CHINA-NORTH KOREA: ECONOMIC TIES

As tension mounts in the Korean Peninsula on whether Pyongyang decides to launch an ICBM or not, there is increasing attention on China’s substantial economic ties to North Korea. Nearly 90% of North Korea’s legal trade is with China, with the South Korean government estimating that China bought US$2.8 billion in North Korean exports in 2016. The closure of the joint South–North Korean Kaesong Industrial Complex in 2016 only increased Pyongyang’s dependence on trade with China. China provides substantial amounts of critical energy and commodity exports to North Korea, valued at US$450 million in 2016. Data from China’s General Administration of Customs shows that this includes nearly US$100m in steel and US$50m in fuel oil. Imports of North Korean coal have been one of the most controversial forms of economic aid, with the latest data showing that China imported 255m tonnes, valued at US$1.2bn, last year. China has few illusions about the purpose of this economic lifeline, and has shown a great reluctance to curtail its assistance, even in the face of new United Nations sanctions. Indeed, China’s imports from the DPRK increased 18.4% year-on-year in the first quarter of 2017, while exports to North Korea increased a staggering 54.5%.







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