Similar conclusions can be drawn from the letter sent on June 18, 2013 by the Chinese President Xi Jinping to the North Korean leader Kim Jong-un, in response to congratulations on the occasion of his birthday. In his letter, Xi Jinping intimated his care over the development of Sino-North Korean relations, allowing the Communist Party and the government of China to adhere to the course of bilateral relations on a strategic and forward-looking basis. Xi added that he would strive for the healthy and stable development of Sino-North Korean relations with preservation of continuity, future orientation, good neighborly relations and the desire to strengthen cooperation.
China’s Ambassador to North Korea, Liu Hongcai, also believes that Sino-North Korean relations have entered a new stage. The Chinese diplomat said that bilateral relations between Pyongyang and Beijing should benefit the peoples of the two states on the basis of mutual respect and prosperity. Liu Hongcai’s statement is remarkable, coming amid recent statements by the head of the International Relations Department of the Communist Party of China Central Committee, Wang Jiarui, who at a meeting with South Korean parliamentarians stated that China and North Korea are connected by “simple relations between the two states”.
Nonetheless, during the reign of Kim Jong-un, the volume of official visits between the two countries declined. It is also alleged that in May 2013, during a visit by Chief of Political Directorate of the Korean People’s Army, Vice Marshal Choe Ryong-hae, to Beijing, the North Korean special envoy attempted to arrange a visit by Kim Jong-un to China in September. The Chinese, however, side did not accept the offer due to the tense situation on the Korean peninsula.
Beijing is active in demonstrating its desire for denuclearization and its concern over the situation. Thus, during a meeting in 2013 with the Head of the National Security of South Korea’s presidential administration, Kim Chang Su, the Chinese Foreign Minister, Yang Jiechi Yang, reiterated China’s principled position: that the Korean Peninsula should remain a nuclear-free zone, and that North Korea never be recognized as a nuclear power. This news should take into account North Korea’s appeal to China to recognize its nuclear status. China, however, expressed its negative position on the issue.
China has always maintained close contact with all members of the six-party talks, expressing the hope that “all concerned parties will show wisdom in quickly returning to the course of dialogue and consultation, in order to facilitate the early resumption of talks.”
To revitalize the “six-party talks”, China proposed six conditions for the resumption of the negotiation process, such as:
– participants agreement on the resumption of the negotiation process;
– implementation by Pyongyang of the joint declaration of September 2005;
-the adoption of practical measures on the denuclearization of the Korean Peninsula;
– consideration of North Korea’s interests in the denuclearization process;
– the improvement of relations with South Korea, the U.S. and Japan;
– a written agreement to preserve North Korea’s political system.
In addition, China took the initiative of holding the six-party meeting “in an unofficial format”, as an intermediate step to the resumption of full talks within the “one and a half track.” September 18, 2013 was advanced as a possible date for the meeting, with the Chinese Institute of International Relations as organizer of the event. This would coincide with the eighth anniversary of the 2005 Agreement, when the first breakthrough was achieved in the six-party talks. North Korea agreed to such a dialogue, but the United States, South Korea and Japan refused. If Xi Jinping finally manages to return North Korea to the six-party talks and to resume the work of the “six”, it would serve as a significant trump card for the new Chinese leader in his future regional and global playing field with the U.S. and its allies.
In January 2013, China supported the UN Security Council resolution condemning North Korea’s missile launch, and the newspaper Huanqiu Shibao stated that in the case of any new nuclear testing by North Korea, China would reduce aid to the country. On April 23, 2013, it also criticized North Korean actions, expressing hope that Pyongyang would not act so rashly in the future. The publication explains that this step was Beijing’s response to the reluctance of its neighbors to coordinate their actions.
In March-April 2013, the departments of transport and customs, financial institutions, law enforcement agencies and China’s border guards received an official document, indicating strict fulfillment of the requirements of resolution 2087, adopted by the UN Security Council. On April 29, 2013, the Chinese Government issued similar instructions to all government institutions, including military departments and law enforcement agencies, as well as the financial community, to follow UN Security Council Resolution 2094.
In addition, the Chinese authorities levied stricter controls on North Korean banks operating on Chinese territory, with offices in Beijing, Dandong, Hunchun and other Chinese cities. North Korean banks were thereby prohibited from performing financial operations, as their representative offices/branches in China were entitled to receive money only from their own country to pay the rent and office expensesin order to ensure the continuation of current operations. These offices, however, were illegally operating as full-fledged bank branches.
China also emphasized that “sanctions are not the only measures that the UN Security Council can use. Moreover, sanctions do not provide a fundamental solution to such situations.”
It is worth briefly mentioning developments in Sino-Korean economic cooperation.
On November 19, 2013, at the Seoul conference on “International Cooperation for Peace in Northeast Asia and the Development of North Korea”, professor of the Central Party School of the Communist Party of China, Huchji Zhao, noted that economic cooperation between China and North Korea is based on mutual benefit. However, attempts by North Korean leadership, headed by Kim Jong-un, to combine economic development with their nuclear program cannot effectively implement large-scale Sino-North Korean economic cooperation. The scholar does not exclude the fact that Kim may open, by means of reforms, a qualitatively new stage in North Korean development. Nevertheless, the leadership of North Korea has a very difficult task – striking a balance between openness and reform on one hand, and the heritage of previous generations on the other.
However, these remarks relate to the development of the North Korean economy as a whole; in the sense of strategy China has long been a major trading partner of North Korea. According to estimates by international experts, China accounts for more than 70% (according to 2012 data) of North Korea’s foreign trade. Other sources indicate that North Korea’s trade with China represents 88.3% of the country’s net trade.
According to data released by the Korean Association of International Trade for 2013, the volume of trade between China and North Korea exceeded $6 billion – amounting to 6 billion, 450 million USD. This is a record in the history of trade and economic ties between Beijing and Pyongyang. Compared with 2012, with a rate of 5 billion, 931 million USD, this is an increase of 10.4%, and a very significant indicator.
Trade, however, is on the negative side for North Korea, despite a continuously reducing deficit. In 2013, North Korean exports to China amounted to 2 billion, 912 million USD (up 17.2%) and imports to 3 billion, 633 million USD (up 5.4%). Correspondingly, North Korea’s trade deficit with China reached 721 million USD, less than the 961 million USD in 2012.
North Korea’s main export to China is anthracite. South Korean experts estimate the total value of natural resources in North Korea at 6.3 trillion USD. In all, 88% of minerals, mainly coal and iron, go to China. North Korea also exports copper and textiles, and imports meat and meat products, cereals, and machinery. South Korean sources mention gold sales as well. According to the Korea Institute at Johns Hopkins University, 41% of Chinese companies listed as working with North Korea, operate in the extraction of natural resources sphere.
In general, China is investing heavily in the North, especially in the special economic zone in Rason, established in 2011 in the northeastern part of North Korea. A group of Chinese companies, led by the Chzhaoshantszyuy Corporation, signed an agreement for a 50-year lease of three berth terminals at Rajin Port. Furthermore, they plan to create a “logistics center” in Rason for the development of raw material processing, equipment production, advanced technology and high-performance agriculture. The Chinese, in fact, will gain exclusive rights to developing the area, for which Pyongyang has big economic plans.
According to leaked information, China agreed to invest about three billion dollars in Rason. “The joint development and management of the Rason Economic Zone is being rapidly carried out. We have achieved great success,” says a senior researcher at the Institute for Disarmament and Peace in the North Korean Foreign Ministry, Hwang Ik-hwan.
In addition to Rason, North Korea and China will jointly operate the Chongjin Port; over the next 30 years a specially formed joint venture company will operate two berths in the port. Reports indicate that the Chinese company has invested 12 million USD into the modernization of the quays, amounting to over 60% of the authorized capital of the joint venture.
Another investment site is Onsong Island, located on the Tumen River, separating North Korea and China. In accordance with the signed contract, China will invest in the development of tourism and the construction of several plants in the industrial zone.
In April 2014, work will begin on the laying of a railway and a high-speed autobahn across the entire North Korean territory. These highways will connect Kaesong, situated at the inter-Korean border, with Sinuiju, situated on the border between China and North Korea.
How safe are these investments, taking into account the negative experiences of the Xiyang Group? On one hand, the deputy general director of the company, Y. Sishen, in a media interview, said bluntly that “the problem is not just in us. All foreign companies that operate in North Korea are in the same situation. Koreans do not create conditions for investments. They say they welcome the investments, but do not prepare any base for them.”
On the other hand, one Chinese businessman’s approach is different: “There are risks, and they are significant. However, if you have connections and luck, then profits will exceed the costs. That is why we are going to North Korea.”
Finally, Beijing guards its investors. According to South Korean media, Prime Minister Wen Jiabao presented the North Koreans with five conditions, without which discussion on further cooperation would be impossible. These are: the adoption of laws on the regulation of foreign business, fighting corruption, abolishing the practice of imposing new taxes on investors, accepting assistance provided by authorities, and the reorganization of customs.
Separately, it should be noted that new UN sanctions against North Korea and Chinese Customs more closely controlling cargo going from China to North Korea have not led to a decrease in the volume of bilateral trade. Xinhua cites Tao Venchzhao’s article published after the third North Korean nuclear test for this information. According to the expert, Sino-North Korean trade and economic relations are a normal undertaking for the two neighboring countries. As for the nuclear issue, “China, as a responsible member of the international community and one of the signatories of the Treaty on the Non-Proliferation of Nuclear Weapons, took a solemn oath…to ensure the preservation of the global nuclear non-proliferation system.”
Konstantin Asmolov, PhD, Senior Fellow at the Center for Korean Studies at the Institute for Far Eastern Studies, exclusively for the online magazine “New Eastern Outlook”.
