China eases economic pressure on North Korea

WASHINGTON — China has steadily loosened restrictions on trade with North Korea in recent months, undercutting President Donald Trump’s effort to exert economic pressure on Kim Jong Un’s regime, former U.S. officials and independent experts told NBC News.

From coal shipments to revived construction projects to planes ferrying Chinese tourists to Pyongyang, China has reopened the door to both legal and illegal trade with the North, throwing the North Korean government a vital lifeline while derailing U.S. diplomacy. North Korea depends almost entirely on its larger neighbor to keep its economy afloat.

The increase in trade can be traced back to March, when the White House stunned Beijing by announcing plans for Trump to hold an unprecedented meeting with the North Korean dictator. Fearing a loss of influence with its often recalcitrant ally, China invited Kim to three successive summits in China, in March, May and June.

While China rolled out the red carpet for Kim, Beijing’s enforcement of U.N. sanctions began to soften and its limits on legal commerce also eased, according to regional analysts who track cross-border trade, foreign diplomats and former U.S. officials. As a result, the White House’s bid to impose “maximum pressure” on North Korea, in hopes of pushing the regime to abandon its nuclear and missile program, has been dealt a severe blow.

U.S. President Donald Trump welcomes Chinese President Xi Jinping at Mar-a-Lago state in Palm Beach, Florida, U.S.
President Donald Trump welcomes Chinese President Xi Jinping at Mar-a-Lago state in Palm Beach, Florida on April 6, 2017.Carlos Barria / Reuters file

“The Trump administration’s much vaunted maximum pressure is now at best minimal pressure,” said Daniel Russel, a former senior State Department official who oversaw China policy. “And that means a huge loss of leverage.”

Trump’s rush to meet with Kim — before U.S. and North Korean officials had time to hammer out a clear agenda or commitments from Pyongyang — doomed a relatively united international front against the North that had been painstakingly assembled, Russel and other former officials said.

Now it could be almost impossible to reconstitute the pressure campaign. Apart from China’s reluctance, South Korea’s progressive Prime Minister Moon Jae-in is openly promoting economic engagement with the North and does not share Washington’s preference for strangling the regime’s trade prospects.

The shift is evident at the Chinese port of Longkou, where North Korean cargo ships have been spotted pulling into coal docks, according to data obtained by NBC News from Windward, a firm that uses commercial satellites and other data to track maritime traffic. At least 29 North Korean cargo vessels visited the coal docks in May and June. Prior to that no North Korean ships had paid a visit to the port since January.

Traffic has picked up on the border bridge to the Chinese city of Dandong, a main artery for North Korea. Small trucks carrying coal have been photographed moving across the border bridge, according to NK Pro, a specialist website that focuses exclusively on North Korea.

Coal is a crucial source of revenue for Pyongyang and U.N. sanctions bar North Korea from shipping coal to China or elsewhere.

There are other signs of an economic thaw.

Gasoline prices in North Korea, which had soared as China squeezed fuel supplies last year, have steadily dropped since March. The Trump administration has blasted North Korea for skirting sanctions by obtaining oil at sea, conducting at least 89 ship-to-ship transfers of fuel.

The unofficial exchange rate for the euro in North Korea also shot up in the winter of this year as sanctions began to bite, but the rate came back down by June and July, NK Pro reported. The rate rose to 10,000 North Korean won to one euro in February, and has now returned to about 8,000:1.

U.S. Secretary of State Mike Pompeo shakes hands with North Korean leader Kim Jong Un

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