Daily Management Review

China cuts off ties with North Korea


02/20/2017


North Korea has just lost a major ally. On Saturday, China stopped all coal imports from North Korea.



Joseph Ferris III
Joseph Ferris III
Beijing took this decision within the United Nations Security Council’s sanctions related to North Korea's nuclear weapons and ballistic missile programs.

The ban will last until the end of the year, according to statement of the Ministry of Commerce of China.

China will not suffer from such a decision, since the coal import was generally just a help to North Korea, which has now lost one of the most important sources of foreign currency.

The ban was introduced six days after North Korea tested a ballistic missile, which the UN Security Council described as a violation of its resolutions. The test took place during a dinner between the Japanese Prime Minister and the President of the United States, Donald Trump. Then, North Korea announced that it has successfully launched a new type of a rocket capable of carrying nuclear missiles. According to US experts, the medium-range solid fuel missile will make it more difficult to track starts.

China tore the coal contract up, and it was a very painful blow to North Korean economy, which is on the verge of collapse. Coal accounted for 34-40% of exports in recent years, and almost all of it went to China. Some experts believe that coal sales last year covered more than half of total exports of North Korea, and about one-fifth of total trade.

In November 2016, the UN Security Council also adopted a resolution according to which North Korea should not be able to export more than 7.5 million tons of coal per year, or to earn more than $ 400 million on this. It is unclear which of these indicators has already been achieved in this year.

China usually ignores all resolutions and tried not to harm its neighbor, restraining aggressive actions of other countries. Beijing rightly believes that strengthening of sanctions or harsh statements and actions can lead to destabilization.

Yet, apparently, China's patience is not endless. In addition, China has no particular influence in North Korea, and further resistance to the US’s calls can result in accusations of destabilization.

Chinese officials, however, said that ban on imports will not affect actions of North Korea's nuclear weapons development, as Kim Jong-un regime will be trying to display force unless it feels safe. Therefore, it is necessary to resume negotiations and "break the negative cycle of the nuclear issue," said Chinese Foreign Minister Wang Yi.

Bloomberg adds that China's call for a new initiative contrasts with Washington’s militant tone.

President Donald Trump, who during his campaign said that he could negotiate with Kim Jong-un, promised to deal with North Korea this month. He also called on China to act tougher. US is placing a defense system called THAAD in South Korea - this move potentially threatens military capability of Beijing. 

However, China may get a chance to change many things, considering possible impeachment of South Korean President Park Geun-hye.

Some sources also say that last week’s murder of Kim Jong-un’s brother, in which many see a trace of Pyongyang, forced Beijing to take decisive measures, as this case only proved irrationality of the North Korean regime.

This whole situation puts Beijing in a rather awkward position, since China supported the Kim dynasty after the Korean War only to prevent emergence of a US ally located nearby. And now, given the sanctions, China accounts for about 90% of total North Korean trade.

It is not yet clear whether this ban will return Pyongyang to the negotiating table, but almost certainly loss of the largest source of external financing will lead to political chaos in the communist country. 

source: bloomberg.com






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