Archive for the ‘Trade Statistics’ Category

DPRK – China Trade in 2016 (UPDATED)

Monday, August 15th, 2016

UPDATE 13 (2016-8-25): According to the Korea Herald, China’s exports to North Korea showed the largest on-year drop in July:

According to KITA, China’s exports to North Korea came to US$193 million in July, plunging 27.6 percent from the same month last year. Last month’s decrease is the biggest drop in China’s exports to North Korea this year.

Along with exports, China’s imports from North Korea also dropped by 5 percent from a year ago to come in at US$227 million, the data showed.

KITA attributed the changes to China’s sanctions against Pyongyang, and to North Korea’s dwindling foreign reserves.

China has been limiting trade with North Korea since April.

UPDATE 12 (2016-8-24):  According to Yonhap, China’s imports from DPRK fell in q1 2016 (before US/UN sanctions passed/implemented) compared with previous year:

China’s northeastern province of Jilin saw its imports from North Korea plunge nearly 15 percent in the first quarter of 2016 from a year ago, data showed Wednesday, dealing a fatal blow to the neighboring country’s moribund economy.

According to the Chinese customs data, Jilin’s trade with North Korea sank 14.7 percent on-year to US$176 million in the January-March mainly because of plunging imports.

Jilin, which borders the North’s three provinces, is China’s hub of trade with its ally and boasts the largest trade volume with Pyongyang among China’s provinces.

Jilin’s imports from North Korea came to $66 million in the three-month period, down 33.8 percent from a year earlier. Tumbling imports of such major items as iron ore, clothing and fisheries goods led the drop.

Imports of North Korean iron ore dipped 19.3 percent on-year to $7.28 million in the first quarter, with those of clams, T-shirts and functional clothing nose-diving 25 percent to 73 percent.

China experts said Jilin’s imports of iron ore from North Korea fell sharply in the first quarter due to sluggish demand from China in the wake of Beijing’s move to eliminate its steel overcapacity.

U.N.-led international sanctions on North Korea for its nuclear and missile programs seemed to play a part as well. Pyongyang conducted its fourth nuclear test in January and has test-fired a series of ballistic missiles in recent months.

The Chinese province’s imports from North Korea are estimated to have dropped further in the second quarter when the sanctions began to bite, they added.

“A tumble in trade with Jilin comes as a serious blow to North Korea as it relies heavily on exports of minerals to the province for external trade,” a North Korea watcher said.

Meanwhile, North Korea’s overall trade with the world’s largest economy dropped 9.3 percent on-year to $2.31 billion in the first half of this year, with exports and imports falling 3.1 percent and 16 percent each.

UPDATE 11 (2016-8-19): NK News reports on the DPRK – China coal trade:

But in April, Chinese imports of the high-quality smokeless coal anthracite from North Korea plummeted, according to data from the Korea International Trade Association (KITA) in Seoul which sources Chinese import receipts. Shipments of 1.525 million tons were down 35 percent – albeit compared to record highs in March – and 21 percent compared to the same month last year/compared to April last year.

Then, after just one month, Beijing’s toughness on Kim Jong Un appeared to dissipate. Since April, Chinese imports of North Korean coal – worth 40 percent of total export earnings – have begun to return to normal levels.

In May, imports of anthracite were up 1.7 percent on the low of the previous month but still down 15 percent on May 2015, KITA data showed.

This recovery continued into June. China’s imports of anthracite rebounded nearly 22 percent, coming out of the trough of April and May, and were down just 5.6 percent on May 2015.

While China is trying to cap and reduce coal use – consumption fell for the second year in a row in 2015 – its demand for anthracite to produce metals remains high.

China’s total coal imports slumped 30 percent last year as the government emphasized other cleaner energy sources. This, in turn, pushed down the domestic price of coal, also by 30 percent, and as a result, imports were less competitive and shipments to China dropped.

But while Chinese coal imports from key suppliers Australia and Indonesia plummeted last year, there was one source country that recorded a 25-percent surge in shipments: North Korea.

“This type of coal is in shortage and, in fact, North Korea is the largest supplier of this type of coal to China,” she said.

This complex picture has produced confusing and often contradictory reports on China’s sanctions enforcement previously, and especially since Resolution 2270 passed in March. What has become clear, say observers, is that North Korean coal is increasingly reaching China which has, at the same time, turned down negative rhetoric against North Korea. Meanwhile, China remains keen to create the impression it is enforcing UN sanctions as part of its international commitments.

UPDATE 10 (2016-8-14): Yonhap reports that N. Korea-China trade showing signs of revival:

Lim Eul-chul, research professor at Kyungnam University’s Graduate School of North Korean Studies said that his contacts in China have hinted that while Chinese customs offices ostensibly claim they are adhering to the United Nations Security Council (UNSC) resolution restricting transactions with Pyongyang, there has been a noticeable easing in oversight by authorities.

“Chinese companies who had held back on trading with the North, have started to ship more goods after hearing the news that Seoul-Beijing relations have taken a turn for the worse over the THAAD issue,” the scholar said.

He also said that there have been reports of greater traffic moving between the country at night and early morning hours. Lim said that taking into account the customs office operating hours, the flow of traffic at such hours could indicate the illegal movement of goods.

This view was echoed by Cho Bong-hyun, an analyst at the IBK Economic Research Institute, who said that people living in the Sino-North Korean border region are saying customs inspections have become lax along the Sino-North Korean border.

“There is even speculation that banned items are being disguised as products that are not subject to the UNSC sanctions and are being traded,” he said.

Reflecting this, two-way trade data between the neighboring countries support this.

Official customs data released by China showed bilateral trade hitting US$503.77 million in June, up 9.4 percent on-year, and the first rebound just three months after Beijing said it will clamp down on trade. The increase is significant because it took place before the THAAD deployment was announced.

According to U.S.-based Radio Free Asia (RFA), people in Liaoning Province said that the number of cargo trucks coming out of North Korea on a daily basis has jumped twofold to 20 from just 10 two months earlier.

“While trucks only arrived twice a week from North Korea to China just a few weeks ago, they are currently arriving every day, which may be neutralizing the international sanctions,” the media outlet citing a source said. The local said that the traffic involved container trucks.

UPDATE 9 (2016-8-14): Japanese media reports that oil exports to the DPRK have increased:

Japan’s Yomiuri Shimbun daily says that China’s oil supply to North Korea appears to have increased.

The daily said on Sunday that freight trains traveling from the oil storage facility in Dandong to the Daqing oil field operated once a day when the United Nations sanctions against the North were imposed, but the number increased to two to three times a day from late June.

The paper speculated that the change reflects China’s concerns that the Kim Jong-un regime might become unstable under continued international sanctions following the North’s missile launches and nuclear tests.

UPDATE 8 (2016-8-12): The information should be taken with a grain of salt, but according to the Daily NK:

Thousands of tons of iron ore exports from the North are pouring into China daily, despite UN Security Council sanctions issued in April that ban states from procuring minerals from the regime unless related to “livelihood purposes”, Daily NK has learned.

“The Chinese regions facing Musan County in North Korea are teeming with thirty- and forty-ton trucks loaded with iron ore,” a source in China with knowledge of North Korean affairs told Daily NK in a telephone conversation on August 11.

Sources in North Hamgyong Province corroborated this news.

The trucks, he added, are mostly transporting iron ore to a classification yard near Helong City in China. In the past, the railways near Helong running along the Tumen River border area were not frequently utilized. But recently China added express freight trains on this route, presumably to facilitate more expedient transport of North Korean iron ore to local steel mills. More broadly, the source asserted the development indicates Beijing’s future intentions to expand trade with the North.

Connecting dozens of 100-ton freight cars, the express trains transport some 2,000 tons in a single shipment, with several round trips transpiring daily. Moreover, the source noted, “Some cargo trucks transport goods from Musan Mine across the submerged bridge on Tumen River directly to steel mills in China.”

The partially underwater bridge, made by connecting slabs of rock large enough to permit vehicular transport, was constructed in the early 2000s to facilitate the Sino-North Korean iron ore trade industry. However, following the implementation of strong global sanctions earlier in the year, iron exports plummeted, rendering the bridge obsolete.

More recently, however, this crude piece of infrastructure is experiencing a resurgence, coming as quite a surprise to local Chinese residents. The source explained that goods passing through Chilsong Customs are checked thoroughly, item by item. Customs officers at the underwater bridge, on the other hand, merely record the total number of shipments passing through, making it the preferred conduit for proscribed goods.

The general rise in trade can also be noted in Dandong, the gateway to 70 percent of trade between the North and China. A source in the city told Daily NK earlier in the month that after the reopening of the aging Sino-North Korean Friendship Bridge, after yet another round of repairs, the volume of shipments has been on a steady uptick.

“Roughly 1,000 trucks, each with a 20-ton loading capacity, are laden with diverse goods and pulling into Sinuiju daily. That’s more than a ten-fold increase,” she said.

The number of trucks coming out of the North to Dandong has also climbed, energizing trade and overall activity in the border area–so much so, in fact, that some residents have asked whether sanctions on the North have been lifted. Others speculate the reversal is a form of retaliation from Beijing against Seoul for deciding to deploy the U.S. missile defense system THAAD to the South.

UPDATE 7 (2016-8-2): N. Korea’s exports of unsanctioned resources to China jump in first half of 2016. According to Yonhap:

North Korea’s shipments of natural resources to China that are not on the United Nations’ sanctions list sharply increased in the first half of the year, nearly making up for a decline in shipments of products prohibited by the U.N., a report showed Saturday.

Shipments of five mineral resources from North Korea to China came to US$78.2 million in the first six months of the year, up 50.3 percent from the same period last year, according to the report from the North Korea Sources Institute in Seoul.

The five minerals are lead ores, zinc ores, spelter, magnesia and cooper ores, which are not on the U.N. list of goods prohibited from access to or from the communist state.

The sanctions, under the U.N. Security Council Resolution 2270, were issued in response to North Korea’s defiant nuclear test in January and a long-range missile launch the following month.

In the January-June period, China’s imports of seven mineral resources from the North that are prohibited under the U.N. resolution plunged 15.7 percent on-year to $547.2 million. Such a drop accelerated in the second quarter, plunging 25.6 percent on-year as the U.N. sanctions were put in place in March.

The prohibited items include coal and iron ores.

An institute official, however, noted the drop in China’s imports of North Korean minerals may have come from a dip in China’s own demand for the said natural resources, adding the cut in imports may not necessarily indicate that China is faithfully implementing U.N. sanctions.

China is the North’s largest communist ally.

Meanwhile, the think tank estimated North Korea’s total coal production for 2015 at 33.8 million tons, up 12.2 percent from a year earlier. It put the estimate of the country’s iron ore production at 4.26 million ton for 2015, down 25 percent year-on-year.

UPDATE 6 (2016-7-25): Leo Byrn wrotes about DPRK-China trade in NK News:

Volumes of anthracite shipped to China in June increased from 1.5 million tonnes to 1.8 million. The number is higher than both January and February export totals and consistent with a recent trend which saw North Korea export more coal to its neighbor in order to combat low commodity prices.

Chinese traders paid their North Korean counterparts over $88 million for the coal in June, a $14 million increase over the previous month. While the figures are down compared to their March equivalents, those were record exports for the DPRK at 2.3 million tonnes.

Shipments of North Korean iron ore showed an even more pronounced rise after the UN passed Resolution 2270. While volumes are smaller, North Korean iron ore exports increased more than 100 percent between April and May.

June’s exports also increased, but at a slower rate to over 221,000 tonnes. The number is more than double the March export figure, and continues a theme of month on month increases beginning in April.

Exactly how Beijing has set about enforcing the new sanctions is currently unclear. Resolution 2270 contains an exception allowing iron and coal imports provided the revenues do not contribute to the North’s weapons programmes.

But how the process works is currently vaguely defined, and it is unknown how authorities would ensure cash flows from commodity exports go where intended.

The increasing exports could also be the result of traders playing out existing contracts, or arise from the difficulties in rapidly shutting down large scale trade.

UPDATE 5 (2016-06-22): China’s imports of North Korean goods fell 12.59 percent on-year in May

By Benjamin Katzeff Silberstein

Says Yonhap, citing KOTRA data:

China’s imports of North Korean goods fell 12.59 percent on-year in May, data showed Wednesday, amid tougher U.N. sanctions against Pyongyang’s nuclear weapons and missile programs.

Imports from North Korea declined to US$175.6 million last month, compared to $200.9 million for the same month last year, according to Chinese customs data compiled by the Beijing unit of South Korea’s Korea Trade and Investment Promotion Agency (KOTRA).

Imports of North Korean coal, which accounts for nearly half of the North’s annual exports to China, plunged 28.3 percent on-year to $74.7 million in May, the data showed.

China’s exports to North Korea also fell 5.9 percent on-year to $239.3 million last month, according to the data.

However, these numbers suffer from the same problems that often plague trade data on North Korea. We don’t know 1) how much of the decrease is caused by a general, global drop in world market prices for North Korea’s export goods, and how much is an actual, quantitative import decrease, and 2) how much of the drop would have counterfactually happened “anyway,” given the contraction of Chinese industries using North Korean coal.

Full article:
China’s imports of N. Korean goods fall 12.6 pct in May 
Kim Deok-hyun
Yonhap News

UPDATE 4 (2016-6-3):  The Institute for Far Eastern Studies (IFES) also comments on the April 2016 trade statistics.

China Decreased Imports from North Korea in April by 22.3 Percent

Last month, imports from North Korea to China plunged more than 20 percent below that of the same period last year. April is the first month for China to begin the implementation of sanctions against North Korea adopted by the UN Security Council resolution. China’s sanctions against North Korea have a notable effect.

KOTRA Trade Office in Beijing released the official DPRK-China trade statistics of Chinese Maritime Customs Service on May 14. According to this report, China’s total import volume from North Korea in this period recorded 161,380,000 USD, down 22.35 percent compared to April last year. By item, imports of coal decreased by 38.34 percent while lead imports were reduced by 16.12 percent. There were no titanium imports as China listed titanium as one of the banned exports from North Korea.

However, iron ore is one of North Korea’s main export items along with coal. Unlike lead and coal, the import of iron ore increased 19.38 percent, and zinc import jumped a whopping 685 percent. In this regard, China appears to have decreased coal imports to deal with domestic overproduction problem of coal while increasing the imports of other minerals and under the suspicion that it is imposing sanctions on North Korea only on the outside.

China’s exports to North Korea recorded insignificant decrease of approximately 1.53 percent, with a total volume of 268,000,000 USD. Refined oil including jet fuel was identified to have decreased 6.11 percent compared to the same period last year. Exports of freight cars and electronic equipment decreased 45.46 percent and 43.95 percent, respectively, while agricultural and clothing items were not much affected.

As a result, the total of DPRK-China trade volume decreased 10.54 percent compared to last year, at 429,410,000 USD. Last month on April 5, China’s Ministry of Commerce announced 25 banned items of import and export to and from North Korea. This is about a month since the resolution on North Korean sanctions was passed. Since then, China immediately began to impose sanctions.

In the list of import bans, there are a total of 20 items, including coal, steel, and iron ore, along with gold, titanium, vanadium ore and other rare earth minerals as classified by maritime customs. Prior to the sanctions, DPRK-China trade in March recorded 490,000,000 USD in trade volume, which was an increase of approximately 20 percent compared to the previous year.

As China continues to impose sanctions on North Korea, North Korea can be expected to suffer a significant setback in its foreign currency earnings.

UPDATE 3 (2016-5-25): DPRK – China trade Jan 1 – April 30 2016:

Preliminary estimates of trade volume between DPRK and China through April 30 total appx $1.597 billion ($4.791 annualized, 11.7% decrease from 2015).

DPRK imports/Chinese exports total $862 million, and DPRK exports/Chinese imports total $735 million. So we can see a bilateral trade deficit in Jan-April 2016 of appx $127 million ($381 million at annualized rate vs $460 million in 2015).

Chinese enforcement of UNSC Resolution 2270 reportedly began in April, in which China reports it’s DPRK imports total US $161 million (down 22.3% from April 2015). Coal imports at $72.2 million (down 38.2% from April 2015 total of $116.6 million), gold imports $250k (down 91.1% from April 2015). China’s exports total $268 million in April 2016 (down 1.5% from April 2015).

It is impossible to tell from this data whether the sanctions are having any impact beyond the general downturn in the Chinese economy because this is trade based on value (Price x Quantity), and prices of North Korea’s commodity exports have been falling as well. We need to compare the quantity of the prohibited mineral exports over time to see if the sanctions are having any impact (assuming China is accurately reporting them).

It is also important to remember that DPRK – China trade is not regular, so past performance is not necessarily indicative of future results. Also, the data can be revised for numerous reasons.

Finally, China stopped reporting unrefined oil exports to the DPRK in 2014, but they did not stop exporting unrefined oil itself. According to Chinese customs data, the country exported about 520,000 tons of oil to North Korea every year from 2009 to 2012. Beijing normally supplied between 30,000 to 50,000 tonnes (222,000 to 370,000 barrels) of crude oil to North Korea every month. Shipments of crude oil to North Korea rose 11.2% to 578,000 tons in 2013.

The data in the above summary comes from the articles below, starting with this in the Choson Ilbo:

China’s imports of North Korean products declined more than 20 percent last month compared to the same period of 2015 as Beijing began to implement UN Security Council sanctions against Pyongyang.

According to statistics by the Korea International Trade Association, China imported US$161 million worth of North Korean products in April, down 22.3 percent on-year.

Its imports of North Korean coal fell 38.2 percent to $7.21 million [this statistic is wrong and was corrected by Yonhap], and of gold 91.1 percent to $250,000. Imports of North Korean titanium, which is on the list of banned imports, were zero.

But imports of iron ore, which is allowed since it is thought to support the livelihood of ordinary North Koreans, increased 1.7 percent, and of zinc, which is also not banned, a whopping 685 percent to $5.7 million.

China’s exports to North Korea totaled $268 million last month, down 1.5 percent. Sales of jet and rocket fuel dropped 39.9 percent and of cars and electronic equipment 45.5 percent and 43.9 percent.

Total trade between North Korea and China last month fell 10.5 percent on-year to $429 million. If China continues to abide by UN Security Council sanctions against North Korea, bilateral trade will shrink further and dent the North’s attempts to earn hard currency.

North Korea’s state-run Rodong Sinmun daily on Tuesday complained that the sanctions are pressuring the North “beyond imagination.”

Read the full story here:
Sanctions Slash Chinese Imports of N.Korean Products
Choson Ilbo

UPDATE 2 (2016-5-23): Reuters reports a drop in Chinese imports of North Korean coal:

China’s imports of coal from its neighbor North Korea reached 1.53 million tonnes in April, down 35 percent on the month and 20.5 percent year-on-year as Beijing sought to comply with a tougher sanctions regime against the country.

North Korean shipments over the first four months of the year remain 23.2 percent higher than the same period of 2015, data from China’s General Administration of Customs showed on Monday.

China’s Ministry of Commerce announced at the beginning of April that it would ban North Korean coal imports to comply with new United Nations sanctions on the country, though it made exceptions for deliveries intended for “the people’s wellbeing” as well as coal originating from third countries like Mongolia.

Mongolia was the chief beneficiary of the decline in shipments from North Korea, with the country supplying 1.98 million tonnes to China in April, up 34.7 percent on the year.

Australia remained China’s biggest supplier, though the April volume of 5.74 million tonnes was down 12.9 percent compared to last year.

Read the full story here:
China coal imports from North Korea dip 35 percent as sanctions bite

UPDATE 1 (2016-4-14): Yonhap reports on Q1 2016. Overall trade is up, but this is composed of surging Chinese exports to North Korea and falling imports. Here are the relevant parts of the report:

Trade volume between North Korea and China posted double-digit growth in the first quarter of 2016 from a year earlier despite the United Nations’ punitive economic sanctions imposed on the reclusive country, official data showed Wednesday.

The size of bilateral trade stood at 7.79 billion yuan (US$1.2 billion) in the January-March period, up 12.7 percent from the same period last year, Huang Songping, spokesman of China’s General Administration of Customs, said during a press briefing on the country’s first-quarter trade outcome.

The increased trade volume is attributable to a sharp rise in China’s exports to North Korea in the three months, which posted 14.7 percent growth to 3.96 billion yuan, according to the spokesman.

On the other hand, China’s imports from North Korea contracted 10.8 percent to 3.83 billion yuan, he said.

“Major Chinese exports to North Korea are machinery, electronic goods, labor-intensive products and agricultural goods, while imports mainly are coal and iron ore,” Huang said.

The spokesman indicated that the trade increase should not be viewed as China circumventing the U.N. Security Council sanctions because the latest figure accounts for bilateral trade volume before the sanctions took effect.

China immediately implemented the sanctions after it announced a list of banned trade goods with North Korea on April 5, the spokesman pointed out.

“The China-North Korea trade data for the first quarter has nothing to do with anti-North sanctions,” the official said, also vowing to “follow through with the U.N. sanctions resolution thoroughly.”

Another official from China’s State Council stressed any trade items that concern the public welfare or have no link to North Korea’s nuclear weapons development are not subject to the sanctions.

But the official refused to release the monthly trade figure for March, only saying that the monthly data is not available.

In early March, the U.N. adopted the toughest sanctions it has ever slapped on North Korea as punishment for the communist country’s defiant nuclear test in January and a long-range rocket launch in February.

Read the full story here:
N. Korea-China trade volume up 12.7 percent on-year in Q1

ORIGINAL POST (2016-4-7): The Chinese Ministry of Commerce issues announcement on trade and UNSC Resolution 2270:

MOFCOM Announcement No. 11 of 2016 Announcement on List of Mineral Products Embargo against the DPRK
April 7, 2016 – 10:57 BJT (14:57 GMT) MOFCOM

In order to carry out relevant resolutions of the UN Security Council and in accordance with the Foreign Trade Law of the People’s Republic of China, the following products are hereby embargoed against the Democratic People’s Republic of Korea:

1. Imports of coal, iron and iron ores from the DPRK are forbidden with the following two exceptions:

(1) Trading that is determined to be conducted to generate profits solely for the people’s livelihood, and that does not involve the nuclear program or the ballistic missile program of the DPRK or any other profit generating activities prohibited in the Resolutions No. 1718(2006), No. 1874(2009), No. 2087(2013), No. 2094 (2013) or No. 2270 (2016) of the UN Security Council.

If the import falls into the range of the trade mentioned above, then during the import declaration, the enterprise shall submit to the customs authority a letter of commitment (See Annex 2) signed by its legal representative or principal and affixed with its official seal. If it is confirmed by solid information that the imports are not for the people’s livelihood, or are related to the nuclear program or the ballistic missile program of the DPRK, the customs authority will not clear such imports.

(2)Trading of coal that is confirmed not to be originated in the DPRK but is delivered and used to export from the Port of Rason through the DPRK, and such trade does not involve the nuclear program or the ballistic missile program of the DPRK or any other profit generating activities prohibited in the Resolutions No. 1718(2006), No. 1874(2009), No. 2087(2013), No. 2094 (2013) or No. 2270 (2016) of the UN Security Council.

If the import falls into the range of the trade mentioned above, the importing enterprise shall submit to the provincial competent commerce authority, where such enterprise is located, relevant information and application in advance, which shall then be submitted to the Ministry of Foreign Affairs via the Ministry of Commerce, and then notified to the Sanctions Committee of the UN Security Council for record-filing before the enterprise can begin to import. During the import declaration, the enterprise shall submit to the customs authority a letter of commitment (see Annex 3) signed by its legal representative or principal of the enterprise and affixed with its official seal and the certificate of original. If it is confirmed by solid information that the trade does not fall into the exception, then the customs authority will not clear the imports.

2. Imports of gold ores, titanium ores, vanadium ore, and rare earth minerals from the DPRK are forbidden.

3. Exports of aircraft fuel including aviation gasoline, naphtha aircraft fuel, kerosene aircraft fuel and kerosene rocket fuel are forbidden with the following two exceptions:

(1) The aircraft fuel that has been specially approved by the Sanctions Committee of the UN Security Council case by case to be transferred to the DPRK and verified to be used to satisfy basic human needs; however, special arrangements must be made to effectively monitor the delivery and use of such fuel.

(2) The aircraft fuel that is sold to civil airplanes outside the territory of the DPRK or is supplied solely for use in trips from and to the DPRK.
4. For details of the product embargo, please see Annex 1.

This Announcement shall be implemented as of the date of announcement.


China’s enforcement of sanctions on North Korea: a bit of perspective

Thursday, June 2nd, 2016

By Benjamin Katzeff Silberstein

To what extent is China enforcing the latest round of UNSC sanctions on North Korea? This question is as important and interesting as it is nebulously complicated and difficult to answer. For the fact is, like Curtis points out here, that lower coal imports by China from North Korea does not necessarily give evidence to sanctions enforcement. Some of the figures reported in the news concern the value of the imports, which fluctuates with world market prices.

Moreover, as the old saying goes, correlation does not imply causality. In other words, the mere fact that trade in coal and other goods is decreasing does not necessarily mean that it is going down because of sanctions alone. It is worth to remember that Chinese imports of North Korean coal has decreased in the past too, before the latest sanctions round, due to decreased domestic demand and other factors. A whole host of variables other than sanctions may well be at play too.

Looking back at some previous trade data gives some context to the latest reports of decreasing trade. Even though volumes may be down, to fully understand how this impacts the North Korean economy, dollar value terms may be more relevant.

To recap:

  • According to recent data, Chinese imports of North Korean coal have decreased by 20.5 year-on-year for April 2016 (in tonne numbers).
  • According to Yonhap figures, cited here, this translates into a drop from $116.6 a year ago, to $72.27 now. This represents a 37 percent drop.
  • In the pre-sanctions quarter of the year, North Korean exports to China increased by 12 percent.

To put this in perspective, consider the following changes in the past:

  • Between January and November 2014, North Korean exports to China dropped by 12.3 percent in dollar terms.
  • Between 2013 and 2015, the value of coal exports to China dropped by 24.6 percent.
  • Between January and February 2014, total trade between North Korea and China dropped by 46 percent.

The point of citing these numbers is not to show that sanctions are not being implemented by China. Rather, such flows tend to fluctuate quite heavily for other reasons as well, and it is too early to conclude that sanctions are the only reason behind the contraction. As a New York Times story from late March this year showed, Chinese border agents tend to be fairly lax in controlling goods crossing the border – NYT cited a figure of about five percent of all goods being inspected. In sum, it is too early to draw any major conclusions about Chinese sanctions enforcement, and only future data will be able to give a more conclusive picture.


Not surprising: Inter-Korean trade to fall in 2016

Friday, May 13th, 2016

According to the Choson Ilbo:

Trade with North Korea is expected to be practically zero this year now the joint Kaesong Industrial Complex has been shut down.

According to a 2016 White Paper published by the Unification Ministry on Thursday, last year’s cross-border trade volume was a record US$2.7 billion, up 15.9 percent from 2014, thanks to an increase in trade through the industrial park.

But that accounted for 99.6 percent of all cross-border trade since other trade had already been suspended under earlier sanctions in the wake of the sinking of the Navy corvette Cheonan in 2010.

Now the industrial park has been closed there is no trade left, the ministry said.

Since the North’s latest nuclear test in January, Seoul has also halted humanitarian aid to the North. Last year, Seoul gave Pyongyang humanitarian aid worth W25.4 billion, up 30 percent from 2014 (US$1=W1,167).

Read the full story here:
Trade with N.Korea Falls to Near-Zero
Choson Ilbo
Kim Myong-song


North Korea’s food situation: worse, but maybe just back to normal

Thursday, April 28th, 2016

By Benjamin Katzeff Silberstein

Some days ago, the Food and Agriculture Organization (FAO) sounded the alarm bells on North Korean food production. The drought of last summer, among other factors, has caused North Korea’s food production to drop for the first time since 2010. (Recall that in the past years, both North Korean media outlets and some analysts touted Kim Jong-un’s agricultural reforms — the former claimed that food production was increasing despite the drought. It seems they spoke too soon).

Numbers like this, however, matter little without context. After all, five years is not a very long measurement period. Analysts like Marcus Noland have noted that the years following 2010 were probably exceptionally good. The current downturn might be best contextualized as a return to lower but more normal levels of food production.

How does the latest food production figure look in a larger context? The short answer is: not that bad, even though the downward trend is obviously problematic. Let us take a brief look at North Korean food production figures over the past few years. All following numbers show food production figures in millions of milled cereal equivalent tons:

  • 2008/2009: 3.3
  • 2010/2011: 4.5
  • 2012/2013: 4.9
  • 2013/2014: 5.03
  • 2014/2015: 5.08
  • 2015/2016: 5.06

(Sources for all figures except the 2015/2016 figure can be found here, in a piece I wrote for 38 North late last year. It seems the calculation I made for 2015/2016 was off by 0.01 million tonnes.)

In other words, yes, the latest food production estimate represents a decrease, but it’s not that big. North Korean food production is still far larger than it’s been for most of the 2000s.

It is also interesting to note the striking variation in North Korean government food imports. Marcus Noland and Stephan Haggard wrote in Famine in North Korea that the government downsized food imports as a response to increasing aid flows. Whatever the rationale might be behind the regime’s food import policies, they tend to vary greatly from year to year. In 2012/2013, the country imported almost 400,000 tonnes of cereal. In the mid-2000s, imports were close to one million tonnes, and they dropped to under 300,000 tonnes in 2008/2009.  In 2011/2012, imports climbed to 700,000 tons.

For 2015/2016, FAO projects a gap of need versus production of 694,000 tonnes, but government imports stand at around 300,000 tonnes, a relatively low figure in a historical context. Thus, North Korea is left with an uncovered deficit of 384,000 tonnes. Presumably, this wouldn’t be prohibitively expensive to cover by doubling cereal imports. The economy seems far more healthy today than it was in 2011-2012, and still, it managed to import more than double its planned imports of 2015-2016.

All in all, North Korea’s food production appears to be far from sufficient or stable, but the situation does not appear acute in a historical context. Indeed, one could argue that it’s a matter of policy choices and priorities: the regime could choose to increase imports to offset the decline in production, but its funds are spent elsewhere. And, of course, more efficient agricultural policies overall would make North Korean agriculture and food markets far more resilient to weather variations.


DPRK – Russia Trade in 2015 (UPDATED)

Friday, April 22nd, 2016

UPDATE 1 (2016-4-22): According to the Russian Exports National Information Portal:

In 2015 North Korean-Russian bilateral trade volume decreased by 10% and reached 83.2 million USD compared to 92.2 million USD in 2014.

North Korean exports to Russia fell to 5.7 million USD (by 43%) while imports fell to 77.5 million USD (by 6%) .

Figure 1. 2007-2015 North Korean-Russian bilateral trade turnover, million USD. Source: ITC Trade Map.


North Korean exports to Russia

North Korea primarily exports to Russia the following products:

▪ Fish, crustaceans, molluscs, aquatic invertebrates nes (29%)
▪ Articles of apparel, accessories, not knit or crochet (27%)
▪ Musical instruments, parts and accessories (17%)
▪ Railway, tramway locomotives, rolling stock, equipment (6%)
▪ Manmade filaments (5%)
▪ Electrical, electronic equipment (4%)
▪ Plastics and articles thereof (3%)
▪ Wadding, felt, nonwovens, yarns, twine, cordage, etc (2%)
▪ Rubber and articles thereof (2%)
▪ Machinery, nuclear reactors, boilers, etc (1%)
▪ Cereal, flour, starch, milk preparations and products (1%)
▪ Tanning, dyeing extracts, tannins, derivs,pigments etc (1%)
▪ Milling products, malt, starches, inulin, wheat gluten (1%)

In 2015 the imports of North Korean made products in Russia experienced a significant rise . The imports of man-made filaments rise by 8733%; the imports of railway, tramway locomotives, rolling stock, equipment- by 5283%.

Russian exports to North Korea

In 2015 Russia has exported to North Korea the following products:

▪ Mineral fuels, oils, distillation products, etc (83%)
▪ Wood and articles of wood, wood charcoal (4%)
▪ Cereals (4%)
▪ Milling products, malt, starches, inulin, wheat gluten (3%)
▪ Fish, crustaceans, molluscs, aquatic invertebrates nes (3%)
▪ Pharmaceutical products (1%)

2015 showed a significant rise in Russian exports to North Korea of cereal, flour, starch, milk preparations and products (+706%). At the same time the exports of machinery, nuclear reactors, boilers (-97%) showed a significant fall.

I have posted a PDF of the source web page here.

ORIGINAL POST (2015-6-4): According to Leo Byrne at NK News:

North Korean trade with Russia decreased sharply in the first quarter of 2015, according to data from the ITC Trade Map, despite continued attempts to improve bilateral economic cooperation between the two countries.

Both imports and exports between Russia and North Korea fell in the first four months of 2015 compared to 2014 numbers.

Exports from North Korea to Russia fell from more than $3 million in the fourth quarter of last year to approximately $500,000.

The drop was mostly on the back of a big reduction of machine and clothes exports to Russia. While the latter group also appears to fluctuate based on the season, imports in the first four months of 2015 were also lower than those a year earlier.

Exports from Russia to North Korea account for the largest share of trade between the two countries, and also fell in the first quarter.

Overall, Russian exports fell by nearly 20 percent so far in 2015, compared to last quarter of 2014. At $17 million, the figure was 70 percent of that in the same period last year.

North Korea’s lower imports from Russia were mainly due to a large decrease in food imports.

Throughout the last six months of 2014, the DPRK imported more than $12 million in cereals from Russia, but these imports appeared to cease in 2015.

The overall numbers dropped despite an uptick in North Korean imports of Russian coal.

The figures continue a trend of decreasing trade between the two countries. From 2013 to 2014 trade values also fell, but were not as low as the most recent 2015 figures.

The news comes despite a flurry of diplomatic and political exchanges between the two countries geared towards increasing economic cooperation and trade, with Russia setting a target of $1 billion in trade by 2020.

Read the full story here:
Russia, North Korea trade drops in Q1 [2015]
NK News
Leo Byrne


Nw York Times reports on sanctions enforcement, at Sino-DPRK border

Thursday, March 31st, 2016

By Benjamin Katzeff Silberstein

Just as before, China’s controls over goods flowing across the border with North Korea is spotty at best. According to a New York Times dispatch from the border, Chinese customs authorities only control a small percentage of the goods (particularly relevant parts in bold):

If recent trade here is any indication, that cooperation has been spotty at best.

Cross-border trade, legal and illegal, flows pretty much as usual, and seems to be largely unhindered by the new rules, traders and local officials said.

One of the toughest components, a requirement that countries inspect all cargo entering or leaving North Korea for banned goods, is not enforced here.

On many days, Mr. Qin’s secondhand taxis cross the bridge in a convoy of more than 100 vehicles, including trucks loaded with containers draped in shabby tarpaulins and secondhand minibuses for North Korea’s rickety transportation system. Few are ever inspected by the Chinese authorities.

China accounts for about 90 percent of North Korea’s trade. Half of that business is estimated to flow through Dandong, a boom-and-bust city whose fortunes are tied to trade with North Korea.

Virtually everything that keeps the North Korean economy afloat passes through here: Coal and iron ore come in, violating the sanctions, and crude oil flows out, exempted from them.

Smuggling is rampant. The export of North Korean rare earth minerals and gold, banned under the new rule, is one of the more lucrative revenue sources for the North Korean government, traders said. That business continues on privately owned 200-ton ships belonging to Chinese smugglers based here, they said.

The United Nations rules put the onus on customs inspectors here to judge which goods may help the nuclear program or the military, which are banned, and which are intended for civilians, which are allowed.

On a recent day, the customs checkpoint, a large outdoor parking area adjacent to the bridge, held a collection of China’s castoffs: cheap four-wheel-drive Haval passenger vehicles, discount medicines for hepatitis and tuberculosis, old solar panels to brighten dark houses.

But the customs office here lacks the staff to open all the containers, a local government official said. Like most people interviewed for this article, he spoke on condition of anonymity since there are risks to speaking candidly to foreign media about trade with North Korea.

At peak times, up to 200 trucks a day cross the Yalu River to Sinuiju, North Korea. Before departing, only about 5 percent of the containers they carry are inspected, the official said.


Virtually everything that keeps the North Korean economy afloat passes through here: Coal and iron ore come in, violating the sanctions, and crude oil flows out, exempted from them.

Smuggling is rampant. The export of North Korean rare earth minerals and gold, banned under the new rule, is one of the more lucrative revenue sources for the North Korean government, traders said. That business continues on privately owned 200-ton ships belonging to Chinese smugglers based here, they said.

The United Nations rules put the onus on customs inspectors here to judge which goods may help the nuclear program or the military, which are banned, and which are intended for civilians, which are allowed.

On a recent day, the customs checkpoint, a large outdoor parking area adjacent to the bridge, held a collection of China’s castoffs: cheap four-wheel-drive Haval passenger vehicles, discount medicines for hepatitis and tuberculosis, old solar panels to brighten dark houses.

But the customs office here lacks the staff to open all the containers, a local government official said. Like most people interviewed for this article, he spoke on condition of anonymity since there are risks to speaking candidly to foreign media about trade with North Korea.

At peak times, up to 200 trucks a day cross the Yalu River to Sinuiju, North Korea. Before departing, only about 5 percent of the containers they carry are inspected, the official said.


There is, however, evidence of some enforcement in one important area: North Korea’s sale of coal and iron ore, two of its most important exports.

Port authorities here have been fairly vigilant in enforcing the new ban on North Korea’s ragged fleet of more than two dozen cargo ships, two local officials said. The coal they carry earns North Korea as much as $1 billion a year, according to the United States Treasury.

But that ban has been circumvented by smuggling ships and by the transfer of 12 North Korean ships to Chinese ownership, allowing them to dock at Chinese and other ports, a longtime trader, Mr. Yu, said.

A few traders interviewed here said the new rules had crimped their business.

Mr. Zhang, a trader who does tens of millions of dollars a year in business with North Korea, said customs officials had just impounded a big secondhand excavator he had bought from a coal mine in Shanxi Province and sold to a North Korean coal mine for more than $60,000.

Customs inspectors asked how he knew the equipment would not be transferred to the North Korean military. “We didn’t know how to answer,” he said.

But traders and officials expect that after some initial minor squeezing, whatever enforcement there is will be relaxed. Liaoning Province, where Dandong is a prominent city, ranked at the bottom of China’s 31 provinces for economic growth last year, and there was political pressure not to weaken the economy further.

Full article here:

A Hole in North Korean Sanctions Big Enough for Coal, Oil and Used Pianos

Jane Perlez and Yufang Huang

New York Times



Trade between North Korea and China fell 1.2 percent in January

Thursday, February 25th, 2016

By Benjamin Katzeff Silberstein

Note that the cause given here is not a fall in trade volume — trade in minerals jumped 35 percent in volume terms — but falling commodity prices.

BEIJING, Feb. 25 (Yonhap) — Trade between North Korea and its economic lifeline, China, fell 1.2 percent on-year in January, data showed Thursday, indicating that their trade was largely unaffected by the North’s latest nuclear test.

Bilateral trade volume declined to US$388 million last month, compared with $398 million for the same period last year, the Beijing unit of South’s Korea Trade and Investment Promotion Agency said, citing Chinese customs data.

China’s imports of North Korean goods slipped 3.96 percent in January to $177 million, the data showed.

North Korea’s exports of mineral resources, including coal, to China fell 3.94 percent last month to $76.9 million, but the volume of mineral exports jumped 35 percent to 1.66 million tons for the month.

The figures showed that North Korea also felt the pinch of lower commodity prices.

Full article here:
N. Korea’s trade with China falls 1.2 pct in January 
Yonhap News


North Korea’s nuclear test and trade with China: no discernable impacts so far

Tuesday, January 19th, 2016

By Benjamin Katzeff Silberstein

North Korea’s nuclear tests aren’t usually met with any drastic economic measures from China. So far, the supposed-but-not-really-hydrogen bomb test hasn’t been an exception. According to a piece in Asia Times Online, traders in Dandong have barely noticed any impacts from the latest test. Though fewer North Korean traders appear to be present in Dandong, nothing seems to be greatly out of the ordinary:

According to Initium reporters,  two-way trade in Dandong,  a prefecture-level city China’s  southeastern Liaoning province that sits astride the Chinese-North Korean border, hasn’t been affected. Merchants in the key trade hub told Initium that fewer North Korean merchants had been seen in Dandong recently, but they said this could be tied to a change in procedures with the possibility of a rebound in trade in February.

The piece also contains a look back at what’s happened (and not happened) after North Korea’s previous nuclear tests, though I suspect that isolating the specific causes for any changes in trade is next to impossible:

The North’s second nuke test in 2009 had the gravest impact on bilateral trade. The trade volume decreased by 8.9%. In October of that same year, then Chinese Premier Wen Jiabao visited the North and crafted a set of bilateral cooperation agreements, including the development of special border zones and the construction of the new cross-border Dandong-Yalu River bridge. These efforts led to the best 2 years for the China-DPRK relationships since the end of the Cold War, with then DPRK leader Kim Jong-il visiting China twice. Trade also surged.

After Kim Jong-il’s death in December 2011, bilateral trade lost some steam. But overall volume remained stable. Good times returned and continued until 2013, when the trade volume between the two countries reached $6.545 billion, which was 77% of the DPRK’s total foreign trade.

Read the full article here:

Weighing data: Will North Korea’s nuke test impact trade with China? 
Qin Xuan
Intium Media (and Asia Times Online)


How North Korea Became the World’s Worst Economy

Tuesday, December 29th, 2015

Nicholas Eberstadt writes in the Wall Street Journal:

Economic history is a story of progress and success, but also of retrogression and failure. Among the latter cases, the most gruesome is surely the Democratic People’s Republic of North Korea (DPRK). Its signature catastrophe, the Great North Korean Famine of the 1990s, was, so far as can be told, the only famine in all of human history to beset an urbanized and literate society during peacetime.

Pyongyang’s descent into penury is all the more tragic considering that from the 1950s on into the 1970s, intelligence from Washington and Seoul suggested that North Korea’s per capita output was higher than South Korea’s. An array of public data—on urbanization and energy consumption, for instance—appears to corroborate that judgment. How the once-developing DPRK went from a rapid ascent into a stall, and then into a dreadful downward spiral, is a cautionary tale with implications far beyond the Korean peninsula.

The ruling Kim regime suppresses data about the country’s performance, but sufficient hard evidence has seeped out to describe both the dimensions and the causes of its continuing economic calamity. The most meaningful quantitative measure available comes from “mirror statistics” on the country’s international trade—reports by its trading partners on their purchases from and sales to the DPRK of various commodities. These data provide indirect but powerful evidence about productivity, living standards and technological attainment.

Despite a recent China-supported upswing in trade, North Korean per capita merchandise exports last year were no higher, after adjusting for inflation, than in the mid-1970s. By my calculations, real per capita imports in 2014 were barely three-fifths of what they were in 1974. That year marked North Korea’s all-time peak trade.

North Korea’s decline was a continuing drama, not precipitated by any particular geopolitical shock. Neither the end of the Soviet bloc, nor the reportedly disastrous flooding of the mid-1990s, nor a succession of international non-proliferation sanctions imposed since 2006, nor any other external event explains the country’s long-term deterioration. Instead, North Korea’s economic troubles are the natural consequence of the Kims’ dogged insistence on destructive policies.

North Korea appears to have the very worst business climate of any fully functioning nation state. On the 2010 Index of Economic Freedom compiled by the Heritage Foundation and The Wall Street Journal, the DPRK earned one point out of 100, the lowest score of all 179 countries ranked. Zimbabwe, the state with the second-worst ranking that year, came in 20 points higher.

The DPRK has no rule of law; no established property rights; no possibility for private foreign trade; no reliable currency; virtually no official social and economic information; and no internal constraints whatever upon its monumentally ambitious government.

It is difficult to overstate how much this matters. At any point in the postwar era, 80% or more of the differences between countries in per capita GDP can be predicted by human resources plus business climate (i.e., institutions and policies). Statistical analysis of North Korean trade underscores the point. In 2010 the DPRK’s global trade was only 1/20th of what we would expect for a country with its estimated human resources profile. However, when business climate is considered, North Korea no longer looks like an outlier at all.

In 1970 North Korea apparently did a better job than China or Vietnam of converting human resources into economic output. But those two countries would pursue “reform socialist” policies, including freeing up agriculture, encouraging private enterprise and promoting international trade. North Korea went in the opposite direction, shifting to a permanent war-footing economy, systematically eradicating the consumer sector, and repeatedly confiscating any outstanding cash in private hands through “currency reforms.” Simply put: Any economy that embraced the same disastrous rules as the DPRK should be expected to trace out a similar trajectory of economic failure.

There is one final, and particularly bitter, piece in the puzzle: the role of foreign aid in financing and ultimately facilitating North Korea’s ruin. Mirror statistics reveal that the DPRK has never been self-supporting. To the contrary, it has relied on a perennial inflow of foreign resources to sustain itself. Since 1960, North Korea has reportedly received more than $60 billion (in today’s dollars) more merchandise from abroad than it has shipped overseas. Nearly $45 billion of that came from Beijing and Moscow—a figure we can treat as a rough approximation of total Chinese and Soviet/Russian financial support.

Why didn’t these massive transfers result in any appreciable measure of long-term economic advancement? The work of economists Craig Burnside, David Dollar and Lant Pritchett, published in the late 1990s under the aegis of the World Bank, suggests an answer: Aid can have a negative effect on growth when a recipient state has a bad business climate, because foreign subsidies allow the regime, in the short term, to escape the consequences of its misrule. In such cases, the greater the volume of aid, the bigger the harm.

Unfortunately, North Korea’s horrific economic performance was enabled in part by leaders abroad who sent billions of dollars to Pyongyang. Those resources allowed the Kim dynasty to continue policies so patently destructive that they would have been forced to cease, or at least to moderate, them absent subsidy from overseas.

International aid workers and humanitarian policy makers have always feared that foreign assistance, through cascading mishaps, might leave recipients poorer and worse off in the end. North Korea, bankrolled mainly by Moscow and Beijing, has gone further than any other modern state in turning this nightmare scenario into reality.

Read the full story here:
How North Korea Became the World’s Worst Economy
Nicholas Eberstadt


Rajin – South Korea water shipment

Monday, December 7th, 2015

According to Yonhap:

Containers carrying bottled water produced near North Korea arrived in South Korea on Monday via a North Korean port as part of a three-way logistics project involving the two Koreas and Russia, government officials said.

Ten containers full of bottled water produced at Erdaobaihe in northeastern China arrived at Busan, South Korea’s southeastern port city, earlier in the day after leaving from the North Korean city of Rajin bordering Russia, officials said.

The mineral water was produced at a factory run by Nongshim, South Korea’s largest noodle maker, in Erdaobaihe, a town close to Mount Baekdu in North Korea, the highest peak on the Korean Peninsula.

The shipment is part of the two Koreas’ third pilot operation of the project, which calls for shipping some 120,000 tons of Russian coal to three South Korean ports from the North Korean port city of Rajin.

The coal, which was transported from Russia’s border city of Khasan on a re-connected railway, arrived in South Korea in late November.

The so-called Rajin-Khasan logistics project is a symbol of three-way cooperation and an exception to Seoul’s punitive sanctions against Pyongyang following the North’s deadly sinking of a South Korean warship in 2010.

In November 2014, the first shipment carrying 40,500 tons of Russian coal arrived in South Korea without incident in the first test run of the project. The second test was conducted in April.

The project is also part of President Park Geun-hye’s vision for a united Eurasia, known as the Eurasia Initiative, which calls for linking energy and logistics infrastructure across Asia and Europe.

Read the full story here:
Containers carrying bottled water arrive in S. Korea via N. Korean port