Trade Sanctions on North Korea’s Nuclear Program – Unique Role of China

In January 2016, North Korean conducted its fourth nuclear test after in 2006, 2009 and 2013, followed by a long-range rocket launch in February. In a signed letter broadcast on state-run media, North Korean leader Kim Jong Un wrote that he wanted to ring in the new year with, quite literally, a BANG. 

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In response to the North Korea’s recent nuclear test and missile launch, the United Nations Security Council imposed tough new sanctions on the Kim Jong Un government on March 2. These punitive measures include restricting North Korea’s mineral trade including coal, gold, and “rare earth metals” used for high-tech products, prohibiting the supply of aviation fuel, and banning the sale of arms and luxury goods to North Korea. These sanctions are believed to be the toughest and will have greater impact on North Korea compared with previous sanctions which were more like ineffective statements.

China Has A Unique Influence Through Trade Over North Korea On Denuclearization 

China is North Korea’s biggest trading partner.China receives 84% of North Korea’s exports, followed far behind by Indonesia, which receives just 2%. While 84.5% of North Korea imports are from China, followed by India with just 5%. North Korea exports roughly $2.7 bn worth of materials every year, 90 percent of trade flows either to or through China. Mining plays a massive role in North Korea’s lucrative trade, with coal and iron constituting over 46% of the nation’s exports. It delivered 20m tonnes of coal last year to China, amounting to $1 billion according to AFP news agency. And $73 million worth of iron ore.

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As one of the UN members, in response to the new sanctions, China has banned on exports linked to any fuel or oil products that could be associated with North Korea’s nuclear program. More importantly, China has prohibited coal and gold imports from North Korea of which proceeds fund the North’s weapons program. As trade with China is the vast majority of North Korea’s trade, the actions taken by China will play a significant role in limiting North Korea’s nuclear activities.

In addition, China is required to inspect all North Korean planes and ships carrying cargo instead of previously inspecting only those with reasonable grounds, to see if tools and parts for missiles and the nuclear program are hidden. Since 90% of trade goes to or through China, this sanction will substantially decrease arms supply for nuclear program.

Tension Over Northeast Asia Influences China’s Attitude Towards North Korea   

The sanctions, however, don’t influence the trade of coal and other natural resources of which are not associated with the nuclear program. China’s commerce ministry said the trade in coal would still be permitted as long as the revenue was intended for “people’s well-being. Critics say that it’s almost impossible to measure the usage of proceeds and it leaves room for China to maintain and manage trade with North Korea.

In the 2016 Nuclear Industry Summit on March 31, Obama met Chinese president Xi Jingping and emphasized the commitment to “denuclearization of the Korean peninsula”. Xi said “As the two biggest economies, China and the U.S. have a responsibility to work together.” Joint efforts of U.S. and China will pressure and isolate the North Korean regime over their nuclear weapons program, which will benefit U.S. allies, South Korea and Japan. However, the situation is complicated by the friction between U.S. and China on South China Sea issue, leading to uncertainty of Chinese support to the states.

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Moreover, Donald Trump, the Republican front-runner, has said repeatedly in recent days that South Korea and Japan may need to develop their own nuclear weapons to confront regional threats, rather than rely on the U.S. nuclear umbrella that has shielded them for decades. This has upended the pillar of U.S. foreign policy which aims to prevent the spread of nuclear weapons, not to encourage it. The advocates by Trump may also adversely influence China’s current coordination with U.N. sanctions.

Further Sanctions On North Korea – Labor Exports

North Korea is believed to have enough plutonium to make eight to 12 nuclear bombs and has a stockpile of highly enriched uranium. In the short term, there seems little the world can do to stop North Korea from conducting a fifth nuclear test in the very near future. However, labor export restriction could be another effective method to constrain the nation’s nuclear program.

Pyongyang’s next serious violation of U.N. resolutions would likely result in restrictions on the export of North Korean labor, according to a South Korean official. North Korea now has over 50,000 people working in China, Russia and countries around the world, and that they send back nearly $ 2 billion a year, most of which goes to the government in Pyongyang. With the U.N cutting down on other North Korean cash flows, the country has been increasing the number of laborers sent overseas to make up for the shortfall in cash it earns from other activities. The $2 bn earning, which is as great as earnings from coal exports, is a critical revenue source for the government, and thus supports the nuclear program.

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If further sanction on labor export took place, China would have a substantial impact on North Korea. 40% North Korean foreign laborers work in China, especially in Dandong, of which one quarter of the population is involved in business with North Korea. 

North Korean government’s sale of labor is quite shady. Laborers are selected through a state-administered process and they are sent abroad to work for the North Korean government as government takes up to 70% of the workers’ earnings as ‘loyalty payments’. Laborers work under substandard living conditions and are in almost complete isolation from the local populations. They are watched and manipulated. They work for long hours, no holidays, and are without injury treatment or compensation, virtually cheap labor or even “slaves”. This is against humanity.

Although U.N. has made efforts to standardize working conditions, middlemen help North Korean and Chinese managers and traders cover their tracks. The further labor exports sanctions will cease the government’s anti-human labor sale, but requiring China working effectively with U.S. and U.N.

Overall, as the major trade partner, China plays an important role in constraining North Korea developing nuclear weapons. Besides restricting imports in primary sectors including coal, ore, gold, and other resources, and prohibiting arms and nuclear program associated jet fuel exports to North Korea, China has further impact on North Korea through labor imports channel. Besides, China may need to work closely and effectively with U.S and other Asian countries to maximize the effectiveness of sanctions on North Korea. While there might be conflict of interests and tension between China and other countries, the biggest economies have the responsibility to work together to stabilize and enhance the nuclear security in the Northeast Asia regime. 

References

1. http://www.voanews.com/content/north-korea-accelerates-nuclear-testing-after-sanctions/3290116.html
2. http://www.bbc.com/news/world-asia-35969412
3. http://www.cnn.com/2016/03/02/world/un-north-korea-sanctions-vote/
4. https://www.armscontrol.org/factsheets/UN-Security-Council-Resolutions-on-North-Korea#res2270
5. http://www.nkeconwatch.com/category/statistics/trade-statistics/
6. http://www.reuters.com/article/us-northkorea-nuclear-usa-sanctions-idUSKCN0VZ11V
7. http://www.cfr.org/china/china-north-korea-relationship/p11097
8. http://www.forbes.com/sites/scottasnyder/2015/05/22/north-koreas-latest-export-labor/#25b987ee4e33

 

 

 

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3 Responses to Trade Sanctions on North Korea’s Nuclear Program – Unique Role of China

  1. Marshall says:

    I believe North Korea’s rush to advance its nuclear and missile technology is due to its recognition that international sanctions will succeed and their materials and funds will be restricted in the future. As a matter of fact, economic sanctions that lead to negotiations offer the best hope for peaceful resolution to the nuclear standoff on the Korean peninsula.

    I read that President Obama recently emphasized increased military deterrence and reliance on missile defense systems to protect the United States and its allies from a potential North Korean attack. But he ruled out taking offensive military action against the North, saying while American allied forces would ultimately win, it would come at a devastating humanitarian cost for South Korea.

  2. siyuwang123 says:

    As the passage points out, China has a unique influence through trade over North Korea, which makes this problem more complicated. It is a complex of politics and economy.

    Since North Korea is closed and notoriously difficult to get information on, I always have a doubt and want to find out that how does North Korea make its money. Right now, it is very clear that China is North Korea’s biggest trading partner, receiving 84% of North Korea’s exports, providing 84.5% of North Korea imports.

    As 90% of trade goes to or through China, the sanction will substantially decrease arms supply for nuclear program. On the other hand, this change on trade would affect China’s trade activity greatly. More importantly, Zoe suggests that labor export restriction could be another effective method to constrain the nation’s nuclear program. When it comes to human rights, it could be not easy for big economies to reach an agreement. These kind of game, would tell us more about practical international trade.

  3. ilyagoly says:

    It seems like China is undermining the UN’s sanctions. The fact that China receives 84% of North Korea’s exports and imports 84.5% of North Korean imports indicates the strength of their relationship. While China may have banned exports on fuel or oil products and coal and gold imports from North Korea, China’s continued trade with North Korea allows for proceeds to be used for whatever North Korea wishes. There is no way to track what funds are being used for. If North Korea wants to use funds for its Nuclear Program, there is no way to stop it as long as trade continues.

    Beyond this, China’s relationship with North Korea helps the country retain a balance of power in East Asia. With South Korea and Japan as US allies, China feels threatened and needs North Korea as a counter to growing US influence. It is in China’s political interest to keep North Korea as an ally so that it can have leverage in the region. With escalating tensions over islands in the South China Sea, China wants to achieve regional hegemony. By having influence over North Korea, more so than any other country, China can leverage its relationship in the event of disputes over the islands.

    It is simply in China’s interest to keep North Korea as a threat to regional stability such that it will be able to leverage its relationship if tensions continue to escalate.

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