N Korea trade soars on Chinese demand
North Korea’s external trade jumped 51 per cent last year to a 22-year high of $6.3bn on the back of greater Chinese demand, according to a South Korean government agency that monitors activity in its neighbour.
Pyongyang issues no data but the estimates, based on statistics released by the country’s major trading partners, gives a glimpse of the economy in one of the world’s most closed societies.
The increased trade is due largely to additional exports of natural resources to China when Pyongyang was seeking foreign currency to fund this year’s centenary celebrations of the birth of the country’s founder, Kim Il-sung.
Exports surged 84 per cent to $2.79bn while imports jumped 32.6 per cent to $3.53bn, according to the Korea Trade-Investment Promotion Agency. Trade with China increased 62.4 per cent from a year earlier to $5.63bn, accounting for 89.1 per cent of North Korea’s foreign trade, highlighting the isolated state’s growing dependence on its only ally in the region.
The main exports were coal, iron ore and textiles while imports from Beijing were mostly crude oil, grains and machinery.
China, provides the impoverished state with extensive aid. Pyongyang’s economic dependence on China has deepened in recent years as it faced more international sanctions over its nuclear programme. China, hungry for natural resources, covets North Korea’s mineral reserves, which South Korea’s state-run Korea Resources Corp estimates to be valued at more than $6tn.
“The government restricted domestic supply of its rich underground minerals like coal and iron ore to be exported more to China and thereby bring in the foreign currency [that is] much needed to fund large-scale political events scheduled for this year,” said a Kotra official. “The rise in international oil and commodity prices also contributed to the boost in trade.”
Meanwhile, trade with South Korea has slowed since Lee Myung-bak, South Korean president, adopted hardline policies against its neighbour although South Korea runs a small investment enclave in the North Korean city of Kaesong. Inter-Korean trade was excluded from the Kotra data, but the unification ministry in Seoul put the figure at $1.7bn in 2011.
In April, North Korea’s new leader Kim Jong-eun oversaw the anniversary celebrations. But the failed launch of a long-range rocket, which was supposed to be the centrepiece of the festivities, cost the impoverished regime about $850m, according to South Korean estimates.
North Korean defectors in Seoul did not welcome the country’s increased trade.
“The increased trade does not mean a better life for North Koreans because the hard currency earned from mineral exports to China was mostly spent on the large-scale events to promote the regime,” said Suh Jae-pyong, a North Korean defector who works for the Committee for the Democratisation of North Korea, a civic group.
In February, the US agreed to send 240,000 tonnes of food aid to North Korea in return for a freeze on nuclear and missile activities but the agreement collapsed after Pyongyang’s rocket launch.