China pressures North Korea
TOKYO: As the Us-north Korea summit looms, US president Donald Trump’s maximum pressure policy on North Korea may be working – thanks to China.
Beijing appears to have gone well beyond UN sanctions on its unruly neighbour, reducing its total imports from North Korea in the first two months this year by 78.5% and 86.1% in value – a decline that began in late 2017, according to the latest trade data from China. Its exports to the North dropped by 33% to 34% both months.
The figures suggest that instead of being sidelined while Kim Jong-un made his surprising diplomatic overtures to Seoul and Washington, China’s sustained game of hardball on trade with Pyongyang going back at least five months may have been the decisive factor in forcing Kim’s hand.
Trade with China is crucial to North Korea’s survival. It accounts for the largest share of the North’s dealings with the outside world and provides a lifeline to many of the necessities to keep its nation fed and its economy from breaking down. Estimates vary, but it is believed roughly half of all transactions in the North’s economy are made in foreign currencies, the Chinese yuan the most common.
That gives Beijing tremendous leverage, though for political and national security reasons it has generally been reluctant to exert too much pressure on Pyongyang.
That reluctance is wearing thin. The statistics need to be taken with a dose of caution. Neither country is known for its transparency. More specific data reveal an even tougher, targeted crackdown, according to Alex Wolf, a senior emerging markets economist with Aberdeen Standard Investments:
• China’s exports of refined petroleum have collapsed over the past five months – to an annual rate of less than 4% of what it exported last year. With the downward trend, he says, total exports could fall further.
• North Korean steel imports from China also collapsed in 2018, and the same goes for cars.
Wolf notes it’s unclear if China is blocking such exports or North Korea simply can’t afford them. But either one, he said, would be a clear signal the North’s economy is “under a great deal of stress”. – AP/ African News Agency (ANA)