China is the largest trading partner of North Korea, providing the isolated nation with the bulk of its energy, food, and infrastructure resources. The close trade relationship between China and North Korea has been a point of contention both within the international diplomatic sphere and within each country itself. Despite criticism and pressure from the international community, trade between the two nations remains strong, with China continuing to finance North Korea’s economy.
History of Trade
Sino-Korean relations date back to Ancient China and during the Qing dynasty. China up until the 1950s was the North’s main provider of goods and resources. The close relationship between the two states existed even during the Korean War, when China sent thousands of troops to aid North Korea.
In 1961, the two countries signed a treaty of friendship and cooperation that established their mutual relationship. This allowed China and North Korea to become more heavily entwined in terms of trade, particularly after the fall of the Soviet Union.
In recent years, the trade relationship between Beijing and Pyongyang has become increasingly important. In 2014, China’s imports from North Korea increased by nearly 40% to an estimated US$5.22 billion, and exports rose by 19.6% to US$3.49 billion.
Motivations of Trading
There are several factors that have prompted the continued trade between China and North Korea. The primary motivation is economic, with China providing much of the energy and infrastructure needed to power the North Korean economy. In addition, the two states share a common political ideology, as both countries are ruled by communist governments. Another factor is North Korea’s relatively low wages, which makes it an attractive market for Chinese exporters.
Condemnation of Chinese Support
The Chinese government’s continued support of North Korea has been widely criticized, with some commentators arguing that it encourages and enables the North’s oppressive regime. In 2017, the United Nations Security Council passed a series of sanctions, restricting North Korean exports, including coal and seafood, which are the North’s two largest exports to China.
In response, China has implemented a series of economic measures to limit trade with the North. In 2017, the country’s imports of North Korean coal declined by 90%, while its exports of crude oil fell by 20%. The Chinese government also suspended all flights between the two countries and imposed a ban on three North Korean companies in an effort to curb the flow of illicit goods.
Advocates of Trade
Supporters of Sino-Korean trade argue that it is important for the economic development of North Korea. They argue that trade helps North Korea to develop its economy, thereby reducing poverty and stimulating economic growth. Additionally, by trading with North Korea, China is able to influence the regime and encourage it to pursue a more peaceful and cooperative foreign policy.
Compliance and Supervision
Despite the criticism of China’s trade with North Korea, the Chinese government insists that it is compliant with UN Security Council resolutions related to North Korea. To ensure adherence to sanctions, China has implemented a specialized inspection system, with inspectors monitoring the flow of goods across the border.
The Role of China in Denuclearization
Since the start of denuclearization talks between North Korea and the United States, China has taken an active role in the process in an effort to ensure the two sides reach an agreement. China has called for both sides to show flexibility and to engage in dialogue, rather than confrontation.
China has also taken a lead role in mediating the talks, with Foreign Minister Wang Yi holding meetings with North Korean Leader Kim Jong Un in order to help ensure the continued dialogue between the two countries.
Impact on Sanctions
The Chinese government has also taken steps to enforce UN sanctions on North Korea. In 2018, the country’s imports of North Korean goods fell by a further 56.6%, while its exports to the country declined by 66.8%. In addition, China has frozen the assets of several North Korean entities in order to prevent them from accessing funds to purchase goods on the international market.
Insight into the Future
Looking ahead, it is clear that trade between China and North Korea will remain a contentious issue. Despite criticism, the Chinese government insists that it is complying with UN Security Council resolutions and is taking steps to reduce the flow of illicit goods into North Korea. Nevertheless, the international community remains divided over the wisdom of supporting a regime accused of human rights abuses.
The Role of International Companies
China is not the only country that trades with North Korea. A number of international companies are known to be involved in North Korean trade, despite the sanctions. These companies include banks and shipping firms from countries including Russia, India, and the United Arab Emirates.
The activities of these firms are of particular concern to the international community as they are seen as undermining the sanctions regime. However, the firms argue that their involvement is vital in providing essential goods and services to the North Korean people.
The Impact on North Korean Economy
The economic relationship between China and North Korea is complex. On the one hand, trade between the two states provides North Korea with vital supplies of food, energy, and infrastructure resources. On the other hand, the continued support of the North by China is seen by some as allowing it to pursue its oppressive regime.
The long-term impact of Sino-Korean trade on the North’s economy is yet to be seen. While economic sanctions are likely to have some effect, it is also possible that the North’s economy may be able to survive and even grow due to the support it receives from China.
The Limitation of Chinese Investments
Though Chinese investments in North Korea are not prohibited, Beijing is usually reluctant to provide any financial resources due to the sanctions imposed by the international community. North Korean firms are also reluctant to accept Chinese investments, due to distrust of terms imposed by Chinese companies. As a result, it is difficult for Chinese firms to gain access to North Korea’s market.
The Power of China in Diplomacy
The power of China in diplomacy is another factor influencing the relationship between China and North Korea. Beijing has established its role as a mediator between the two nations and has been heavily involved in the negotiations between North Korea and the US. China is also seen as instrumental in helping to maintain the peace on the Korean peninsula.
It is clear that despite international condemnation, trade between China and North Korea is likely to continue. The two states have an important economic relationship, with China providing much of the energy and infrastructure needed to power the North Korean economy. Additionally, the two countries share a common political ideology, which helps to keep the relationship strong.
Nevertheless, the international community remains concerned about the impact of China’s support of North Korea, with some arguing that it encourages the regime to pursue its oppressive regime. In response, China has implemented a series of economic measures to limit trade with the North, while taking a lead role in mediating the denuclearization talks.