North Korea kicks up smuggling to offset Chinese trade cuts

As Beijing adheres to UN sanctions, Kim Jong Un's empire turns to illicit trade

North Korean leader Kim Jong Un watches the launch of a Hwasong-12 missile. Courtesy of the North Korea's Korean Central News Agency

China’s trade with North Korea slumped in September, amid United Nations sanctions aimed at deterring Kim Jong Un from pursuing his missile and nuclear-weapons program.

Exports to North Korea fell 6.7 per cent last month versus a year ago, while imports fell 37.9 per cent, customs administration spokesman Huang Songping said at a briefing in Beijing. North Korea’s deficit with China more than tripled in the first nine months of the year from the same period in 2016, to US$1.07 billion, he said, without giving further explanation.

With China’s support, the UN has agreed on two rounds of sanctions since the beginning of August including bans on North Korean exports of iron, coal, lead, seafood, textiles and oil import restrictions. The UN stepped up sanctions after Pyongyang fired missiles over Japan and tested its sixth and most powerful nuclear bomb last month.

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The breakdown of trade with North Korea was given in response to a reporter’s question at a briefing following publication of China’s overall trade statistics for September. The customs agency doesn’t usually break out North Korean trade data until later in the month.

There are no records of seafood imports from North Korea, while shipments of coal, iron ore and clothing all declined, according to Mr Huang.

Around 90 per cent of North Korea’s documented trade was with China last year. Beijing been under pressure from the US and others to show it is complying with UN sanctions designed to put an economic squeeze on mR Kim’s weapons programs. Still, Beijing is reluctant to trigger an economic collapse and chaos over its shared 1,350-kilometer border.

US president Donald Trump, who has given a mixed response on the effectiveness of China’s efforts to curb North Korea, will visit Beijing in November. Earlier this month he admonished of secretary of state Rex Tillerson for "wasting his time" in seeking negotiations, a goal that the sanctions are designed to help achieve.

Though North Korea's exports declined via official channels there is evidence that the country is smuggling shipments to and from China. North Koreans use boats, cars, trucks and several rail lines to carry everything from seafood to diesel fuel and mobile phones back and forth across the border, according to a report by Bloomberg.

China’s overall trade with North Korea for the first nine months of the year rose 3.7 percent from a year ago to $4.03bn, slowing 3.8 percentage point from January through August.

China’s exports to North Korea from January to September rose 20.9 per cent to $2.55bn while imports dropped 16.7 per cent to $1.48bn. The customs agency said it will publish details its trade in specific products with North Korea on October 23.