Bullish on the border
China-North Korea trade could soar if Trump-Kim summit deal brings an easing or end to sanctions. By Jane Perlez in Hunchun, China
In the Chinese border town of Hunchun, garment factories gladly employ squads of North Koreans, who are valued as skilled and dutiful workers. Live crabs from the North wriggle in huge tanks in the local fish market. Informal “bankers” promise to deliver the equivalent of thousands of dollars in Chinese currency to North Koreans across the border in a matter of hours.
Up and down the 1,450-kilometre border, Chinese businesspeople export and i mport everything from Chinese-made street lighting to exotic North Korean-grown mushrooms.
By all indications, China has at least officially enforced the international sanctions that have been imposed on the North to curtail its nuclear weapons programme. But on the border, the signs of North Korea’s economic dependence on China are evident in a shadow economy of cash couriers, short-term workers and grey-market trading that has persisted despite the sanctions.
And with US President Donald Trump preparing for a summit meeting tomorrow in Singapore with North Korean leader Kim Jong-un, excitement is growing about the opportunities that could open up should sanctions be eased.
Should a deal emerge from the Singapore talks, China is ready to extend its dominance over the North’s small and decrepit economy, where signs of an emerging market economy are also strengthening China’s hand.
Trump seemed to concede China’s leading role when he told reporters that he would leave it to China and also South Korea to help the impoverished North rebuild.
“That’s their neighbourhood; it’s not our neighbourhood,” he said, leaving aside the fact that US troops have been stationed on the peninsula for decades.
Much of the business is driven by demand from a nascent North Korean middle class, which Chinese traders said could become a group of avid new consumers once sanctions are eased.
The changes in the North are largely the work of the young leader. Kim Jong-un has lifted the controls of the command economy to allow small-time trading, smuggling and “shuttle traders” who move with ease between China and his country, economists and Chinese businesspeople say.
In a New Year’s speech in January, Kim said that having developed a nuclear arsenal, he would now turn his attention to improving the lives of his people.
Inside North Korea, the markets that Kim has allowed to grow have become an essential part of everyday life, offering many people a higher standard of living, said Kim Byung-yeon, an economist and author of Unveiling the North Korean Economy.
While this growth has bolstered popular support for the Kim family dynasty, the North Korean leadership is aware that it can also be a two-edged sword, he said. Having set itself on this road of economic improvement, North Korea must continue to find ways to expand and develop a national economy whose output is still just US$20 billion — half the size of that of South Korea’s sixth-largest city, Gwangju.
“North Korea is now a place where you can enjoy a normal life compared to the 1990s,” said the economist. “Money has become very important. People there are saying if they can have money they have no reason to flee to South Korea.”
The support of the middle class is vital for the North Korean leader and so far he seems to have gained it. That holds true not only in the capital, Pyongyang, but in other towns to the north, said Andrei Lankov, a Russian expert on North Korea who has lived in the North and maintains ties there.
“Kim Jong-un is popular,” Lankov said. “Everyone supports him.”
China is anxious to repair its tattered alliance with the North and is determined to play a dominant role, along with South Korea, in any reforms of the North’s economy. In perhaps the most telling sign of a revival in trade, Air China announced last Tuesday that it would resume regular flights from Beijing to Pyongyang.
Xi Jinping met in Beijing last month with a delegation of North Korean mayors and governors, an unusual gesture by the powerful Chinese president to meet such low-ranking foreign visitors. The North Koreans were given a grand tour not just of Beijing but also of Shanghai and the rural central province of Shanxi, travelling on state-of-the-art bullet trains and receiving tutorials on how China rapidly built up its cities and industries.
Since Kim’s surprise meeting with Xi in Dalian last month, where economic development was reported to be at the top of the agenda, there have been suggestions that China might help rebuild the North’s primitive roads and ports. Such aid may become part of the Belt and Road initiative, Beijing’s signature effort to extend its influence by helping other countries finance large-scale infrastructure projects.
For now, China is providing visible help to the North in smaller ways. One is by serving as a conduit for money transfers back home by North Koreans living abroad who are trying to help family members maintain their improved living standards despite the sanctions.
A restaurant owner in Pyeongtaek, South Korea, who fled the North several years ago, said she sent the equivalent of $5,000 a year to her mother, husband and school-age son who stayed behind in Pyongyang. She uses a money dealer not far from the border to send $2,500 twice a year.
The money has gone to pay for a tutor for her son and also to buy him a $200 second-hand Japanese bicycle, said the woman, who asked that her name not be used.
While her husband has a good job as a manager at a state enterprise, she said, they need the money because food is short after the long winter and the price of rice is rising. She said she sent the money in Chinese yuan, which is used in the North to buy consumer goods.
Other North Koreans living in Seoul said relatives had been requesting more money over the last year, not only to ride out the sanctions but also to cover what they said was the growing cost of bribes paid to North Korean officials, who are also trying to profit from the new cash economy.
In Hunchun, one of China’s biggest garment manufacturers, Younger, recently built a sprawling factory complex where North Korean workers make men’s suits for the Chinese market. The North Koreans work alongside Chinese workers, receive the same wages and live in apartment blocks about three minutes from the plant, a manager said.
Seafood sellers in Hunchun, meanwhile, are earning top prices for North Korean live crabs, considered a delicacy because it comes from the North’s unpolluted waters.
The crabs are trucked on a short trip from North Korea into the port of Vladivostok in Russia, then south over nearly 100 kilometres of bumpy road to Hunchun, a journey of up to 10 hours. They said the detour through Russia gave the crabs a cover of legality and the Chinese are building a new road that will allow them to arrive more quickly.
The customs paperwork needed to resume direct shipments of crab and frozen seafood has already been completed and is ready to be submitted as soon as sanctions are lifted. That will make the Russia detour unnecessary, said one seller as he watched over a dozen tanks filled with green crabs.
“We have been told it will be soon,” he said.
© 2018 New York Times News Service