Chinese firms 'not told' of UN curbs on coal trade with N. Korea

Trucks sit beside a pile of coal on the North Korean side of the Yalu river, opposite the Chinese border city of Dandong, this week. Coal is one of the North's only sources of hard currency and its largest single export item.
Trucks sit beside a pile of coal on the North Korean side of the Yalu river, opposite the Chinese border city of Dandong, this week. Coal is one of the North's only sources of hard currency and its largest single export item. PHOTO: REUTERS

Beijing - Pyongyang's closest ally - supports sanctions, but fears North's economic collapse

BEIJING • More than two weeks after the UN slapped harsh new sanctions on North Korea, several Chinese shipping and trade sources say they have not been told of any curbs on the import of coal from the isolated nation - a lifeline for its struggling economy.

China accounts for about 90 per cent of North Korea's trade and its help is crucial in enforcing the sanctions announced by the United Nations on March 2 to punish Pyongyang for its nuclear and ballistic missile programmes.

Coal is particularly important to North Korea because it is one of its only sources of hard currency and its largest single export item. It is also bartered for essentials, including oil, food and machinery.

Although some curbs are in place in the border city of Dandong, half a dozen trade and shipping sources at ports in north- eastern China said they have had no instructions from the government on any new rules on coal imports from North Korea. The ports account for most of the coal trade between the two countries.

"Nobody has come to us and said you shouldn't do it," said an official at a company in the port city of Dalian. "I'm not even clear on what the specific sanctions are.

"It's chaos. At this time, nobody knows what the impact will be on us and it's tough to tell."

International sanctions experts said UN members are expected to implement sanctions immediately, and it was not too early to expect signals of enforcement, including in trade. In practice, however, UN resolutions are often inconsistently enforced.

China, North Korea's closest ally, supported the UN resolution. Nevertheless, Beijing prizes stability on the Korean peninsula and fears that any widespread unrest there could send millions of refugees across the border.

Beijing has barred a Pyongyang freighter from one of its ports and blacklisted 31 vessels covered by the UN sanctions, but Chinese officials and experts have expressed concern that cracking down too stringently could result in disaster for the North's economy.

China's Foreign Ministry this week said the country had always enforced UN sanctions and would "strictly manage" businesses accordingly. The Ministry of Transport did not respond to repeated requests for comment.

The resolution bans UN member states from importing North Korean coal, iron and iron ore unless such transactions are for "livelihood purposes" and would not be generating revenue for the Pyongyang government's nuclear and missile programmes.

"I think it is an indication that the Chinese managed to negotiate a wide exemption for the coal trade," said deputy director Andrea Berger of the proliferation and nuclear policy programme at the Royal United Services Institute.

On Wednesday, the United States slapped harsh sanctions of its own on North Korea that included allowing it to blacklist all individuals, whether or not they are US citizens, who deal with major sectors of North Korea's economy.

Analysts say the reference to "livelihood purposes" in the UN resolution leaves open a window for China to continue trade with North Korea. "It is an explicit loophole," said Mr Adam Cathcart, a specialist on China-North Korea ties at the University of Leeds.

A representative of a Shandong- based trade logistics firm specialising in importing coal from North Korea said business had not been affected, adding: "The government hasn't issued any notice to us about the sanctions."

REUTERS

A version of this article appeared in the print edition of The Straits Times on March 19, 2016, with the headline 'Chinese firms 'not told' of UN curbs on coal trade with N. Korea'. Print Edition | Subscribe