China's Q1 trade with North Korea up despite sanctions

Flags of China and North Korea are seen outside the closed Ryugyong Korean Restaurant in Ningbo, China on April 12, 2016.
Flags of China and North Korea are seen outside the closed Ryugyong Korean Restaurant in Ningbo, China on April 12, 2016. PHOTO: REUTERS

BEIJING (REUTERS) - China's trade with North Korea rose in the first quarter in spite of tough new international sanctions this year targeting Pyongyang's banned nuclear programme, including curbs on coal imports.

Imports from the isolated country, consisting mainly of coal and clothes, rose 10.8 per cent from a year earlier, customs spokesman Huang Songping said on Wednesday (April 13).

China's exports to North Korea in the first quarter rose 14.7 per cent from a year earlier in yuan terms, Huang told a news conference. China is North Korea's only major ally and most important trade partner.

Exports consisted of electromechanical products, labour-intensive and agricultural products.

United Nations sanctions ban member states from importing North Korean coal, iron and iron ore unless the transactions are for "livelihood purposes" and would not be generating revenue for Pyongyang's nuclear and missile programmes.

Western analysts say that clause is an explicit loophole that could allow China to continue buying North Korean coal and other resources.

Asked why trade with North Korea had risen, Chinese foreign ministry spokesman Lu Kang told a news briefing that while China would stick to the sanctions it also had "normal relations" with the country outside the framework of the sanctions.

China's Commerce Ministry banned imports of North Korean gold and rare earths and exports to the country of jet fuel and other oil products used to make rocket fuel last week.

The mining sector is a key part of North Korea's economy, which is already largely cut off from the rest of the world. Experts believe revenue from the sector helps underwrite North Korea's military expenditures.

Ties between China and North Korea have frayed in recent years as the North has carried out a series of nuclear and ballistic missile tests. Pyongyang conducted its fourth nuclear test in January and launched a long-range rocket in February.

Still, China's trade with North Korea is tiny compared with China's business dealings with capitalist South Korea.

China-South Korea trade was worth US$57 billion (S$77 billion) in the first three months of the year, while China-North Korea trade was only US$7.8 billion over the same period.