[Reportage part II] The effect of sanctions at the corridor between N. Korea and China

Posted on : 2016-04-01 12:46 KST Modified on : 2019-10-19 20:29 KST
Despite harsh measures to limit economic interchange with North Korea, trade continues in Dandong
Passengers board a train bound for Pyongyang in Dandong
Passengers board a train bound for Pyongyang in Dandong
Korean-Chinese Kim’s office for trade with North Korea

I arrived at the train station in Dandong at 4:30 pm on Mar. 8, the day that the South Korean government announced plans to place its own sanctions on North Korea.

At the same time, an international train that had arrived from Pyongyang was stopped on a different track. The train had set out from Pyongyang that morning and traveled 200km to Dandong, which it reached just before sunset. The windows of the train were either blocked by white shades or were too far away for me to see inside.

This was the day when the Seoul announced that it would be expanding its financial sanctions on the North, toughening its restrictions on North Korean shipping, tightening controls on North Korea imports and exports and encouraging South Koreans to refrain from patronizing North Korean restaurants and other for-profit establishments.

Amid the heavy rumble of the trains and the murmur of a language I did not understand, I mixed in with the Chinese surging toward the turnstiles at the train station like the rising tide.

I saw a poster with Korean lettering that advertised a Chinese-North Korean trade fair. No doubt, the people who read this sign as they walked by would each have their own nationality. There would be South Koreans, North Koreans, ethnic Koreans with Chinese nationality and ethnic Chinese who live in North Korea and have Chinese nationality but do not have a hukou, a Chinese government document that ensures a variety of social benefits.

In front of Dandong Station, Kim, 50, a Chinese-Korean from the Yanbian Korean Autonomous Prefecture who does business with North Korea, was waiting for Kang and me. He greeted us in Korean.

For several days of our nine-day trip, Kang and I were supposed to take a peek at Kim’s factory and the office of his trading company. Kim was Kang‘s key informant.

“The city of Dandong is like an onion,” said Kang, as we were riding in Kim’s car toward his office. “No matter how many layers you peel back, there‘s always another one. You can’t see the city if you don‘t go inside.”

On the wall in Kim’s office were hanging clocks and calendars for North and South Korea. China and South Korea‘s time zones are one hour apart, while North Korea is half an hour between China and South Korea. We plopped down in chairs.

“Well, all of my goods came in from Pyongyang today,” Kim said.

“I read in the Korean papers that goods aren’t coming in,” Kang said.

“Really? But everything is coming in just fine,” Kim said. “It’s a sensitive time. South Korea’s NIS [National Intelligence Service] is planning an investigation in Dandong and means to hit the South Korean companies who are rerouting deliveries of North Korean goods through China. I bet the NIS and the CIA will make a hit. The NIS knows all of the companies in Pyongyang, right? They’re going to look for the place of origin.”

Kang handed Kim a cookbook he had bought in South Korea that was supposed to help people recover from diseases. The book was one that a senior North Korean official with an intractable disease had asked Kim to buy for him.

Shelves on one side of Kim’s office were lined with books. If a bookshelf sheds light on someone‘s thoughts, Kim’s books ran the gamut of ideology. I could see “My Time as President” by former president Lee Myung-bak (2008-2013), “DPRK Laws in the Category of Foreign Trade,” “Rich China, Poor Chinese,” “The Destiny of Moon Jae-in,” and “Ahn Cheol-soo’s Thoughts.”

“There are some North Koreans who come to borrow books in a professional capacity. They keep a list of books they want to read. There was even one guy who wanted a South Korean book called ‘Post-Kim Jong-il.’ He read it in one month and then brought it back,” K said. The people who borrow books from his bookshelves are North Korean employees assigned to China.

“North Koreans who are in Dandong like South Korean products. TV programs in particular are easy to come by, since that’s how the Korean Wave began. And it‘s the same language, you know. I’m telling you, one North Korean who visits my office goes online to watch South Korean shows that were aired the day before.”

 

The economic effect of UN sanctions
 a researcher at Kyungnam University)
a researcher at Kyungnam University)

Trade between North Korea and China is growing steadily.

According to “Statistical Data on Trends in North Korean Foreign Trade,” released by the Korea Trade Promotion Corporation (KOTRA), North Korea has rapidly become more dependent on China for its trade. China accounted for 48.5% of its foreign trade in 2004, 79% in 2009 and 89% in 2011. As of 2012, 88% of North Korea‘s total foreign trade, valued at US$6.8 billion, was with China.

And considering that North Korean trading companies employ a variety of transactions that get around banks - including trading in kind and cash and smuggling - North Korea’s trade with China is presumably much greater than the official figures of China Custom indicate. In fact, it is hard to know which would be bigger - the official trade value listed in government statistics, or the amount of trade that takes places off the record.

The stereotype that North Korea is a country that relies on foreign aid is shattered by its import and export statistics. North Korea’s exports to China are worth US$2.28 billion (46.4%), while its imports are worth US$2.63 billion (53.6%).

Dandong is on the front line of commerce. “More than 60% of total trade between North Korea and China passes through China’s three northeast provinces, which are geographically close to North Korea, while more than 60% of that passes through Dandong,” said a senior official at South Korea’s Foreign Ministry who is well-versed in North Korea’s relations with China.

“There are about 5,800 entries in the list of Dandong companies in my office,” Kim said. “Skim through it and you can see that more than half of them are connected with North Korea. Say that there are 3,000, with from 3 to 8 employees in each company. That gives you 20,000 people. When these people import one item, it involves the staff at the client, logistics, customs, and so on. The process of trade involves six or seven steps. Now when the people involved in all these steps are added to tourism in Sinuiju, you‘ve got half of the 300,000 people living in Dandong making their living off trade. And people over in North Korea make their living off Dandong.”

Since 2013, more than 180,000 North Koreans have been visiting China every year. This is the official figure, which does not include workers who enter China illegally.

In Dandong, it is easy to run into North Koreans who are not refugees. At a business hotel, which is not usually frequented by South Koreans, there were North Koreans in the restaurant eating breakfast, in the elevator and at the front desk on the first floor. There are North Koreans everywhere.

Kang and I pressed floor buttons for North Koreans in the elevator, picked up luggage that had fallen to the floor (even at the train station, North Koreans have a ton of luggage) and talked about the weather.

South Korean media reports claim that trade between the two countries will freeze because of the nuclear test and UN and South Korean sanctions, but is that really the case?

“Of course Dandong is highly dependent on North Korea. For a long time, the city mayors had all been pro-North Korea, close with the North. Even when major South Korean officials visited Dandong, they got a cold reception because the city officials were more concerned about how North Korea would feel,” said a South Korean who does business in the North.

“But last year, I think it was, pro-South Korean officials were appointed both as city mayor and city secretary. China had moved closer to South Korea under President Xi Jinping, and associates of Xi had been dispatched to the provinces as well. So last year the South Korean consulate and the Dandong city government held a ’night of China-South Korean friendship‘ for the first time. This had been happening for a long time elsewhere in China’s three northeast provinces.”

In China, the city secretary, who is assigned by the central Party leadership, has a higher rank than the mayor.

Figures related to China-North Korea trade are not closely correlated with UN sanctions.

According to a 2013 paper by Lee Seok, an analyst at the Korea Development Institute (KDI), titled “Determining Factors for China-North Korea Trade: An Analysis of Trade Statistics and Survey Data,” UN sanctions are presumed to have a bigger effect on North Korea‘s imports from China than its exports to China, but this effect is short-lived, largely limited to the first two quarters after the sanctions. Even though the UN Security Council adopted Resolution No. 2094 after North Korea’s third nuclear test in 2013, North Korea and China‘s trade volume reached its highest level at that time.

A train from Pyongyang at Dandong Station on Mar. 8. (provided by Kang Joo-won
A train from Pyongyang at Dandong Station on Mar. 8. (provided by Kang Joo-won

Since China’s relations with South Korea have been friendly under Xi, some experts do expect that China will strictly enforce sanctions on North Korea after its fourth nuclear test. But the prevailing view is that China will not do so.

In a paper titled “North Korean Foreign Trade: 2015 Assessment and 2016 Forecast,” KDI analyst Lee Jong-gyu said, “While the UN Security Council is working toward a resolution, an economic contraction in the three northeast provinces would increase pressure on the Chinese government, which has not even been able to keep the economic growth rate above 7%.”

By Park Yu-ri, staff reporter

Please direct questions or comments to [english@hani.co.kr]

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