North-South Trade is Gone. So what?

Trade between the two Koreas is now finally gone. This may be stating the obvious, given that Seoul shut down the Kaesong Joint Industrial Complex in February, following Pyongyang's 4th nuclear test. But a South Korean government white paper now fully spells it out, in context of the upward trend that the closure interrupted.

As Seoul's Chosun Ilbo reports:

According to a 2016 White Paper published by the Unification Ministry on Thursday, last year's cross-border trade volume was a record US$2.7 billion, up 15.9 percent from 2014, thanks to an increase in trade through the industrial park.

But that accounted for 99.6 percent of all cross-border trade since other trade had already been suspended under earlier sanctions in the wake of the sinking of the Navy corvette Cheonan in 2010.

Now the industrial park has been closed there is no trade left, the ministry said. 

"So what" is that now that South Korea completely out of the game, one naturally is inclined to look even more closely at China, the last major direct player in the DPRK economy. 

Recent conversations CE has had with businesspeople in China and in Pyongyang suggest that things are mostly normal, though Chinese traders and investors are a little more cautious, sensing that Beijing's expectations and policy line are not yet fully clear. There are also additional hoops to jump through on the Chinese side of the border, with more paperwork, inspections and delays reported. 

However, several reports suggest that trade continues, mostly as it did before the new UN sanctions. One Pyongyang businessperson said he felt little impact, other than for people he knew in the minerals trade. Certainly, there was no shortage of consumer goods from China evident on recent CE trips to Pyongyang. (And North Koreans are going further afield in China to hawk their goods, also.)

Some experts are expecting Pyongyang to invest in repairing Sino-DPRK relations in the coming months. For the DPRK, trade in consumer goods is one thing, but Pyongyang will be extremely eager to make sure mineral exports can resume. At this point, however, what Pyongyang is willing to pledge to secure that, and what China is willing accept and then offer in return are far from certain.

 Sinuiju and Dandong, from a comfy Air Koryo window seat.

Sinuiju and Dandong, from a comfy Air Koryo window seat.