total of 320 million USD in output through July, an average of 46 million USD each month. This guarantees that cumulative production surpassed 3 billion USD sometime in August.

The annual output of the Kaesong Industrial Complex started at 14.9 million USD in 2005 and reached 180 million USD in 2007, exceeding 100 million USD for the first time.

Except for 2013 (when operations were suspended for about five months), output has grown rapidly each year since 2007, shooting up to 470 million USD last year.

While it took the complex five years to reach 1 billion USD in cumulative output, it took only three additional years to surpass 2 billion USD by 2013, and just two more years to exceed 3 billion USD.

If the complex can maintain a similar rate of output in the second half of this year as in the first half (it produced 278 million dollars-worth in the first half), this year it will surpass an annual output of 500 million USD for the first time.

Even between March and May of this year, when tensions were heightened due to North Korea’s demands for a unilateral minimum wage increase, production was up 10-20 percent over the previous year. Thus, the Kaesong Industrial Complex has maintained a stable growth rate.

The number of resident companies at the complex has also increased significantly. While in 2005 only 18 companies did business at the complex, currently there are 124. Furthermore, the number of North Korean workers at the complex has risen nine-fold, from 6,000 at the beginning of its operation to approximately 54,000 at present.

Looking at the Kaesong complex companies by industry, textile companies account for over half of companies at 58 percent; machinery metal companies account for 19 percent; electronics companies, 11 percent; and chemicals companies, 7 percent.

The cumulative number of people who have visited the Kaesong Industrial Complex reached 1,100,000 this August, while 723,000 vehicles have visited the complex.

Share

China slowdown hits North Korea’s exports

Thursday, October 8th, 2015

Alastair Gale writes in the Wall Street Journal:

China’s economic slowdown and a plunge in coal prices are depriving North Korea of critical foreign currency, threatening to stir discontent among the small, elite class that the nation’s mercurial dictator relies on for support.

The drain on income comes as North Korea continues to plow its limited resources into its armed forces. On Saturday, the isolated state is set to hold a military parade to mark the 70th anniversary of the founding of its ruling party. It has also declared plans to launch satellites, seen by the U.S. and others as a way to test ballistic missile technology.

The value of North Korean exports to China, by far Pyongyang’s biggest trade partner, fell 9.8% through August from the year-earlier period, Chinese data show, accelerating from a 2.4% decline last year.

Adding to the pressure on Pyongyang is China’s attempt to scale back its bloated steel industry, the main customer for North Korea’s biggest export product, coal.

The scenario leaves North Korea’s young leader, Kim Jong Un, vulnerable. North Korea depends on China to buy most of its exports, but ties between the longtime allies have become strained over North Korea’s nuclear brinkmanship. To boost exports, Pyongyang has little option but to turn to its only other significant trade partner, South Korea.

All of this means Mr. Kim has less foreign currency to underwrite the lifestyles of the North Korean elite whose support is essential to maintaining his grip on power.

“Raising living standards for the North Korean apparatchik class is extraordinarily dependent on trade with China in a single commodity,” said Marcus Noland, executive vice president of the Peterson Institute for International Economics, a Washington research group. “A slowdown in revenues will create discontent.”

The depth of possible repercussions is hard to gauge because of North Korea’s opaque economy and political system. There are no clear outward signs of government instability, and prices of daily necessities such as rice—often an indicator of economic shocks—remain steady, said Nicholas Eberstadt, a political economist at the American Enterprise Institute, a Washington think tank.

North Korea continues to press ahead with infrastructure projects, such as the recent opening of a new international airport terminal near Pyongyang. The emergence of semiprivate businesses such as taxi companies in recent years has provided the state with fresh sources of income, said Go Myung-hyun, an expert on North Korea at the Asan Institute for Policy Studies, a Seoul-based think tank.

And China’s ban starting this year on highly polluting types of coal somewhat shields North Korea’s coal exports from a fall in demand because they are mostly high-quality anthracite, a type that produces little smoke.

Still, the fall in trade revenue increases the challenge for Mr. Kim, who has said economic development is a top policy priority despite his reluctance to embrace Chinese-style economic reforms, such as privatizing state businesses. In 2012, Mr. Kim said in a speech that citizens should “not have to tighten their belts again,” and North Korea’s state media frequently tout the construction of apartment buildings and leisure facilities as examples of progress.

Andrei Lankov, a professor at Kookmin University in Seoul, says the regime has been trying to reduce its dependence on China, which now absorbs as much as 90% of Pyongyang’s exports, compared with around 50% in the early 2000s, according to the Korean International Trade Association in Seoul. The value of those exports last year was $2.9 billion, Chinese customs data show.

One sign of that concern came in late 2013 when Mr. Kim executed his own uncle, Jang Song Thaek, an official who was widely seen as a proponent of closer trade links with Beijing. State media blamed Mr. Jang for “selling off precious resources of the country at cheap prices.”

Pyongyang’s diplomats have traveled extensively around the world over the past year, including a rare foreign ministry visit to India in April. Still, many nations remain wary of boosting trade links as North Korea continues a nuclear standoff with the U.S. and other nations.

Last year, North Korea and Russia signed an ambitious economic development agreement, but while Pyongyang and Moscow have warmed politically—reflecting shared hostility toward the U.S.—few economists see much potential for significant growth in bilateral trade; North Korea’s exports to Russia totaling just $10 million in 2014.

U.S. and South Korean diplomats say that greater international scrutiny has crimped another North Korean revenue stream: illicit arms and drugs.

Many economists say South Korea is the North’s only near-term option to offset declining trade income from China and may have motivated Pyongyang in August to reach an accord to end a confrontation after the two sides exchanged artillery fire.

“South Korea is the one potentially interested partner that could provide a significant boost to North Korea’s economy,” said Troy Stangarone, senior director for congressional affairs and trade at the Korea Economic Institute in Washington.

The South imposed economic sanctions on the North in 2010, blocking most bilateral trade, in response to the sinking of a warship that killed 46 sailors. Trade has since edged up and Seoul says it is willing to discuss increasing economic cooperation if progress is made in other areas, such as reuniting families separated by the Korean War.

Lee Jong-kyu, a research fellow at the Korea Development Institute in Sejong, South Korea, said the North may also seek new revenue by ramping up its exports of manual laborers to places such as Russia and the Middle East, try to boost tourism or build up light industry. North Korea also has tried to reboot plans for foreign investment in special economic zones—with little success, say foreign officials.

Ultimately, while Chinese diplomats express frustration with the regime in North Korea, it is unlikely that Beijing would allow its volatile neighbor to become destabilized by a fall in trade and spark a humanitarian disaster on its doorstep, observers say.

“If Beijing is a generous uncle, this will not prove to be a perilous problem because uncle will send more allowance,” Mr. Eberstadt said.

Read the full story here:
Cash Crunch Hits North Korea’s Elite
Wall Street Journal
Alastair Gale
2015-10-8

Share

Dandong bridge accident

Tuesday, September 29th, 2015

Dandong-bridge-accident-1 Dandong-bridge-accident-2

Photos from Daily NK

UPDATE 3 (2015-10-26): NK News reports that the bridge was also closed to road traffic in the last week of October for additional repairs.

UPDATE 2 (2015-10-6): Sino-NK Friendship Bridge to open with new regulations. According to the Daily NK:

The Sino-Korea Friendship Bridge has reopened after receiving maintenance for wear and tear that caused a truck accident and an ensuing shutdown of the bridge late last month, Daily NK has learned.

“The transport of cargo was halted because of the truck accident, which was the first to occur in seven decades since the bridge was built, but they’ve resumed transport starting today,” a source in North Pyongan Province told Daily NK on Monday. “They completed three days of work on the bridge, and all cargo trucks are traveling through, but they’ve limited the weight of the truck and cargo to 15 tons to prevent recurrences.”

This news was corroborated via a second source in the same province.

Following a request from the customs office in China’s Dandong, the two sides agreed to abolish the system of allowing cargo to pass according to respective decisions that had created room for passage of overloaded trucks. Instead, authorities will cap the weight of the vehicle and cargo combined at a total of 15 tons.

There are no exceptions at this time, he said; if a vehicle fails to comply with the limit regulations, no access will be permitted.

“Until now, 20 to 30 tons had commonly been the minimum loaded, and often cargo would be much heavier,” the source explained. “Especially more recently, the loads sometimes reached up to 40 to 50 tons due to overloading because of mineral exports that were done in 30-ton containers.”

The bridge is acutely susceptible to damage, he added, noting that North Korea has been overloading trucks with coal, and minerals such as gold, copper, silver, magnetite, molybdenum, and other minerals to earn in foreign currency and secure ‘loyalty funds’ for the leadership since the 1990s.

Mineral exports have reportedly seen a dramatic surge this year, explained by state efforts to reap in capital for Party Foundation Day preparations. However, no attending measures were implemented to control the pervasive practice of overburdening vehicles.

“We (the North) will face a sense of urgency to push out as many minerals as we can to get our hands on more money and import goods, but now with the restrictions on cargo volume now, traders will be swamped,” the source predicted, adding that the number of trucks on the road is also likely to jump significantly.

A flagrant disregard for concern over safety measures is entirely to blame for the accident, he lamented, noting that traders focus all their energies and concerns on raking in ‘loyalty funds’ above all else. While the need for weight regulations was irrefutable, the source surmised that the sudden modification will soon prove to be a double-edged sword.

Going forward, accidents will, presumably, decrease, but disgruntlement from traders faced with bringing in massive loads of supplies into the country leading up to the October 10 celebration is certain to peak, he concluded.

UPDATE 1 (2015-10-1): According to the Daily NK:

The Sino-Korean Friendship Bridge, connecting China’s Dandong and North Korea’s Sinuiju, has been shut down after damage sustained over a protracted period of time caused a truck to flip over. However, with only a number of days left until the Korean Workers’ Party foundation celebration, traffic was temporarily resumed on September 30th, Daily NK has learned.

“Today (September 30th) they resumed traffic just for one day so that North Korean traders can bring in supplies for the event after a truck crashed because of the damage on Monday,” a source from North Pyongan Province told Daily NK.

An additional source in the same province corroborated this news.

Officials have banned entry from October 1 to 4 so that they can restore the bridge, but facing urgent preparation for the Party’s 70th Foundation Day festivities, they put down steel plates as a temporary fix to get truck loads of supplies through, the source explained.

“The accident has thrown customs offices on either side of the border into mad panic,” she added. “Cadres from both customs services surveyed the site of the accident and put things into motion, so construction work is now underway.”

Starting at 8 p.m. on the day of the accident, train services were up and running, but the battered roads with deep crevices were covered with makeshift steel plates by North Korean workers, allowing vehicles that had entered Sinuiju to return to Dandong. Reconstruction work is currently being carried out by Chinese workers, according to the source.

The source speculated that the project would be finalized by October 5, opening up the bridge for a massive trade of goods, leading up to the Party celebration, which falls on the 10th.

ORIGINAL POST (2015-9-29): According to UPI:

A 72-year-old railroad bridge connecting North Korea and China was closed after a crash involving multiple trucks occurred on the North Korea side of the span on Monday.

The Yalu River Bridge, also known as the Sino-Korean Friendship Bridge, was blocked after three or four Chinese trucks rolled at a portion of the bridge that had sunk between 13 and 22 feet, South Korean news network YTN reported.

The bridge has a lane for road vehicles and another for a pair of railway tracks. Trains traveling from China into North Korea were temporarily suspended, but service was resumed after the tracks were repaired, an unidentified source told YTN on Monday.

Another source told South Korean outlet CBS No Cut News the heavy trucks headed for Sinuiju overturned, fell and collided into the adjacent railway tracks, and the accident occurred between 10 and 11 a.m. Vehicular traffic was closed for the rest of the day, and more than 100 trucks from China waiting to enter North Korea were halted, the source said.

The number of casualties was not disclosed.

The bridge, completed in 1943, accounts for 70 percent of commercial traffic between China and North Korea, and the railroad runs from Sinuiju to Beijing.

China remains North Korea’s No. 1 trading partner, and North Korea imports more than it exports to Asia’s largest economy. Pyongyang’s trade dependence on China runs as high as 90.1 percent, according to South Korean government statistics [which exclude South Korean trade with the DPRK].

Read the full story here:
Truck accident on sinking North Korea bridge suspends traffic
UPI
2015-9-29

Share

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
Xinhua
2015-9-25

Share