According to an article in the Korea Times:
Approximately 100 small Chinese companies out of 150 that have investments in North Korea are based in Jilin and Liaoning Provinces near the northeastern border with the North.
Read the full story here:
Investments in NK limit China’s policy choices
Korea Times
Kang Hyun-kyung
8/20/2010
Institute for Far Eastern Studies (IFES)
NK Brief No 10-08-19-1
8/19/2010
Despite the ongoing inter-Korean tensions, and the stand-off over the Cheonan incident in particular, the first two quarters of 2010 saw an all-time record of 980 million USD-worth of inter-Korean exchange. However, with the South Korean government ceasing all inter-Korean trade outside of the Kaesong Industrial Complex in reaction to the investigation results finding North Korea responsible for the sinking of the South Korean naval corvette Cheonan, cross-border trade between the North and South has fallen and is expected to remain approximately 30 percent lower during the second half of the year.
According to South Korean customs officials, inter-Korean trade in the first half of the year was worth 983.23 million USD, with ROK imports worth 430.48 million USD and exports worth 552.75 million USD; a 122.27 million USD trade surplus. This is a 52.4 percent rise over last year’s first two quarters of trade, worth 645 million USD. In the first six months of 2009, South Korea exported 259.91 million USD (66%)-worth of product, and imported 385.1 million USD (44%) in goods. This year’s trade volume was nearly 100 million USD higher than the previous record, set in 2008, of 884.97 million USD. It was also around six times more than the 161.63 million USD recorded in 1999, when inter-Korean trade first became significant.
In 1999, North-South trade totaled 328.65 million USD. Despite rocky inter-Korean relations at the time, cross-border trade continued to grow, and with the expansion of the Kaesong Industrial Complex and other projects, first topped one billion USD in 2005, squeezing above the marker at 1.08872 billion USD. This growth continued in the latter half of the decade, hitting nearly 1.38 billion USD in 2006, 1.795 billion USD in 2007, and 1.82 billion USD in 2008. Repercussions from the North’s second nuclear test in 2009 caused trade to fall off to 1.666 billion USD in 2009.
On May 24, the South Korean government announced that all inter-Korean trade outside of the Kaesong Industrial Complex would be halted due to North Korea’s sinking of the Cheonan. If this trade ban continues, cross-border trade during the second half of the year is expected to be down 30 percent. The inter-Korean project in Kaesong makes up 70 percent of inter-Korean trade, so that other individual projects add up to only about one third. It is the suspension of these projects that is lowering North-South exchanges by 30 percent.
Actually, there was a decline in trade during the first six months of the year. In June, exports totaled 56.88 million USD, while imports were worth 66.18 million USD (total: 123.06 USD). This is 21 percent (33.31 million USD) less than in May. Exports were down 4 percent and imports dropped by 32 percent. Compared to trade prior to the ROK government’s measures, the trade of electric and electronic goods, transportation, and other capital goods actually raised from 19.31 million USD to 21.21 million USD, while mined goods and other consumables dropped from 76.81 million USD to 36.86 million USD.
According to the Korea Herald:
North Korea watchers in the West estimate the North’s outstanding debts to be around $12 billion, two thirds of which is owed to former communist states.
In 2008, a ruling Grand National Party lawmaker had suggested allowing North Korea to pay back its loans from South Korea with mineral resources or development rights.
Rep. Kwon Young-se said during a parliamentary audit two years ago that North Korea’s debts amount to $18 billion, nearly as much as the country’s economic output in the year 2007.
About five percent of it, or $920 million, was borrowed from South Korea.
“Loans for North Korea’s economic development from socialist countries in the 1950s and 60s, and Western nations in the 1970s have accumulated with overdue interest on outstanding debts,” Kwon said.
“North Korea’s per capita debt is around 930,000 won, slightly less than the country’s annual per capita income of 1.07 million won.”
Last year, a top South Korean government official said Seoul could pay for tours to North Korea with commodities instead of cash.
He said the issue of paying cash to North Korea had to be reconsidered based on the U.N. Security Council Resolution 1874, which slapped tightened sanctions on the reclusive state as punishment for its nuclear and missile programs.
The crossborder tours have been suspended for the past two years after a South Korean tourist was shot to death in the North’s mountain resort.
Read the full sotry here:
North Korea cornered with snowballing debts
Korea Herald
Kim So-hyun
8/17/2010
According to the Financial Times:
Hungary has revealed that it was asked by North Korea to write-off more than 90 per cent of its outstanding debt in the latest indication of the secretive totalitarian regime’s financial distress.
Hungary’s economy ministry told the Financial Times that North Korean negotiators had tabled the request in November 2008 during a meeting in Pyongyang.
“They asked [us] to take good consideration of the Democratic People’s Republic of Korea’s current economic difficulties and asked for cancellation of over 90 per cent of the total debt amount,” the ministry said.
The revelation follows a report in the FT last week that Pyongyang had asked the Czech Republic to write-off 95 per cent of its Kc186m ($10m) debt.
The cash-strapped totalitarian state offered to settle 5 per cent of the debt in ginseng, a root that is said to combat lethargy and impotence.
North Korea appears to be struggling to meet its financial obligations owing to the pressures of a moribund domestic economy and international trade sanctions imposed over its nuclear weapons programme.
Following the mysterious sinking of a South Korean warship in March, Washington vowed to further crack down on North Korea’s international financing, money laundering and narcotics operations.
Pyongyang’s outstanding debts are estimated at about $12bn, about two-thirds of which is owed to former communist states.
Its Hungarian debt emerged from a trade surplus between the two countries, mostly in the period before the fall of the Iron Curtain, an official said.
The total debt is 29.6m clearing roubles – an accounting unit used in the former Soviet Bloc.
Hungary said North Korea had agreed in principle to pay the debt in cash, with partial cancellation.
Details such as the clearing-rouble conversion rate and the size of the cancellation must still be settled, however.
Officials were unable to say when the negotiations would resume. Ginseng was not mentioned during previous talks.
Read the full sotry here:
Hungary reveals North Korean debt request
Financial Times
Chris Bryant
8/18/2010
According to the Daily NK:
Trade between North Korea and China for the first half of 2010 was $1.29 billion, a 16.8% increase over the corresponding period of last year.
Using Chinese customs statistics, the South Korean embassy in China revealed the details of Sino-North Korean trade on Monday. According to the statistics, North Korean exports to China fell by 1.1% in the same period to $350 million, while imports from China increased by 25.2% to $940 million.
As a result, North Korea’s trade deficit with China was $590 million, a 48.5% increase over the previous year.
According to the statistics, North Korea imported 140,000 tons of food, 300,000 tons of oil and 100,000 tons of fertilizer during the period. Notably, flour imports rose by 383%.
Reduced inter-Korean trade and other economic exchanges following the Cheonan sinking and reduced international humanitarian aid due to UN sanctions were two of the most significant causes of the burgeoning reliance upon China.
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Sino-North Korean Trade Deficit Rises
Daily NK
8/16/2010
According to Yonhap:
Inter-Korean trade soared to a record high in the first half of this year despite escalating tensions caused by the sinking of a South Korean naval ship in late March, a government report said Thursday.
Two-way trade jumped 52.4 percent on-year to US$983.2 million in the January-June period, according to report by the Korea Customs Service (KCS). It also represents a six-fold increase from the $161.6 million tallied in the same period in 1999.
Outbound shipments spiked 66 percent on-year to $430.5 million, with imports from the North surging 44 percent to $552.7 million for a deficit of slightly more than $122.2 million.
The report, however, said that with most cross-border exchanges being cut off by Seoul in retaliation for the sinking of the South Korean warship Cheonan, inter-Korean trade is expected to drop about 30 percent on-year in the second half.
A Seoul-led multinational investigation team found the North responsible for the sinking of the 1,200-ton warship that resulted in the deaths of 46 sailors. The North countered that it was in no way in involved.
Only the Kaesong Complex, located just north of the DMZ that separates the two countries, has not been affected by the fallout from the ship sinking. The complex accounts for roughly 70 percent of all inter-Korean trade and is home to 120 South Korean companies that make products with the help of North Korean laborers.
The customs office, meanwhile, said trade between the two Koreas rose from $328.6 million in 1999 to $1.08 billion in 2005 and peaked at $1.82 billion in 2008. Last year, the trade volume fell to $1.66 billion after Pyongyang detonated its second nuclear device.
According to the Choson Ilbo:
In spite of strained inter-Korean relations following the March sinking of the South Korean Navy corvette Cheonan, trade volume between the two Koreas hit a record high in the first half of this year.
According to data from the Korea Customs Service, the total value of exchanged goods reached over US$983 million in the January to June period, up more than 52 percent from $645 million a year ago.
The latest figure tops the previous record of $885 million in 2008, and is six times higher than the $162 million recorded in 1999.
The South’s cross-border exports jumped 66 percent to $435 million, and inbound shipments 44 percent to $553 million.
Amid the ever-changing atmosphere on the Korean Peninsula, inter-governmental efforts to spur North-South trade and the expansion of the joint Kaesong Industrial Complex have fueled a gradual yet continuous growth in trade activity.
The annual trade volume, which amounted to nearly $329 million in 1999, peaked at over $1.8 billion in 2008 before dropping slightly to $1.67 billion in the wake of North Korea’s second nuclear test in 2009.
Experts, however, forecast the trade volume to drop by as much as 30 percent on-year in the second half of this year, reflecting Seoul’s suspension of all trade with Pyongyang, except for operations at the Kaesong Industrial Complex, in response to the sinking of the Cheonan.
Much attention is focused on the future of business at the industrial park, which produces 70 percent of the goods traded between the two sides.
Read the full stories here:
Inter-Korean trade hits record high in H1: report
Yonhap
8/12/2010
Inter-Korean Trade Reaches Record High
Choson Ilbo
8/13/2010
According to Yonhap:
Inter-Korean trade has fallen more than 30 percent since the South cut almost all business relations with the North after Pyongyang was blamed for torpedoing one of its naval ships in late March, the customs office here said Friday.
According to data provided by the Korea Customs Service, the trade between the two Koreas came to US$123.06 million in June, down 32 percent from April, when they still kept their ordinary business relations despite a probe into the naval disaster.
…
South Korea’s exports to the North amounted to $56.88 million in June, down 27 percent from April, while imports decreased 36.5 percent to $66.18 million over the same period, the data showed.
Inter-Korean trade also dropped 21 percent from May, with its exports to and imports from the North falling 4 percent and 32 percent, respectively.
Despite such a sharp shrinkage, the customs office said the decline was not as steep as expected thanks to the Kaesong complex, which takes up most inter-Korean trade.
“The reason why the decline was not as sharp as expected is because we still keep a trade channel open in the Kaesong complex, which accounts for around 70 percent of total trade with the North,” a customs official said.
South Korea is the North’s second-largest trade partner after China. A suspension of inter-Korean business would cause a significant impact on the efforts of the reclusive communist nation to secure cash, according to experts.
Earlier, a state-run think tank here said inter-Korean trade suspension could cost North Korea about $280 million annually, adding to pressure on the North’s cash-strapped regime in governing its country.
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Inter-Korean trade falls more than 30 pct amid heightened tensions
Yonhap
8/6/2010
UPDATE: This story was picked up by the Financial Times (8/11/2010):
North Korea has offered the Czech Republic 20 tonnes of ginseng in lieu of payment for some of its debts.
However, Prague has turned down the deal, instead suggesting that Pyongyang pays in the valuable mineral zinc, which can be resold on international markets.
North Korea owes the Czech Republic $10m from the days when the Czech Republic was under communist rule and the two countries traded with each other regularly. Communist Czechoslovakia was a leading supplier of trucks, trams and machinery to North Korea, creating a large pile of debt.
Pyongyang reportedly offered $500,000 worth of ginseng, a root which is reputed to boost memory, stamina and libido, as a down payment.
However, consumption of ginseng in the European country is low, with just 1.4 tonnes used each year.
North Korea’s economy is struggling as international sanctions tighten and it hopes to be able to barter its way out of handing over valuable cash.
Non-cash transactions between socialist countries is common, with Cuba sending Venezuela doctors in exchange for discounted oil.
A Czech government spokesman has said that the countries were in negotiation over how the debt would be paid.
“We have been trying to convince them to send, for instance, a shipment of zinc,” the deputy finance minister told the MF Dnes newspaper.
ORIGINAL POST: According to the Korea Times:
North Korea has offered to pay its debt to the Czech government with ginseng, according to a local Czech daily newspaper.
MF DNES, a daily newspaper based in Prague, reported last Saturday that North Korea has recently suggested to the Czech Finance Ministry that it would pay 5 percent of its debt — approximately $500,000 — with ginseng.
“We are trying to persuade them (North Korea) to give us, for example a bulk of Zinc instead, so that we could sell it to someone else,” Tomas Zidek, deputy finance minister, told the newspaper in Czech.
North Korea is believed to have a significant amount of zinc in deposits.
The paper went on to say the consumption of ginseng in the Czech Republic is very small, and it only imported 1.4 tons last year. The amount of ginseng worth $500,000 will be roughly 400 tons, securing the supply for more than 200 years.
But, to Czech’s disappointment, North Korea seemed to have made up its mind, as it sent a delegation with samples of ginseng.
North Korea is known to be Czech’s 10th biggest debtor, which goes back to the communist governments. The North bought many trams and vehicles from former Czechoslovakia.
Read the full story here:
North Korea wants to pay back debt in ginseng
Korea Times
Kim Se-jeong
7/26/2010
According to Forbes:
Last year India exported roughly $1 billion to North Korea, up from an average of barely $100 million in the middle of the past decade, reports the Confederation of Indian Industry, a trade organization–most of that in refined petroleum products. The trade group says that North Korea’s exports to India were a minuscule $57 million, including silver and auto parts. (South Korean trade figures suggest India’s exports are much lower.)
The commercial tie has no deep historical roots and is curious, to say the least, given Pyongyang’s closeness with China, India’s commercial rival, and its connection to the A.Q. Khan nuclear network in Pakistan, India’s enemy.
North Korea needs oil to maintain power plants and to keep its outsize military on the move. It apparently has enough hard- currency reserve from its murky export trade to buy on the spot market. India, for its part, has ramped up refining but gotten ahead of domestic demand. Further, by keeping an artificial lid on pump prices until recently, Indian policy encouraged these oil sector producers to look for clients overseas. “India is the largest exporter of refined products east of the Suez [meaning the Middle East and Asia],” says Fereidun Fesharaki, chairman of Facts Global Energy in Singapore. A lot of enhanced supply came online in 2009, mostly from Reliance Industries, which has the world’s largest refinery, and the Essar Group, the Mumbai steel and energy giant. At current usage and demand “India needs 15 years of demand to absorb this current supply,” he adds.
Until June the New Delhi government kept a cap on domestic gasoline prices, running up a $10 billion subsidy bill, or roughly 7% of its budget. While state-owned companies were compensated for their losses, those in the private sector were on their own, causing them to look for other markets, especially since the price for crude has doubled, to $78 per barrel since 2004. “Their incentive is [to find] who in the world is desperate enough to take the products, and it’s usually Iran or North Korea,” says Fesharaki.
Some North Korea watchers are caught off guard. “I was flabbergasted by the increase in trade,” says Stephan Haggard, director of the Korea-Pacific Program at UC, San Diego. “North Korea is basically engaged in close to barter trade.” No one seems more surprised than Pratap Singh, India’s ambassador to Pyongyang, who says he has no idea of trade volume because the North Koreans won’t supply credible data, much less working phone lines. “How did you manage to get through?” he asks a reporter.
Like other oil refiners, neither Reliance nor Essar exports fuel to North Korea directly. That’s too much of a risk politically (even though this trade isn’t barred under current UN sanctions) and economically, as Pyongyang has been known to slip on its payments. Instead, the fuel is sold through a network of traders and banks in Dubai and elsewhere. Trade data nevertheless record the origin of the refined petro goods.
Curiously, both New Delhi and the U.S. State Department, which have bumped along in relations complicated by India’s own nuclear development, show no alarm. A spokesman for India’s Ministry of Foreign Affairs says all international strictures are observed and nothing sinister is at hand. Washington won’t comment without verifying the data.
Perhaps a little more attention is in order since India is selling more than mere oil to North Korea. Last year, according to Indian trade data, India also exported $2 million in goods in a category called “nuclear reactors, boilers, machinery and mechanical appliances”–most likely water pumps, computer data storage units, ball bearings and machine tools. Could they be used to maintain a nuke plant in some way? Maybe.
“North Korea, over the years, has attained skills to disguise their trade activities and also to utilize materials they have for other purposes,” says Jennifer Lee, a research analyst at the Peterson Institute for International Economics in Washington. “Countries need to be especially careful in what they export to North Korea.”
Read the full story here:
Look Who’s Helping North Korea
Forbes
Megha Bahree
7/22/2010
(Magazine date: 8/9/2010)
According to Yonhap:
The volume of goods brought into South Korea from a joint factory park in North Korea has remained unchanged despite Seoul’s trade ban slapped on Pyongyang in May in retaliation for its deadly attack on a South Korean warship, the government here said Tuesday.
The volume of products transported from the Kaesong industrial park stood at 6,953 tons in June, compared to 7,004 tons a month earlier when South Korea banned trade with North Korea and cut the number of South Korean workers staying in the North Korean border town, the Unification Ministry said in a release.
“There has been little difference in the amount of manufactured products brought in since the May 24 measures,” which the South imposed after a multinational investigation found the North responsible for the March sinking of the Cheonan, it said.
Ministry spokesman Chun Hae-sung said currency conversions for the data were not immediately available.
North Korea has denied any responsibility for the attack in the Yellow Sea that left 46 sailors dead. About 121 South Korean firms operate in Kaesong, employing 44,000 North Korean workers — the last remaining major symbol of detente between the divided countries.
According to the ministry that handles cross-border affairs, the amount of goods brought into South Korea for the first half of this year nearly doubled compared to the same period last year. The figures signaled the Kaesong factory park continued to grow even though the relations between the Koreas have soured since 2008.
But many of the Kaesong companies have complained of falling orders and are seeking rescue funds, arguing the deteriorating political relations are increasingly becoming a liability for their businesses.
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Influx of goods from inter-Korean factory park stays consistent: gov’t
Yonhap
Sam Kim
7/20/2010
