Archive for the ‘International trade’ Category

Food imports from China fall in 2014

Wednesday, July 30th, 2014

According to Yonhap:

North Korea’s grain imports from China tumbled more than 50 percent on-year in the first half of this year, data showed Wednesday, amid speculation that relations between the communist allies are not like before.

North Korea imported 58,387 tons of cereal crops from China in the January-June period, down 53 percent from 124,228 tons recorded a year earlier, according to the data by the Korea International Trade Association (KITA).

By type, flour topped the list with 40,142 tons, or 68.8 percent, followed by rice and corn with 13,831 tons and 3,420 tons, respectively, added the Seoul-based agency.

Analysts say the remarkable decrease may be attributable to reportedly strained ties between the two sides in recent months.

“Of late, North Korea has appeared to move to reduce its economic dependence on China and diversify its foreign economic partners,” said Lim Eul-chul, professor at the Institute for Far Eastern Studies at Kyungnam University.

Kwon Tae-jin, researcher at private think tank GS&J, said it might have been more affected by Pyongyang’s increased crop yield.

“North Korea’s stockpile of crops seems to have grown due to a good harvest last year.

Meanwhile, China’s fertilizer exports to North Korea also plunged 21.3 percent to 109,531 tons during the January-June period this year from a year earlier, said KITA.

Read the full story here:
N. Korea’s grain imports from China halve in H1
Yonhap
2014-7-30

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Chinese Koreans and cross border trade

Tuesday, July 29th, 2014

According to the Daily NK:

The Hwagyo, North Korea’s community of overseas Chinese, are seeing their value rise in response to demand for assistance transporting cross-border freight for local traders hamstrung by their proscribed freedom of movement, according to a source inside North Korea. The local traders refer to the process as “renting a passport”.

The source in North Pyongan Province reported to Daily NK on July 28th, “Pyongyang Hwagyo are catering to the tastes of middle-class consumers in the city’s markets by taking orders from individuals or by bringing in goods on the behalf of traders.

“The measles outbreak prevented Pyongyang hwagyo in Pyongyang from taking the cross-border train, but recently that ban was lifted so they can come and go from Dandong again.” The measles travel ban was put in place during June in Yongcheon and Sinuiju, but was withdrawn on July 15th.

Hwagyo are treated as citizens in North Korea, carrying the same identification cards as all other residents; however, they are also able to hold Chinese passports, which allows for greater mobility and autonomy than other North Koreans. That is the reason for the high demand; North Korean traders and wholesalers employ them to ensure that their supplies arrive from China.

“Although there are a lot of hwagyo from Sinuiju and elsewhere in Dandong, Pyongyang hwagyo are the ones who get hired the most because the train ends in Pyongyang; This makes it easier to get the goods into circulation, and the procedures there are not as stringent,” the source reported. “This has caused their value to rise.”

“The hwagyo either use their own money to get products to sell in Pyongyang markets directly, or they use money from traders and take 5% of the total upon delivery,” she said. “They take commission for transferring goods from the cross-border trains to merchants in Pyongyang markets.”

“Merchants used to collaborate with train operators coming in from Dandong to bring goods into Sinuiju. However, more are seeking out the hwagyo instead, because it’s cheaper,” the source said.

There is a stipulated limit of 300kg of cargo per person on the train between Dandong and Pyongyang. Excess luggage is possible, but only up to 50kg, and this is charged at 1.50 RMB per kg, according to the source. The ticket for the 5hr 30min ride is 300 RMB, and this must also be factored into the overall freight transit cost.

The train departs at 10:00 daily. Once it arrives in Pyongyang at around 15:30, passengers and freight are subjected to customs procedures, followed by immigration inspections. “Not a single person can leave the train until everyone goes through immigration and officers check their passports and travel visas,” the source recalled.

“Because the staff in Sinuiji Customs House are tough about inspections and are sure to take at least one thing, it’s safer and cheaper to transport goods via the cross-border train,” the source said, concluding, “How funny it is that this place prevents North Korean citizens from moving around freely and ends up making hwagyo richer.”

Read the full story here:
Hwagyo Step in to Dominate Border Trade
Daily NK
Seol Song Ah
2014-07-29

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DPRK increases exports of rare earths to China

Sunday, July 27th, 2014

According to the Korea Times:

North Korea has increased its rare earth exports to China amid worries within the international community that its mineral exports could weaken the effect of sanctions imposed on the reclusive state.

The cash-strapped communist country exported goods to the value of $550,000 and $1.33 million in May and June, respectively, according to the Korea International Trade Association (KITA).

Last January, the North exported elements worth nearly $25,000 to China for the first time and continued them this year. The country has an estimated 20 million tons of rare earth elements.

The North’s resources exploitation have stirred speculation that the impoverished state may further diversify mineral exports to China, where it has previously mostly exported anthracitic and iron ore.

The KITA report identified the changing trend in North Korea’s earnings from mineral exports.

In the first half of this year, earnings from anthracitic and iron ore exports decreased 23 percent and 5 percent, respectively.

These earning deficits were compensated for by exports of rare earth elements. There has been a sharp increase in global demand over the last recent decade because several high-tech devices, including smartphones, and other high technology devices use them in core components. Rare earth elements are a group of 17 elements on the periodic table referred to by the US Department of Energy as “technology metals” because of their use and application.

The communist country relies heavily on mineral exports as a major source of hard currency after international sanctions were imposed on the Pyongyang regime for its continuing missile launches and testing of nuclear weapons.

Natural resources account for 73 percent of North Korea’s bilateral trade with China in 2012. The North exports 11 million tons of anthracitic to China annually.

Yonhap coverage:

North Korea exported rare-earth elements worth $1.87 million to China from May to June, resuming outbound shipments of the crucial industrial minerals to its key ally and economic benefactor in 15 months, data showed Sunday.

North Korea shipped rare-earth minerals worth $550,000 and $1.32 million to China in May and June, respectively, which amounted to a total of 62,662 kilograms, according to the Korea International Trade Association based in Seoul.

The communist regime first exported rare-earth metals worth $24,700 to China in January 2013 and had stopped selling them until recently.

Separately, Pyongyang has sold carbonate-containing rare-earth compounds to China since 2011, but the size of outbound shipments is small, with the total amount is estimated at about $170,000 over a period of three and a half years.

The impoverished nation is known to have large reserves of rare-earth minerals, which are crucial ingredients used in many tech products as well as the military and medical sectors.

The latest move comes as the North has stepped up developing rare-earth deposits to support its moribund economy.

Last year, the North’s state-owned Korea Natural Resources Trading Corporation signed a 25-year deal with British Islands-based private equity firm SRE Minerals Limited to mine deposits in Jongju, northwest of the capital, Pyongyang.

Experts said the recent surge in North Korea’s rare-earth shipments may be part of its attempts to diversify sources of mineral exports, which account about half of its total exports.

The North’s export of anthracite coal fell 23 percent in the first half of this year to $571.2 million from a year ago, while ironstone declined 5 percent to $120 million in the cited period, according to trade data.

“The rare-earth minerals sold to China were valued at $30 per kilogram, and they were considered to be processed iron concentrates or oxidized substances,” said Choi Kyung-soo, chief of the Seoul-based North Korea Resource Institute. “It could be seen as an attempt to diversify items of mineral resource exports, but it remains to be seen whether the North will start exporting large volumes of rare-earth minerals.”

Read the full stories here:
Rare earth elements boost NK income
Korea Times
Kang Hyun-kyung
2014-7-27

N. Korea exports US$1.8 mln worth of rare earth to China in May-June
Yonhap
2014-7-27

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Rajin (Rason) port 3 open for business

Friday, July 18th, 2014

According to KCNA:

Wharf No. 3 of Rajin Port Goes Operational

Rason, July 18, 2014 20:13 KST (KCNA) — Wharf No. 3 of Rajin Port has been built with success in the DPRK.

The building of the wharf pursuant to the plan for cooperation between the DPRK and Russia provided another foundation for making a positive contribution to boosting the friendly and cooperative relations between the two countries and economic and trade relations among countries of Europe and Northeast Asia.

An inaugural ceremony took place in Rason City Friday.

Present there were Jon Kil Su, minister of Railways, officials concerned and working people in the city.

Also present there were Vladimir Yakunin, president of the Russian Railways Company, Yury Viktorovich Bochkarev, consul general of the Russian Federation in Chongjin, those concerned of railways and other Russian guests and staff members of foreign embassies in the DPRK.

Vladimir Yakunin in a speech said he was pleased with the completion of the wharf.

The wharf is capable of loading and unloading millions of tons of coal, he said, expressing belief that such joint work would not only develop the bilateral cooperation but promote friendship and mutual understanding between the two countries.

Jon Kil Su said in his speech that the successful reconstruction of the Rajin-Khasan railway section and the completion of Wharf No. 3 of Rajin Port are precious products of the vitality of the Moscow Declaration signed by leader Kim Jong Il and President V. V. Putin. He noted that the transport channel newly provided in the spirit of friendship and cooperation between the two peoples would satisfactorily play the role of a friendship bridge linking Europe and Northeast Asia and, through this, the international position of the Rason Economic and Trade Zone would be further enhanced.

Then followed congratulatory speeches.

A reception was given on the same day.

According to ITAR-TASS:

A new Russian-North Korean terminal was commissioned on Friday in Rajin, which is the major seaport of the North Korean Rason trade and economic zone located in the northeast of the republic. Thus, the pilot part of the project aimed at the reconstruction of the Trans-Korean railway from Russia’s Hasan to the seaport of Rajinis over. Relevant agreement of the heads of Russian, North and South Korean railway authorities was signed in Russia’s Siberian city of Irkutsk in 2006.

Russian Railways’ (RZD) subsidiary, RZD Trade House, and the Rajin port had established the joint venture Rason Con Trans in order to carry out the modernization process. The cargo traffic capacity of the new high-tech multi-purpose facility is about five million tonnes a year. The initial stage of the terminal operation envisions supplies of coal and other bulky goods towards the port. Alongside with cargo transshipment and storage, the terminal makes it possible to organize coal magnetic cleaning and coal separating.

“Today, we are eyeing the loading of the first ship with Russia-mined coal,” RZD President Vladimir Yakunin told the terminal commissioning ceremony. “We are interested in bigger amounts of cargoes in the terminal and higher number of vessels, which will represent the whole world. The launching of the terminal is expected to be fruitful and beneficial not only for the economy of North Korea, but also business communities of neighbor states.”

Jointly with representatives from Russia and North Korea, businessmen from South Korea were also attending the ceremony.

This Russian source had a good summary of events leading up to the opening (Translated by Google):

The official ceremony is scheduled for July 18 in Rajin, which is considered the main port of the SRE. Investment in the project is mainly carried out by the Russian side.The volume of transshipment terminal at the first stage is planned at 4-5 million tons, according to ITAR-TASS.

Initially, the terminal was planned for container transport, but in agreement with the leadership of North Korea until it will be used for the carriage of the Russian coal. In the future, is expected to increase traffic and expand the range of goods.

Agreement to begin the reconstruction of the railway line from the Russian station to Hassan and the port of Rajin as a pilot project to restore the Trans-Korean Railway was reached in 2006. The project started in October 2008, when an agreement was signed between the “Russian Railways” and the Ministry of Railway Transport of the DPRK to cooperate in its implementation. The project is implemented by the joint venture “RasonKonTrans”, created in the same year, with the share of JSC “RZD Trading House” (70%) and the port of Rajin (30%).

In October 2011, a team of machinists Far Eastern Railways of Russia led a demonstration container train in Rajin, opening cargo traffic between the two countries. To control the movement of trains on the line Hasan – Rajin, a special control center with the participation of specialists “RasonKonTrans” and North Korean shipping company “Donghae”.

34 specialists from the DPRK have been trained in the training centers of the Far Eastern Railway.

In the future, when the message will be set up all over trnskoreyskoy magitrali – from the South Korean port of Pusan ​​through Korea to Russia, will be able to refocus on the Russian Trans-Siberian significant portion of goods that are currently going by sea from South Korea to Europe.

According to experts, these advantages have Rajin – ice-free port on the eastern coast of North Korea with the developed infrastructure, which uses Russian standard gauge with a high degree of security for shippers and benefits for entrepreneurs.

Additional information:

1. The Russia-Rason Railway that services the port was opened in September 2013.

2. South Korea is also interested in the Rajin port.

3. There has been some confusion on the legal status of the various piers at Rajin. I help shed some light on the confusion here.

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New Czech brewery in Rajin

Tuesday, July 15th, 2014

UPDATE 3 (2014-8-14): Reader Théo Clément sent these pictures of the interior of the beef factory/bar:

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UPDATE 2 (2014-8-6): Here is an interview (in English) on Radio Praha with Martin Kovář about the brewery.

UPDATE 1 (2014-7-15):

Czech-brewery-rajin

Pictured above (Google Earth): The new brewery in Rajin

One of the individuals involved in setting up the brewery gave this interview (in Czech). NK News translated some of it:

Zvu Potez Sales Director Martin Kovar said that North Korean representatives in the Czech Republic contacted his company directly, saying they wanted to open a brewery in the DPRK with Czech expertise.

“We took them to a few Czech microbreweries so they could examine them and know what to expect from them,” he said, “And they chose a type of beer that most of them liked”.

The brewery subsequently opened in December last year, with equipment brought directly to the site in shipping containers from Prague, via the Russian railway line across Siberia from Khasan in Russia to Rajin port.

According to visitors to the Rason area in late 2013, two staff from the Zvu Potez company arrived in Rajin to help set up the site and train three to four locals in how to use and maintain the brewery.

Among the Czech staff was Tomáš Novotný, who worked as Chief Technologist for Zvu Potez in North Korea for six months while the brewery was being set up.

His job, he told NK News in an email, was to give the North Koreans the “know-how” and supervise the production of the first beer, which he said would be brewed primarily for the local market.

The Czechs have now all returned home, he said, and the brewery is under the full direction of the North Koreans.

And according to Radio Free Asia:

North Korea then opened a microbrewery in the Rason Special Economic Zone in late 2013 and equipped it entirely with Czech-made appliances and hardware.

In addition to the equipment, Novotny explained that the ingredients – malt, hop, and yeast – were also imported from the Czech Republic.

In this effort, brewing technologist Novotny stayed in the North for six months, beginning last October, to teach two North Koreans what he knows about beer.

Novotny added, however, he does not know what the North plans to do once they use up the one-year supply of ingredients from his country.

So why is the impoverished country striving to improve the quality of its beer? It may be that better beer means better business.

While beer at the bar in Rason is free for locals, tourists must pay about 70 U.S. cents per pint, according to the North Korea-focused website NK News.

Pyongyang is also encouraging foreign visitors to take a tour of its various microbreweries, including the Rakwon Paradise , the Taedonggang Craft Brewery, and the Yanggakdo Hotel Microbrewery.

The Czech company’s work on the Rason brewery has come to an end, and it does not intend to send more experts unless North Korea places additional orders.

ORIGINAL POST (2013-12-2): An article in Forbes tells us that Rason is getting a new Czech brewery:

Tomas Novotny has been in North Korea two days, and he looks frazzled. It was a long journey from Prague, and standing on the street in downtown Rajin, his government minder by his side, he can already see that doing business in the DPRK’s remote northeast will present an unusual set of challenges.

Novotny is here because of that railway line. A brewing technologist with the Czech firm Zvu Potez, he has come to set up a brewery. All the equipment and materials were transported by train–from Prague to Moscow, through Siberia and onto the branch line of the Trans-Korean main line.

“We’re still building the brewery. Come and see it,” says Novotny. The two containers that brought the Zvu Potez equipment from Prague lie 50 meters from the brewery. It’s a great location by the sea in Rajin’s main park. The business is a joint venture between the Czech firm and the Rason regional government, says Novotny, and will target tourists and foreigners. There are about 300 Western tourists–including Russians–a year and about 20,000 Chinese visitors to the country’s northeast.

“When they’ve finished building,” he says, shouting over the drilling, “I’m going to teach three or four locals how to brew. I hope they can speak English. If they can’t it will be interesting.”

He expects to be in Rason for six months establishing the business, but already he misses home and his young son. “I won’t get to speak to them until I go home at Christmas,” he says.

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DPRK imports from Bangladesh in FY 2014

Friday, July 11th, 2014

According to Yonhap:

The North spent over US$146,000 to buy medical supplies from Bangladesh in the fiscal year 2014, the Washington-based Radio Free Asia (RFA) reported, citing trade statistics from the Bangladeshi Export Promotion Bureau.

The figure is more than double the $68,000 tallied in the fiscal year 2013. The country closes its books in June.

The North likely chose Bangladesh as its trading partner because the latter can copy patented drugs and sell them abroad for now as per an international agreement brokered by the World Trade Organization, the Dhaka office of the Korea Trade-Investment Promotion Agency said.

North Korea also bought $163,000 worth of instruments used in radiology from the U.S. in May, trade documents by the U.S. Commerce Development showed earlier this month.

Though it is too early to tell, the RFA speculated that the North’s sudden interest in medical import may be closely related to leader Kim Jong-un’s recent campaign to boast his “love for the people,” a move possibly aimed at assuaging public outrage over a deadly collapse of an apartment building in Pyongyang in May.

The North’s healthcare spending has been among the least in the world, with the World Health Organization estimating that it had put in less than $1 per person in 2006.

Separately, the Swiss government has said it will continue its humanitarian assistance to North Korea for the next two years, the U.S.-based Voice of America reported Friday.

The Swiss Agency for Development and Cooperation (SDC) will extend its 2012-2014 Medium-Term Programme, an aid plan aimed at helping North Korea exploit sloping lands for farming purposes and gain better access to clean drinking water, by another couple of years, the report said.

Read the full story here:
N. Korea ramps up import of medical equipment, drugs in past year: RFA
Yonhap
2014-7-11

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DPRK-Russia ties expanding

Thursday, July 3rd, 2014

According to Yonhap:

Cross-border trade between North Korea and Russia jumped 37 percent to US$104 million in 2013 from the $76 million recorded in the previous year, according to a report by Lee Yong-hwa, a researcher at the private think tank Hyundai Research Institute.

“The North is believed to have forged deeper relations with Russia in an effort to revitalize its economy and prevent it from becoming excessively dependent on China,” Lee said in the report.

The researcher said the two countries’ economic cooperation is forecast to grow further going forward as the North’s attempts to revitalize its moribund economy coincide with Russia’s bid to develop its Far Eastern regions.

According to the report, the portion of trade between North Korea and Far Eastern Russia out of the two nations’ total trade volume surged to 23.1 percent in 2013 from the 10 percent tallied in 2009, indicating that Russia’s Far East development policies have added to the overall bilateral trade expansion.

The socialist country has also tightened relations with Russia in other business areas including transportation and logistics as well as in the energy industry, the report added.

China was the biggest trading partner for North Korea last year with their bilateral trade volume reaching $6.54 billion, according to data from the Korea International Trade Association (KITA).

But trade between the two Koreas fell to its lowest level in eight years in 2013 due to their strained relations. Inter-Korean trade reached $1.15 billion last year, down a whopping 41.9 percent from the previous year’s $1.98 billion, the data showed.

Read the full story here:
Russia-N. Korea economic ties expanding: report
Yonhap
2014-7-3

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Data on Kaesong’s cumulative performance

Thursday, June 12th, 2014

According to Yonhap:

Cumulative production of the inter-Korean industrial park has come to US$2.3 billion as the most salient outcome of rapprochement between the Koreas marks its 10th anniversary of operations this week, the unification ministry said Thursday.

The joint factory complex in the North Korean border town of Kaesong opened a decade ago following the first inter-Korean summit meeting in 2000, in which their leaders adopted a joint declaration calling for closer cooperation and exchanges.

On June 14, 2004, a group of 15 South Korean groups signed contracts to operate factories in the then-newly built complex, inaugurating the era of the Kaesong Industrial Complex. In December that year, the joint complex saw its first batch of goods produced in its factories.

In the first full year of operations in 2005, annual output reached $14.9 million before jumping by more than 30-fold to $469.5 million in 2012, according to the unification ministry.

But yearly output nearly halved last year from 2012 after Pyongyang suspended operations of the Kaesong complex for five months from April amid inter-Korean tensions. The figure rose to $168.1 million in the first quarter of this year.

The value of inter-Korean trade through the park came to an accumulated $9.45 billion, according to the ministry.

A total of 940,000 people have visited the inter-Korean economic zone, with 125 South Korean firms currently operating in the complex designed to match deep-pocketed South Korean companies with cheap North Korean labor.

Among the firms, 73, or 58.4 percent, are textile firms, while another 24 firms are machinery or steel makers. The complex is also home to 13 electronics makers and 9 chemicals firms, the ministry noted.

The Kaesong complex also saw the number of North Korean workers grow from around 6,000 in 2005 to 52,000 as of recently, along with monthly salary more than doubling from $50 to more than $130.

Although this story reports salaries of $130, a separate story released just a couple of days ago claims the monthly incomes are just $70. I am not sure why the discrepancy.

Read the full story here:
Cumulative output of Kaesong park reaches US$2.3 bln
Yonhap
2014-6-12

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Eberstadt on DPRK Trade

Wednesday, June 4th, 2014

UPDATE 1 (2014-6-12): Witness to Transformation has an update here.

ORIGINAL POST (2014-6-4): Nicholas Eberstadt has written an interesting article on trends in the DPRK’s trade patterns from 2002-2013.

Here is just one graph:

Eberstadt-graph-DPRK-trade-2014-6-4

Read the full article here.

Dr. Eberstadt draws some counter-intuitive conclusions that cannot be observed directly from the published data. You can read all about the published data on the DPRK’s 2013 trade statistics here.

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DPRK leases ROK waters to Chinese fishermen

Friday, May 30th, 2014

NLL-chinese-fishing-2014-6-4

 

Pictured Above: Areas where the fishermen are allegedly crossing the NLL

According to the Joongang Ilbo:

North Korea signed a contract with Chinese fishermen allowing them to fish in waters near the disputed maritime border including South Korea’s waters, sources told the JoongAng Ilbo yesterday.

The contract allows Chinese fishermen to work near the Northern Limit Line (NLL), the de facto maritime border between the two Koreas in the Yellow Sea, including South Korean waters below the boundary, Seoul officials said. In return for giving the Chinese fishermen the right to work in South Korean waters, particularly during crab and squid seasons, North Korea is paid a certain amount of money annually, officials said.

“As North Korea has expanded its joint fishery area with China [to the southern waters below the NLL], some Chinese vessels are moving southward more than they did before,” a South Korean government official said. “We are thinking of more active measures to keep them from violating the NLL.”

Officials confirmed that the South Korean waters allegedly being rented out to the Chinese fishermen were three areas north and east of Baengnyeong Island and north of Yeonpyeong Island. Under the alleged contract, several North Korean and Chinese vessels have recently worked together, officials said. Some North Korean fishermen were allegedly hired by the Chinese vessels’ owners as well.

“Last year, most Chinese vessels worked north of the NLL, but recently they worked very close to the NLL and some crossed the line,” a Korean Coast Guard official said. “So we dispatched additional patrol ships and special Coast Guard forces to the areas.”

Starting in April, the Chinese ships gradually approached the NLL, officials said, and from mid-May, several large vessels crossed the border frequently, apparently for crab fishing.

The Korean Coast Guard seized a total of six Chinese boats that violated the NLL since May 19, including three 10-ton vessels on Tuesday. They said they also spotted about 100 vessels, assumed to be Chinese, near Yeonpyeong Island, and 170 near Baengnyeong Island, fishing in South Korean waters.

The South Korean government notified Beijing of the illegal fishing and called for them to stop, officials said.

“The Foreign Ministry and the Coast Guard told the Chinese Coast Guard officials about the contract that included our waters,” another South Korean official said. “We demanded the Chinese government warn the vessels not to cross the NLL.”

Military officials in Seoul raised concerns about the purpose of the contract. They say that the regime appears to be attempting to nullify the effectiveness of the boundary as well as to earn foreign currency.

“In the name of controlling the Chinese vessels, some North Korean patrol ships could cross the border or seize our fishing boats as well,” a military official said.

Read the full story here:
North rents out waters near NLL
Joongang Ilbo
Jeong Yong-soo
2014-5-30

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