China limits oil exports to N. Korea, bans textile imports

BEIJING • China has moved to limit the supply of oil to North Korea and will cease buying textiles from its neighbour, it said yesterday.

China is the politically isolated country's most important trading partner, and one of its sole sources of hard currency, the BBC reported.

The ban on textile trade will hit North Korea's income, while China's oil exports are its key source of petroleum products.

China's Commerce Ministry said in a statement late on Friday that restrictions on refined petroleum products would apply from Oct 1, and on liquefied natural gas immediately. A limited amount, allowed under the United Nations resolution, would still be exported to North Korea.

China's tougher moves follow the North's sixth and most powerful nuclear test on Sept 3, which sparked a fresh round of UN sanctions against Pyongyang.

The Commerce Ministry also said it has issued a "comprehensive ban on imported textiles" from North Korea. The ban on textiles - the North's second-biggest export - is expected to cost it more than US$700 million (S$948 million) a year, the BBC reported. China supplies materials to the North, where they are made into clothing in factories using cheap labour, and often re-exported to China.

In its statement, China's Commerce Ministry reiterated the terms of the latest resolution, writing that UN member states would not export more than 500,000 barrels of refined petroleum products to the North in the final three months of this year, and two million annually starting next year, Agence France-Presse (AFP) reported.

The BBC reported that North Korea is estimated to have imported 6,000 barrels of refined petroleum daily from China last year - or nearly 2.2 million in total for the entire year.

North Korea produces little energy on its own, the BBC reported, but it refines some petroleum products from crude oil it imports - which is not included in the new ban. In Pyongyang, the price of petrol has gone up by about 20 per cent in the last two months, AFP reported. "It was US$1.90 yesterday, today it is US$2," a petrol station employee told AFP. "I expect the price will go up in the future."

North Korea also produces coal, exporting some US$1.2 billion of this to China last year, the BBC reported. China started to strictly limit North Korean coal imports earlier this year.

China halted iron, iron ore and seafood imports after the previous round of sanctions against North Korea last month, AFP noted. But Beijing fears pressuring the North Korean regime into collapse, which will trigger a flood of refugees across its border and eliminate a strategic buffer separating China from the US military in South Korea.

A version of this article appeared in the print edition of The Sunday Times on September 24, 2017, with the headline 'China limits oil exports to N. Korea, bans textile imports'. Print Edition | Subscribe