Archive for March, 2017

China continues mineral imports from North Korea, despite sanctions

Thursday, March 30th, 2017

Benjamin Katzeff Silberstein

About that supposed “squeeze”….Yonhap:

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

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

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

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

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

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

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

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

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

…

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

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

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The new Dandong-Pyongyang flight

Wednesday, March 29th, 2017

Benjamin Katzeff Silberstein

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

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

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

Meanwhile, Daily NK reports:

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

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

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

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

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

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

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

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

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

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

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

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

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

Monday, March 27th, 2017

By Benjamin Katzeff Silberstein

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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North Korean merchants resisting price controls on markets

Tuesday, March 21st, 2017

By Benjamin Katzeff Silberstein

Reports Daily NK:

Food prices in the past closely mirrored the ups and downs of rice prices in North Korea. For example, if rice prices climbed by 1,000 KPW per kg, then corn prices could also be expected to rise by approximately 500 KPW. But that trend is beginning to change.
In addition, North Korean rice prices used to exhibit sensitivity to currency exchange rates, but rice prices have recently been falling and climbing independently of the exchange rates.
To calm volatility, the authorities have entered the markets and attempted to control prices, but merchants have widely rejected these measures. Merchants who sell similar products have been collaborating with one another to set prices or decide when to withhold products from sale.
?Merchants know that the authorities? attempts to crackdown on the marketplace usually fizzle out over time,? said a separate source in Ryanggang Province. ?The vendors will pretend to agree and listen to the authorities, but then they will secretly raise the prices.?
?As rumors spread that large shipments of pork were being smuggled in, shrewd merchants refrained from putting pork up for sale because they were expecting the price to rise. They then sold large quantities at a higher price, before the prices gradually began to fall again,? she continued.
One expert believes that this development signals how prices have moved out of the domain of the authorities and under the influence of the black market.
?The price volatility we are currently seeing in North Korea?s markets is a common element for underdeveloped countries,? said Professor Lim Eul Chul, from the Institute for Far Eastern Studies (IFES) at Kyungnam University. He went on to explain that pricing decisions by individual actors involved in market activity are becoming increasingly relevant, but the authorities are having trouble keeping up with the information.
?In the past, market agents carefully watched the authorities? reactions when setting prices, but the markets have developed and now it is the authorities who are following behind. Big merchants have the power and sway to move the market and control prices. We can expect this trend to continue,? he concluded.
Full article:
Merchants resist price controls
Kang Mi Jin
Daily NK
2017-03-20
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Posted in Agriculture, Black markets, Economic reform, General markets (FMR: Farmers Market), Statistics | Comments Closed

North Korean merchants resisting price controls on markets

Tuesday, March 21st, 2017

By Benjamin Katzeff Silberstein

Reports Daily NK:

Food prices in the past closely mirrored the ups and downs of rice prices in North Korea. For example, if rice prices climbed by 1,000 KPW per kg, then corn prices could also be expected to rise by approximately 500 KPW. But that trend is beginning to change.
In addition, North Korean rice prices used to exhibit sensitivity to currency exchange rates, but rice prices have recently been falling and climbing independently of the exchange rates.
To calm volatility, the authorities have entered the markets and attempted to control prices, but merchants have widely rejected these measures. Merchants who sell similar products have been collaborating with one another to set prices or decide when to withhold products from sale.
“Merchants know that the authorities’ attempts to crackdown on the marketplace usually fizzle out over time,” said a separate source in Ryanggang Province. “The vendors will pretend to agree and listen to the authorities, but then they will secretly raise the prices.”
“As rumors spread that large shipments of pork were being smuggled in, shrewd merchants refrained from putting pork up for sale because they were expecting the price to rise. They then sold large quantities at a higher price, before the prices gradually began to fall again,” she continued.
One expert believes that this development signals how prices have moved out of the domain of the authorities and under the influence of the black market.
“The price volatility we are currently seeing in North Korea’s markets is a common element for underdeveloped countries,” said Professor Lim Eul Chul, from the Institute for Far Eastern Studies (IFES) at Kyungnam University. He went on to explain that pricing decisions by individual actors involved in market activity are becoming increasingly relevant, but the authorities are having trouble keeping up with the information.
“In the past, market agents carefully watched the authorities’ reactions when setting prices, but the markets have developed and now it is the authorities who are following behind. Big merchants have the power and sway to move the market and control prices. We can expect this trend to continue,” he concluded.
Full article:
Merchants resist price controls
Kang Mi Jin
Daily NK
2017-03-20
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Some coal transports to China continue, while some controls tighten, Daily NK says

Wednesday, March 1st, 2017

Benjamin Katzeff Silberstein

Daily NK reports that coal smuggling continues despite the Chinese import suspension. Presumably, the suspension would also imply tighter controls on smuggling operations, some of which likely goes on with a degree of knowledge on the side of the authorities:

Although China’s Ministry of Commerce previously announced the suspension of coal imports from North Korea until the end of 2017, coal trading has continued in Rizao Port, Shandong Province, where regulatory control is known to be relatively loose. However, as of February 23, the customs clearance process was reportedly also strengthened in this region, leading to speculation that the coal trade will likely be curtailed in Rizao as well.
“Even on February 20, the day after the announcement to suspend North Korean coal imports, a vessel loaded with North Korean coal was permitted to unload after passing quality inspection at Rizao Port. Although official coal imports from North Korea have all been stopped, coal shipments have been continually imported through Rizao Port while circumventing customs clearance,” a source close to North Korean affairs in China told Daily NK on February 23.
“The North Korean trading companies have already signed contracts for coal trading in the first half of 2017, so they have no choice but to continue shipping in order to receive foreign currency. But the regulations have been strengthened as of today, so all coal is supposedly banned from entering China,” the source added.
To date, North Korean coal has been primarily exported by ships traveling through Nampo Port to Rizao Port, or from Songrim Port in North Hwanghae Province to Dongjiang Port in Dandong or Dalian. The coal is then sold to regions in southern China after passing quality inspection.
“The Chinese companies are obliged to import North Korean coal to secure their sales volumes. The coal trade between China and North Korea is mostly between individual merchants, so they are continuing to engage in smuggling, ignoring diplomatic pressure and sanctions,” the source said.
“When sanctions were imposed in earnest in April last year, the North Korean trading companies overcame the restrictions by changing their trading ports.”
However, in Dongjiang and Dalian, which are close to the border areas and where international attention is concentrated, the regulations imposed by Chinese customs offices are known to be strict.
“Rizao Port is relatively looser with their regulations than Dongjiang Port and Dalian Port because it mostly handles freight. The traders have resorted to Rizao Port in the face of sanctions because they can trade coal without going through the customs clearance process,” a separate source in China with ties to the coal industry reported.
“Even if the UN Security Council and the Chinese authorities tighten regulations on the coal trade, it cannot last long. Coal trading agreements are made between trading companies solely based on profit, so they are bound to create an alternate route whenever sanctions are introduced.”
“The traders can falsify records for coal and document it as other goods, or can borrow vessels belonging to other countries. The UN sanctions are currently ineffective for the land border between China and North Korea, which stretches for over 1300 km, so it will be impossible to block all coal smuggling via sea, which covers a far larger area,” he concluded.

Full article:
North Korean coal smuggling continues despite China’s import ban
Seol Song Ah
Daily NK
2017-02-27

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