North Korea-China economic relations and the United Nations sanctions

Kim Jong-un, the leader of the North Korea (Credits: Kremlin.ru, CC BY 4.0, via Wikimedia Commons)

Geopolitical Report ISSN 2785-2598 Volume 19 Issue 10
Author: Riccardo Rossi

With the 2011 inauguration of President Kim Jong-Un, the Democratic People’s Republic of Korea (DPRK) expanded its atomic arsenal to defend its territory from possible aggression by the Republic of Korea, assisted by Washington and Tokyo. At the same time, North Korea has also faced complicated situations caused by United Nations sanctions eased by Chinese economic and geostrategic interests in the Korean Peninsula.

In recent years, the DPRK’s nuclear program has increased diplomatic tensions with the Republic of Korea and the attention of the United States, the People’s Republic of China (PRC) and the Russian Federation toward the Korean Peninsula. This convergence of interests of Washington, Beijing and Moscow toward Korea has in part fostered among the three Great Powers an understanding of the need to stabilise the area of Korea.[1]

With these considerations in mind, the objective of the analysis is to understand North Korea’s geostrategic importance to China and then assess Beijing-Pyongyang’s economic relations and the effects of the UN economic sanctions on the Sino-North Korean economic association.

The policy of sanctions against North Korea

With the 2011 inauguration of President Kim Jong-Un, North Korea developed its own atomic “dyad,” consisting of ballistic missile submarines (SSBs) and a strategic missile force. Due to several nuclear tests that the DPRK carried out from 2012 to 2022,[2] relations between Pyongyang and Seoul worsened, pushing China, the Russian Federation and the United States to pay intense attention to the Korean peninsula to reduce the possibility of a conflict between North and South Korea, with nuclear potential.[3]

In this regard, the People’s Republic of China, led by Xi Jinping, to limit the risk of a war on the Korean peninsula, has increased its attention to the DPRK, reaching the definition of a partnership with the Russian Federation, which is also plagued by the same fears as Beijing’s.[4]

This common Sino-Russian concern finds a first possible explanation in the contiguity of their respective territories to the DRPC; specifically, the PRC shares a borderline with Pyongyang of about 840 miles, while Moscow shares a borderline of about 11 miles with the Kim Jong-Un regime.[5]

This adjacency to North Korea has led the Xi administration and the Putin presidency to develop a political-strategic theory addressing a twofold strategic need. Moscow and Beijing’s first goal is to avoid the outbreak of conflict between Pyongyang and Seoul, which would make their respective military installations close to DPRK territories possible targets for the United States.[6]

The second strategic Sino-Russian need is to maintain political-economic control over the Kim Jong-Un regime for it to properly carry out its function as a ‘buffer state’,[7] separating the Beijing and Moscow territories from the Republic of Korea and the U.S. military bases located near Seoul and the Japan archipelago. The Xi Jinping presidency has developed a strategy to meet this dual need, combining dialogue with the United States and economic support for Pyongyang.[8]

On the latter point, China has entered into agreements with Kim Jong-Un in the industrial-energy field and a foreign direct investment (FID) program. As for the industrial-energy sector, Beijing has succeeded both in employing a portion of the North Korean workforce (between 50,000-150,000) in its large production Hubs in the neighbouring Liaoning and Jilin provinces [9] and in acquiring from the DPRK mineral resources such as iron, copper, and coal, allowing the Kim Jong-Un presidency in 2017 to earn about $1 billion, which was then reinvested in nuclear missile programs.[10] As for Chinese foreign direct investment in the DPRK, these are intended to construct infrastructure works,[11] and in the energy and industrial sectors, particularly in mining (iron, gold, coal, copper, zinc, magnetite, molybdenum, lead and titanium).[12]

With the start in 2016 of Pyongyang’s nuclear tests, and the inauguration of the Trump presidency the following year (2017-2021), the Xi Jinping presidency’s trade policy in support of leader Kim Jong-Un, has been shrinking rapidly. This assessment is confirmed by the 2022 report of the U.S.-China Economic and Security Review Commission, The China-North Korea Strategic Rift: Background and Implications for the United States, Washington, according to which:

«China’s total trade with North Korea declined by 13.2 percent to a value of $5.3 billion in 2017 and shrank more dramatically by 48.2 percent to a value of $2.7 billion in 2018. Even still, China remained North Korea’s primary trade partner, accounting for 95 percent of North Korea’s total trade in 2017 and 2018».[13]

A first possible explanation for the data exhibited by the U.S. commission can be traced to the understanding between the Xi Jinping presidency and the Trump administration of the need to stabilise the Korean Peninsula by limiting Pyongyang’s policy of nuclearisation.

China-United States entente on North Korea was visible during the UN Security Council of economic sanctions on the Kim-Jong-Un regime, including Resolutions 2270 and 2375. The former passed in March 2016 banned imports from Pyongyang of coal, iron and iron ore, gold, titanium, and vanadium but simultaneously included a clause allowing imports of this category of goods «exclusively for humanitarian purposes or exclusively for livelihood purposes».[14] This clause allowed Beijing to import more than $1 billion worth of North Korean coal between March and December 2016. In the case of Resolution 2375, passed by the Security Council in September 2017, the export of oil to North Korea, the employment of North Korean workers, and strengthened requirements for bans on cargo ships suspected of being North Korean were restricted.[15]

The PRC’s approval of these UN sanctions packages against the DRPC was not followed by full implementation by the PRC, as some Chinese state-owned enterprises continued to support Pyongyang’s economy. This claim is confirmed by the 2017 U.S.-China Economic and Security Review Commission report, which states:

«September 2017, the Wall Street Journal reported North Korean researchers in China and elsewhere almost certainly have acquired expertise and know-how that could be applied to North Korea’s weapons programs, possibly in violation of a 2016 UN ban on teaching certain subjects related to advanced and dual-use technologies. In August 2017, Treasury reported the aforementioned company Dandong Zhicheng “allegedly used the foreign exchange received from the end users of North Korean coal to purchase other items for North Korea, including nuclear and missile components.” […] In April 2017, trucks built by Sinotruk, a subsidiary of the Chinese SOE China National Heavy Duty Truck Group, carried North Korean submarine-launched ballistic missiles in a military parade in Pyongyang.[…]».[16]

The Chinese economic-military support actions for Pyongyang respond to Beijing’s need to avoid an economic meltdown and preserve the Kim-Jong-Un regime’s limited military capabilities.

Conclusions

Over the past several years, the People’s Republic of China, along with the Russian Federation and the United States, have recognised the danger of the growing geopolitical instability on the Korean Peninsula assailable to North Korea’s nuclear development program, which could result in the military and then a nuclear conflict between Pyongyang and Seoul.

In the case of the Sino-Russian strategic partnership, a possible conflict in Korea poses a risk to the protection of their respective borders and national interests, requiring Beijing and Moscow to stabilise the peninsula, protecting the integrity of the Kim Jong-Un regime so that it performs the function of a Buffer State, separating the Russian and Chinese Federation territories from South Korea, and from the U.S. military bases located near Seoul and in Japan.[17]

Moscow and Beijing have developed a strategy of action to pursue this goal, including overseeing Pyongyang’s nuclear programs, maintaining a dialogue with the United States, and supporting the Kim Jong-Un regime economically.

On the latter point, Xi Jinping’s presidency has developed trade relations with North Korea to prevent its economic collapse and protect its interests, especially in the energy and mining sectors.

With the onset of the Kim Jong-Un regime’s nuclear tests, the PRC grasped the danger of Pyongyang’s political-military assertiveness, reaching an understanding with the United States in the U.N. Security Council to enact economic sanctions on the North Korean regime. The approval of these sanctions was not matched by strict implementation by the PRC, continuing to support the North Korean state economically and militarily.

Due to its role as a buffer zone in the region, North Korea is Beijing’s strategically vital area to defend Chinese national interests. In this regard, Beijing might use soft and hard power and economy to assert its control over North Korea.[18]

Sources

[1]Rozman. G (2019) Joint U.S-Korea Academic studies. The east Asian whirlpool: Kim Jong-Un’s diplomatic shake-up, China’s short power, and trump’s trade wars, Korea Economic Institute of America.

[2]Notable among the various tests are the detonation in 2016 of the hydrogen bomb and the launch on March 24th, 2022, of the international ballistic missile (IBCM) Hwasong-17, capable of carrying a nuclear warhead up to 10000 km away. See Riccardo Rossi (2022), North Korea’s new missile platform and the consequences for the Asia-Pacific, Available on site: https://www.specialeurasia.com/it/2022/03/28/north-korean-missile-asia/

[3] Rumer. E, Sokolsky. R and Vladicic. A (2020) Russia in the Asia-Pacific: Less Than Meets the Eye, Carnegie Endowment for International Peace, 2020

[4] Ibid.

[5] U.S.-China Economic and Security Review Commission, Report to Congress, 11/2017

[6] Ibid.

[7] Chand, Bibek (2018) Buffer States in Sub-Systemic Rivalries: Analyzing Nepal’s Role in Sino-Indian Security Dynamics (2018). FIU Electronic Theses and Dissertations. 3779. https://digitalcommons.fiu.edu/etd/3779.

[8] Duchâtel. M, Schell. P (2013) China’s policy on North Korea. Economic engagement ad nuclear disarmament, Stockholm international peace research institute, p.17

[9] U.S.-China Economic and Security Review Commission, Report to Congress, 11/2017, p.337, http://www.uscc.gov

[10] Ibid.

[11] In the case of infrastructure, in 2015, a cable-stayed bridge (financed by Beijing to the tune of $360 million) was opened over the YaluRiver, enabling the connection between the Chinese metropolis of Dandong and the North Korean city of Sinŭiju.

[12] Duchâtel. M, Schell. P (2013) China’s policy on North Korea. Economic engagement ad nuclear disarmament, Stockholm international peace research institute, p.31

[13] U.S.-China Economic and Security Review Commission, The China-North Korea Strategic Rift: Background and Implications for the United States, Washington, p.10

[14] U.S.-China Economic and Security Review Commission, Report to Congress, 11/2017

[15] Ibidem.

[16] U.S.-China Economic and Security Review Commission, Report to Congress, 11/2017, p.337, http://www.uscc.gov

[17] Ibid.

[18] Nye. J (2010) Leadership and power. Hard, soft, smart power, Roma: Laterza.