News / Asia

China's Ties with North Korea Include Economic, Political Influences

China has long provided an economic lifeline to North Korea and those connections are expected to continue as the North moves through a period of transition following the death of Kim Jong Il. Such close ties, analysts say, provide Pyongyang with much needed foreign investment and Beijing with both economic and political influence.

The China-North Korea Friendship Bridge in the northeastern Chinese city of Dandong is a decades-old symbol of the close links between Pyongyang and Beijing. And it's also one of the few ways to cross into North Korea from China.

The pace of China's economic ties with the North has picked up over the past decade and analysts say China accounts for about 45 percent of North Korean trade.

Abe Denmark, a senior adviser for Asia at the Center for Naval Analyses in Washington,  says some in China believe economic engagement makes Beijing more powerful inside North Korea -- to possibly shape events and at the least gain a better understanding of what is going on.

"Beyond that, the Chinese are convinced that North Korea needs to go through a reform and opening process, the same way China did after the death of Mao [Zedong]," Denmark said. "Beyond that, the Chinese are convinced that North Korea needs to go through a reform and opening process, the same way China did after the death of Mao [Zedong] and after the end of the cultural revolution. Many in China in fact see North Korea as somewhat a proto-China."

Helping to build up the Rason Special Economic Zone is a key part of that effort.

The warm-water port is close to the Chinese and Russian border, and one Chinese company has already signed a 10-year lease to rebuild a pier there, a move analysts say would help significantly to cut transportation costs.

"Part of the economic rationale for that is because they needed a maritime transit route whereby they could transfer their goods from the northeastern provinces to their southern industrial bases, also to Japan. This also increases the ability of goods and services from southern China to reach the northeastern provinces," said Russell Hsiao, a senior research fellow at the Project 2049 Institute.

And it is not just in special economic zones where China's engagement can be seen.

One of the last public appearances Kim Jong Il made before his death was to Pyongyang's first supermarket. The market is believed to be backed by Chinese capital and carries Chinese characters on its sign.

The market is both a sign of progress and example of just how far North Korea lags behind most countries in the region.

"Comrade General [Kim Jong Il] asked what it was when he saw it, and I explained it was a stir-fry pan. He said it was really good and housewives would like it," said Kim Yong Ok, the general manager of Rejuvenation Supermarket and was present during Mr. Kim's visit.

Since 1999, China's trade with North Korea has grown from roughly $300 million to more than $3 billion, says Hsiao.

And this has not only helped North Korea.  It also offers hope for the economies of China's northeastern provinces at a time when they are suffering.

"In the past decade [the northeastern provinces] have seen a gradual decline of its industrial base, the unemployment rate increasing, the agricultural sector as well is diminishing and there are certain concerns within Zhongnanhai [among China's leaders] about the implications for that for stability in that region," Hsaio said.

However, how far North Korea will go with its economic opening remains to be seen.

"But whether it's a legitimate experiment in the free market or if it's just a way to get foreign capital, and there's no real interest in foreign markets or capitalism, even to a very limited degree. It's all in the mind of the North Korea's senior leadership," Denmark said.  "But whether it's a legitimate experiment in the free market or if it's just a way to get foreign capital, and there's no real interest in foreign markets or capitalism, even to a very limited degree. It's all in the mind of the North Korea's senior leadership and it's very difficult for us to know."

Trade has long been a difficult dance for North Korea's leaders, analysts say. And while North Korea's leadership may want to be modern and open, it also wants to be modern and open on its terms and for central authorities to remain in control.

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