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Clampdown on North Korean trade squeezes Chinese border towns

By Brenda Goh

DANDONG, China (Reuters) - As Beijing tightens its grip on trade with North Korea, the economies of Chinese towns along the 1,400-km border the two countries share are floundering.

On Saturday, China said it would ban all coal imports from North Korea, the latest move to enforce United Nations sanctions aimed at depriving Pyongyang of hard currency for its nuclear weapons and ballistic missile programs.

The sanctions have had a wider impact on trade, locals on the border complain, as North Koreans struggle to finds funds to pay for goods. Even smugglers are feeling the pinch.

"A few of my friends who used to smuggle goods from North Korea have gotten out of the business in the last two years because it's getting dangerous and not as lucrative," said an owner of a events hall in Kuandian, about 100 km (60 miles) north of Dandong, the largest city on the border.

"I don't know whether it's related, but people are spending less these days. It's getting harder to earn money."

While Beijing, North Korea's sole major ally, has previously said it would comply with UN sanctions, it has been criticized by the United States for not vigorously enforcing them.

China buys 70 percent of North Korea's exports and Dandong, the main gateway for trade with the hermit state, is the best place to gauge the impact of the restrictions it has put in force.

Linked to the North Korean city of Sinijiu via the Friendship Bridge, Dandong has boomed in recent years, swept up by speculation that North Korea's young leader, Kim Jong Un, would, in time, copy China's export-oriented economic reforms.

More than 1,000 border trading companies set up shop in office complexes overlooking the river, while developers flocked to build new apartment blocks.

But many of those firms have since folded, residents and traders say. Construction on at least two apartment complexes in Dandong has stalled and empty shopfronts are scattered across the city.

"These shops couldn't carry on because they rely on the North Koreans, and there are fewer North Koreans coming here too," said a trader, who only wanted to give his name as Jin, who helps North Korean buyers procure goods such as washing machines and construction materials from China.

"Three years ago we could make a profit of 30-40 percent on an order, now you can't even hope for 20 percent."

COAL BAN

It is not in China's interest to ditch its old ally totally. A sudden regime collapse could throw North Korea into chaos and send hundreds of thousands of North Koreans fleeing across the border, diplomats have said.

But China seems to be increasingly irked by what it sees as Kim's recalcitrance on the nuclear weapons issue.

Saturday's coal ban came after Beijing had announced in April last year that it would stop importing North Korean coal. But it made exceptions for deliveries intended for "the people's wellbeing" and not connected to the weapons programs.

In fact, China bought about 22 million tonnes of coal from North Korea last year, up 15 percent, with most of it arriving by sea through five ports along China's east coast.

Still, the impact of the April ban had already been felt heavily in Dandong.

"They've stopped letting in coal since July," said a security guard at the biggest coal yard in the inland port city, now empty barring two small mounds of coal. "All the workers were sent home by the company in October. Once the government decided, the port stopped allowing in the coal, it's not like we could do anything," he said, only giving his surname as Tang.

Local management at state-owned Liaoning Greenland Energy Coal Group, which runs the yard, confirmed the suspension of coal shipments, which used to arrive by boat on the Yalu river that separates China from North Korea.

It remains unclear how rigorously the latest coal ban will be enforced.

Many people in Dandong complained that trade across the river had already fallen broadly.

"Dandong's economy relies on trade with North Korea," said a truck driver waiting to cross the Friendship Bridge, who estimated his income had fallen by around a third as a result.

"We don't have any factories that churn out goods. We don't have light industries, nor do we have heavy industry."

(Reporting by Brenda Goh; Additional reporting by Meng Meng and Beijing newsroom; Editing by Alex Richardson)

 

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