North Korean Economy Watch

By Benjamin Katzeff Silberstein

At this point, non-materializing reports about the China–North Korea opening for full traffic are too many to count. A recent story by SCMP (link here) claims both truck trade and tourism from China to North Korea will start in one month. But “sources briefed by officials on both sides” is an acknowledgment that the report is not based on direct sources. And as has seemed the case for North Korea since Covid-19, plans for policy changes can often change and often do. Judging by the policy pattern, there doesn’t seem to be an overall strategy or timeplan.

By: Benjamin Katzeff Silberstein

After a very long hiatus over the pandemic, China’s new ambassador to North Korea has taken up his post in Pyongyang, AP reports:

Wang Yajun will help in the development of the traditional friendship between the “close neighbors sharing mountains and rivers,” Foreign Ministry spokesperson Mao Ning said at a daily briefing.

China is North Korea’s main source of economic aid and political support, but interactions have been disrupted by travel restrictions imposed in an attempt to prevent the spread of COVID-19.

The ambassador’s posting comes as North Korean state media reported that leader Kim Jong Un urged his nuclear scientists to increase production of weapons-grade material to make bombs to put on the country’s widening range of weapons.

The report Tuesday followed a series of missile launches — seven this month alone — and rising threats to use the weapons against North Korea’s enemies.

(Full article here.)

Does this signal a broader relaxation in North Korea’s border restrictions, brightening prospects for trade to open up more broadly as well? Maybe. After all, there’s been signs for many months (well over a year), from infrastructure construction to (fairly tangible) rumors reported from the border area. And imports have increased, particularly of food, resulting in prices stabilizing somewhat.

At the same time, there are good reasons to doubt it. Welcoming back a Chinese envoy is, after all, a decision more in the realm of foreign policy and diplomacy than economics and pandemic prevention. Thus far there have been no reports in outlets such as Daily NK or Rimjingang suggesting a major reversal in trade policy is imminent. To the contrary, the bigger pattern seems to be the state centralizing control over trade while keeping it at a very small minimum. Whatever trade regime emerges from this, it may not look like the old one.

By Benjamin Katzeff Silberstein

On September 26, a spokesperson for the Chinese Foreign Ministry officially stated that railroad traffic between China and North Korea would restart yet again, after the brief opening and sudden cancellation five months ago. The same say, a freight train crossing the border was caught on video. Bloomberg:

Foreign Ministry spokesman Wang Wenbin said Monday at a regular press briefing in Beijing the cargo rail link between the China and North Korea is reopening, after service was halted in April as part of measures to control Covid.

“The two sides will continue to strengthen coordination to ensure the steady and secure transport of goods, and contribute to friendly relations between China and the DPRK,” Wang said, referring to North Korea by its formal name.

The rail connection between the city of Dandong in China and Sinuiju in North Korea is Kim’s main link to China, his country’s biggest trading partner by far. Reopening the trade route could take pressure off Kim to return to stalled nuclear disarmament talks with the U.S., where the Biden administration is dangling the prospects financial rewards in exchange for steps to wind down its atomic arsenal.

The link was closed in 2020 near the start of the pandemic when Kim shut the borders to prevent the coronavirus from entering, and was briefly reopened in January of this year. Video on social media on Monday showed a freight train that appeared to be crossing from the Chinese side into North Korea.

(Source: “China, North Korea Restore Rail Link on Kim’s Key Trade Route,” Bloomberg News, September 26th, 2022.)

By Benjamin Katzeff Silberstein

Railway freight between Dandong in China and Sinuiju in North Korea, a crucial channel for the flow of goods between the two countries, started back up in January after a two-year border closure, and was shut down again in April due to the Covid-19 situation in both China and North Korea. Now, Radio Free Asia reports that railway freight could start again today or tomorrow (August 8th or 9th), citing North Korean sources:

Rail freight shipments between the northern Chinese city Dandong and North Korea’s Sinuiju will resume next week, providing a vital lifeline of goods to the pariah state, North Korean sources said.

“Starting around Aug. 8 or 9, the international freight train between Sinuiju and Dandong will resume its operation,” an official from a trading organization in North Pyongan province told RFA on Thursday.

“There has been an order from the Central Committee for all trading companies to prepare import and export materials to load,” he said, referring to the Central Committee of the Workers’ Party of North Korea.

North Korean authorities proposed the resumption of service to the Chinese government because the country faces economic difficulties due to a serious shortage of supplies, he said.

North Korea is dependent on trade and aid from China, its main ally and trading partner. Restrictions on the flow of goods from the country during COVID-19 pandemic lockdowns devastated North Korea’s already chronically unstable economy.

Freight train service between Sinuiju and Dandong, the hub of North Korea-China trade, was halted in August 2020 because of the pandemic. It resumed on Jan. 16, but was closed by the Chinese again on April 25 after outbreaks in both countries.

Maritime trade with North Korea was also halted at that time but was partially resumed in mid-July after repeated requests from authorities in North Korea.

Trading company representatives, including ones from firms in the North Korean capital Pyongyang, are stationed in Sinuiju, which sits across the international border of the Yalu River from Dandong, the source in North Pyongan said.

“They have been ordering goods from their Chinese counterparts to import construction materials and basic food. They are trying to secure foreign currency to pay for the imports,” he said.

A North Korean source in Dandong, with knowledge of the situation, also told RFA on Thursday that the Dandong-Sinuiju freight train service was about to resume.

“Since yesterday, a Dandong-based logistics company has been recruiting truck drivers to transport goods to the Dandong freight station and manpower to load goods on the freight train in preparation for the resumption of Dandong-Sinuiju freight train operations,” he said.

The logistics company must collect basic food such as sugar and flour, iron products, and construction materials ordered from North Korea from all over China and transport them to Dandong freight station, said the source, who declined to be named so as to speak freely.

Additionally, Dandong quarantine authorities will directly manage the freight station and the trains that return to China after transporting goods to North Korea, he said.

Chinese workers who load and unload goods on freight trains in Dandong must have received COVID-19 vaccinations, the source added. Workers will be tested daily for the virus and can continue on the job if their results are negative.

The freight train will operate 15 to 17 cars at a time and will go directly to the Uiju quarantine facility, formerly the Uiju Airfield, near North Korea’s northern border with China, the source said.

(Source: Hyemin Son, “Rail freight service between China and North Korea to resume in days,” Radio Free Asia, August 5th, 2022.)

This may just be one individual news report, but the overall context also seems to speak for this in many ways. North Korea recently announced the end of its first Covid-19 wave. It might not be a coincidence that this report comes at the same time. Indeed, declaring the Covid wave over was more or less a prerequisite for re-opening rail freight traffic. It may be that signals from the Chinese government that they were willing to re-open the railway link factored into the North Korean authorities’ decision to declare the first wave over.