North Korea-China trade grew by almost 40 percent in the first quarter of 2017

April 13th, 2017

Benjamin Katzeff Silberstein

Reports?New York Times😕

China released the first-quarter trade data just days after President Trump urged its leader,?Xi Jinping, to clamp down on trade with North Korea. The two leaders met at?Mr. Trump?s Mar-a-Lago resort?in Florida last week.

With signs indicating that North Korea could be planning a nuclear or missile test as early as Saturday, a United States Navy strike group led by the aircraft carrier Carl Vinson is steaming toward the Korean Peninsula in a show of force. But the Trump administration has indicated that economic pressure ? particularly imposed by China, with which North Korea conducts almost 90 percent of its trade ? is its preferred form of deterrence.

[…]

The data released on Thursday showed that China?s trade with North Korea grew 37.4 percent in the first quarter of this year from the period in 2016. Chinese exports surged 54.5 percent, and imports increased 18.4 percent, the General Administration of Customs said at a news conference in Beijing.

China buys iron ore, zinc and other minerals from North Korea, as well as growing amounts of seafood and garments manufactured in the North?s well-equipped textile factories. China reported that its imports of North Korean iron were up 270 percent in January and February compared with the period in 2016.

But imports of coal dropped 51.6 percent in the first three months of 2017 compared with the first quarter of last year, said Huang Songping, a spokesman for the customs agency. Coal has been the biggest hard-currency earner among North Korea?s fairly limited menu of exports.

[…]

After the United Nations sanctions were announced, some economists said it was still possible for Chinese businesses to import coal on an off-the-books basis, using transactions that would not be recorded by customs officials.

But since mid-February, Chinese coal traders have said that their business has virtually vanished. ?It?s over,? said a coal trader who operates from Dandong, a city on China?s northeastern border that functions as the main center of business with North Korea. The trader spoke on the condition of anonymity because he feared reprisals from the city authorities.

Full article:

China Says Its Trade With North Korea Has Increased
Jane Perlez and Yufan Huang
2017-04-13

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Overview of Rason SEZ legislation

April 5th, 2017

Yeobin Yoon and Philipp Kopp at the Hanns Seidel Foundation have put together a brief analysis of different laws that govern the Rason Economic and Trade Zone.

It shows an interesting evolution in the SEZ’s regulations as North Korean policymakers try to make the zone more hospitable to foreign investment.

You can download the PDF of the short report here.

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N. Korea emphasizes corporate profits in economic policies

April 4th, 2017

According to Yonhap:

North Korea appears to stress the importance of increasing corporate profits, an indication of a shift in its economic policies from centralized planning, according to a North Korean university’s newspaper obtained Tuesday by Yonhap News Agency.

The newspaper, published by Kim Il-sung University, North Korea’s top university, on March 5, 2017, carried an article saying, “Net profits gained by individual corporations are fundamental to the establishment of a powerful economy.”

The article, titled “Establishing Way of Economic Management in Our Own Style Leads to Basis of Economic Powerhouse,” apparently lays emphasis on individual corporations’ profits becoming the financial basis for economic development, encouraging the corporate sector to make more profits.

“All corporations should set up scientific strategies and management strategies of their own and ensure they have the maximum effect in their production and management activities so that they could fulfill their duties to provide the state with more profits,” the article said.

This is interpreted as the North Korean economic authorities’ request that corporations focus their management activities on seeking effect and profits rather than relying on centralized planning and guided management.

Since the North’s current leader Kim Jong-un came to power in 2012, the North has taken measures to achieve economic reforms aimed at expanding elements of the market economy, including the country’s new economic management system announced in June 2012.

The university’s newspaper also indicated that the North has introduced a set of measures to strengthen corporations’ autonomy to its economy. Under the implementation of the measures, called “the socialist corporate responsible management system,” companies are given more autonomy than ever in their management and take care of economic problems arising from their production and management processes on their own, according to the article.

But the article made sure that the ruling party will not depart from its control on the economy, saying, “In our country’s socialist system, corporations’ independent management activities are to be carried out under the guidance of the party right down the line.

“I understand North Korean corporations currently pay 30 to 40 percent of their profits to the authorities,” said Cho Bong-hyun, a senior analyst at IBK Economic Research Institute. “The more profits corporations earn, the more national finance increases.”

Cho said the North appears to support its finance by spurring corporations into increasing profits amid the implementation of U.N. sanctions aimed at halting Pyongyang’s nuclear and missile development.

Read the full story here:
N. Korea emphasizes corporate profits in economic policies
Yonhap
2017-4-4

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China continues mineral imports from North Korea, despite sanctions

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

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

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

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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North Korean merchants resisting price controls on markets

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

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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Causes for skepticism on China’s coal suspension

February 21st, 2017

By Benjamin Katzeff Silberstein 

As Yonhap reports, Chinese coal imports from North Korea exceeded the ceiling mandated by UN sanctions by almost three times in December last year (2016):

The volume of North Korea’s coal exports reached nearly three times what the United Nations Security Council has allowed in its latest punitive resolution imposed on the communist country, an update on the U.N. website showed Tuesday.

The report indicates huge shipments of the energy resource were sent before China announced its ban last week. The data did not specify which country imported North Korean coal over the months, but put the number of reporting member states that bought North Korean coal at one, apparently meaning China.

The latest update of the U.N.’s 1718 Sanctions Committee, which oversees the implementation of UNSC sanctions on North Korea, showed North Korea exported a total of just over 2 million tons of coal in December, which is worth US$183.89 million.

In terms of value, the monthly export volume is well over the import ceiling of $53.5 million which the UNSC imposed in Resolution 2321 for the period of Nov. 30 to Dec. 31.

Denouncing North Korea’s fifth nuclear test in September last year, the UNSC approved Resolution 2321, putting import ceilings on North Korean coal, the biggest source of foreign currency earnings for the reclusive country, which is believed to buttress its development of nuclear and missile programs.

The annual import ceiling for 2017 was set at 7.5 million tons or $400.87 million in value.

The sanctions committee update also showed that the monthly export of North Korean coal for January stood at 1.44 million tons, which accounts for over 19 percent of the annual total.

The data also suggests that China stockpiled on North Korean coal before its announcement on Saturday to suspend imports through the end of the year. China said the decision was made in accordance with the latest UNSC resolution.

Asked to comment on the figures, South Korea’s foreign ministry spokesman Cho June-hyuck said “China is explaining that the North Korean coal import suspension adopted on Saturday is part of its implementation of a UNSC resolution.”

Full article:
U.N. report: N. Korea’s coal exports far exceed U.N. ceiling in Dec.
Yonhap News
2016-02-21

This, I would argue, is part of a longstanding pattern, one that gives cause for skepticism on China’s recently announced ban on coal imports from North Korea through the rest of 2017.

It is important to remember that China is already obligated to suspend most mineral imports from North Korea under the UN Security Council Resolution 2270. The resolution was adopted in early March last year, after the first of the two nuclear tests of 2016, and mandated the ban on member states on imports of North Korean minerals, including coal.

The resolution, however, contained a massive loophole and excluded imports whose proceeds went to humanitarian purposes. Needless to say, determining precisely what coal imports from North Korea would generate revenue going toward humanitarian purposes inside the country – and what exactly counts as “humanitarian” – is close to impossible. Though the sanctions under resolution 2270 were by far the strongest ever adopted by the council against North Korea, in retrospect, the humanitarian exemption appears to have been designed specifically to give China the wiggle room to choose its own trade policy vis-à-vis North Korea, regardless of what sanctions mandate. By continuing its imports of North Korean coal, China can perhaps credibly point to the humanitarian exemption clause, but at the very least, this behavior would seem to go counter to the spirit of the sanctions.

After the sanctions were adopted, a familiar pattern set in. In the first few weeks after the sanctions were adopted, tangible signs suggested that Chinese authorities were serious about implementing the sanctions framework. For example, coal shipments from North Korea were reported to be sitting in limbo out at sea, unable to land at their Chinese ports of destination. On April 7th 2016, the Chinese Ministry of Commerce formally announced an embargo against imports of coal, iron and iron ores from North Korea, “in order to carry out relevant resolutions of the UN Security Council.”

Still, during the summer, things looked relatively normal along the border. On a visit to the Sino-Korean border area in late June last year, I spoke to several people involved in the border trade who said that goods were flowing just as normal. Trade was bustling, and around a total of 200 trucks – the number commonly estimated for a regular day before the sanctions were put in place – either crossed the bridge connecting North Korea and China or waited in line to cross.

Some told me that Chinese imports of coal had gone down, but that this was more due to a decline in domestic demand for North Korean coal than the UN sanctions. Trade in coal between the two countries fluctuates for a whole host of reasons other than sanctions. A change in demand from Chinese firms has historically often been the most important explanation for changes in Chinese coal imports from North Korea. Domestic considerations probably loom large in the suspension announcement as well. Remember, for example, that Chinese authorities are already trying to cut down on domestic coal consumption and production to combat smog and pollution.

At first, the summer did see a significant drop in trade between North Korea and China. In July, trade as measured in terms of dollar value plunged by 27 percent for July 2016, compared with the same month in 2015. This came after a smaller decrease in April, the same month that Chinese authorities formally announced the embargo.

This trend, if should even be called it a trend, did not last long. In August, China bought around 2.5 million tonnes of coal from North Korea, the highest figure ever recorded for a single month. This more than made up for any previous declines. All in all, imports of North Korean coal rose the same year that sanctions were supposed to prohibit it almost completely.

In other words: after tightening the screws in the beginning, seemingly to make a point and a symbolic show of compliance, China’s sanctions regime appeared to let up almost completely, and things went back to normal.

Will this time be any different? It is possible, but we should not be surprised if news of continued coal shipments surface later in the year. Though trade in coal could reasonably be expected to decline for some time, as it has in the past, it would not be wholly surprising if it returned to normal levels after a short and symbolic embargo period.

(Part of this post is an excerpt from a piece I published in The Diplomat Magazine on February 20th.)

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