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China Sends Unclear Signals on North Korean Sanctions

A cargo boat (R) is seen on the bank of the Yalu River in Sinuiju, opposite the Chinese border city of Dandong, March 14, 2016.

China is sending out conflicting signals on its support for tough new international sanctions against North Korea.

The United Nations adopted the expanded sanctions on March 2 to punish the Kim Jong Un government for conducting its fourth nuclear test and launching another long range rocket earlier this year.

China and the United States collaborated on developing the new sanctions that require the immediate implementation of mandatory inspections of all North Korean imports and ban the exports of most minerals.

Chinese enforcement

Beijing’s enforcement of these international sanctions is considered crucial because 90 percent of North Korean trade flows either to or through China.

China’s leaders have pledged to support the sanctions, but have not yet announced specific measures to implement them.

There have been mixed reports on enforcement efforts coming from the city of Dandong, a major bilateral trading hub located on the Chinese side of the Yalu river, which separates China and North Korea.

Some news organizations, often citing unnamed businessmen in the region, have reported a reduction in vehicle traffic at the border, the suspension of currency transfers to North Korean banks, and a prohibition on North Korean vessels from entering the Chinese port.

Yet China recently negotiated a slight easing of the sanctions to reinstate four ships to conduct international trade that were blacklisted for past ties to Pyongyang's arms trade.

FILE - Crew members are seen on the 6,700-tonne freighter Mu Du Bong in the port of Tuxpan, April 9, 2015.
FILE - Crew members are seen on the 6,700-tonne freighter Mu Du Bong in the port of Tuxpan, April 9, 2015.

Coal exception

There are also reports that China has been lenient in enforcing the U.N. restrictions on North Korean exports of coal.

The U.N. ban on North Korean mineral exports includes a difficult to verify humanitarian exemption for coal and iron exports, as long as the profits are not used to fund the development of nuclear weapons or other illicit arms.

Coal exports are often bartered for goods utilized by the North Korean general public, including oil, food and machinery.

But the $1 billion of North Korea coal exported to China last year also provided Pyongyang with a key source of hard currency that potentially could be used for its weapons program.

A number of regional sources in the coal trade recently said they had received no instructions from the government on any new rules on coal imports from North Korea.

Choi Kyung-soo, the president of the North Korea Resources Institute in Seoul that tracks mineral exports from the North, said there is a lot of confusion as to whether China is actually stopping North Korean ships and to what extend the sanctions are being implemented.

“Nothing has been clearly identified on whether these are North Korean ships carrying coal and minerals or if they are carrying general shipments,” he said.

Trade data will be released in April and that will give officials their first objective indication of what impact sanctions may be having.

In January, despite rumors to the contrary and a rising concern over impending sanctions, Choi said, there were no restrictions placed on the exports of minerals.

Choi also said it will be difficult for Chinese authorities to differentiate between coal exports that benefit the general populous and those that might be used to fund the country’s nuclear program.

Many analysts expect Beijing to follow the same pattern it set after the U.N. imposed sanctions on North Korea in 2013 for its third nuclear test. Then, China initially restricted border trade, but over time loosened those constraints and has since invested heavily in expanding bilateral commerce and development.

A man passes by a TV screen showing North Korean leader Kim Jong Un during a news program at Seoul Railway Station in Seoul, South Korea, Thursday, March 24, 2016.
A man passes by a TV screen showing North Korean leader Kim Jong Un during a news program at Seoul Railway Station in Seoul, South Korea, Thursday, March 24, 2016.

Stifling change from within

These tough new sanctions, however, will likely make international companies and even developmental assistance organizations wary of doing business with North Korea.

Andray Abrahamian, the executive director of Choson Exchange, a non-profit group that helps North Korean businesses operate more efficiently based on market principles, said his international donors are starting to withdrawal support.

“People are nervous about giving money to organizations that work in country lest they slip up and work with organizations or individuals who are on the designated list” of sanctioned individuals and companies, he said.

The North Korean economy has improved under Kim Jong Un in part because of the economic reforms he implemented that allow farmers to sell a portion of the crops they produce, and permits some industries more incentives and control to manage their production and workforce.

Proponents of engagement have long argued that these changes will dissipate the rigid communist government control over all aspects of life in the country, and over time would transform North Korea into a more rules based and open society, even if the Kim family remains in power.

While it is not clear if the sanctions will work in pressuring the North Korean leadership to give up its nuclear weapons program, it will likely make it more difficult to generate change from within.

“Kim Jong Un’s brand has very much been associated with economic growth and improvement of quality-of-life. If that really slows down, I worry that we’ll see a return to the more traditional military first [type of] austerity that we saw under his father’s leadership,” said Abrahamian.

Youmi Kim in Seoul contributed to this report.