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N. Korea’s trade dependence on China climbs to 95 per cent: Report

Supplied photo taken March 20, 2019, shows a North Korean tanker, left, and a vessel of unknown nationality suspected of engaging in illicit ship-to-ship transfer of goods in the East China Sea. Photo courtesy of Japanese Defense Ministry. Sketched by the Pan Pacific Agency.

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SEOUL, May 18, 2020, Hankyoreh. A new report shows that North Korea’s trade dependence on China has reached 95% and that its trade portfolio has been completely rearranged. The North’s top five imports and exports back in 2017, when the international community tightened economic sanctions, are basically nonexistent in its foreign trade today. And since official trade has been completely halted since the North shut its national borders on Jan. 28 to block the spread of COVID-19, North Korea-China trade in January and February (US$210 million) was down 34% from the same period last year, Hankyoreh reported.

On May 6, the Korea International Trade Association (KITA) published a report about North Korea’s top 10 trading partners and goods in 2019. The report said that, amid the continuing economic sanctions on North Korea and the suspension of inter-Korean trade, the North’s trade dependence on China climbed to 95.2% last year. That was the highest figure on record, up from 91.7% in 2018.

Despite the economic sanctions, North Korea’s trade volume with China (imports and exports) also increased by 15.3% from the previous year to US$2.84 billion (including US$2.59 billion of imports and US$215 million of exports). North Korea’s total foreign trade last year (imports and exports) amounted to US$2.95 billion. That’s an increase of 11% from 2018 (US$2.65 billion), when North Korean trade was at its lowest point during the past 20 years.

North Korea’s top five exports in 2017 were coal, iron ore, textiles, knitwear, and marine products, while its top five imports were fuel, electronics, machinery, automobiles, and steel. Since the tougher sanctions took effect, however, the proportion of these imports and exports has basically fallen to 0% (with the exception of certain fuels that the North is allowed to import).

In 2019, North Korea’s major exports were watches (18.8%, US$49 million), ferrosilicon (11.3%), wigs (11.2%), laboratory equipment and models (6.3%), and tungsten (4.8%), while its major imports were soybean oil (4.5%, US$120 million), textiles (3.5%), rice (2.9%), wheat (2.9%), and watch parts (2.6%). This constitutes a total transformation of North Korea’s trade portfolio, with most of these goods being traded with China.

“These exports show that North Korea is mobilizing all available resources to earn the foreign currency needed for imports. Its major imports and exports were nearly the same in 2018 and 2019, indicating that the sanctions regime has reoriented the North’s trade regime around non-sanctioned goods,” the report concluded.

Looking at the larger categories of these imports, North Korean imported US$275 million of plastic last year, suggesting that it has been steadily importing non-sanctioned subsidiary construction materials (such as plastic sheeting and flooring) from China.

Because of the sanctions, North Korea’s imports outweighed exports by nearly 10 times. Last year, its imports increased by 15.6%, to US$2.68 billion, while exports fell 21% year on year to US$260 million. North Korea’s annual exports peaked in 2013, at US$3.63 billion, and have been falling ever since.

“While North Korea developed non-sanctioned export goods such as watches and wigs after its main exports (anthracite [a kind of coal], apparel, and marine products) were placed under sanctions, those goods haven’t been enough to fill the gap left by the original exports,” KITA said in its report.

North Korea had 62 trading partners last year, a steep drop from the 115 countries it traded with in 2018. After China, North Korea’s major partners were Russia (1.6%), Brazil (0.7%), India (0.4%), and Costa Rica (0.3%).

“After the continuing sanctions reduced the scope of North Korea’s foreign trade and caused it to lose trading partners, the North compensated for its losses through trade with China, increasing its trade volume,” KITA said.

By Cho Kye-wan

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