"North Korea's Trade Volume with China More Than Doubled Last Year"

KDI Estimates Rapid North Korea-Russia Closeness in North Korea Economic Review
"Economic Exchanges Expected to Increase from This Year"

Last year, North Korea's trade volume with China recovered to pre-COVID-19 pandemic levels. Additionally, there is analysis suggesting that economic exchange discussions with Russia, which has been strengthening diplomatic and military ties with North Korea amid the Ukraine war, are becoming more active.

According to the 'North Korean Economic Review' published by the Korea Development Institute (KDI) on the 2nd, North Korea's exports to China last year amounted to $292 million, and imports were $2.014 billion. These figures represent the highest levels since the COVID-19 pandemic in 2020, increasing sharply by 118.4% and 141.7%, respectively, compared to the previous year.

North Korea's total trade volume with China was about $2.79 billion in 2019, but due to the impact of land border closures between North Korea and China following the pandemic, it dropped to $540 million in 2020.

In 2021, it further plummeted to $300 million, reaching a record low. However, starting with the resumption of freight train operations between North Korea and China, the trade volume showed signs of recovery, increasing to $970 million in 2022.

Last year, North Korea's trade deficit with China was recorded at $1.72 billion. The trade deficit with China had significantly decreased from $2.36 billion in 2019 to $440 million in 2020 and $180 million in 2021, but it has been increasing again since 2022 as land trade between North Korea and China resumed and trade volume grew.

Top export items from North Korea to China last year included 'wigs and false beards' ($166.74 million), 'ferroalloys' ($32.06 million), 'tungsten ore and concentrates' ($25.94 million), and electric energy ($22.26 million).

Electric energy exports are conducted through power lines rather than land or sea transport, so they were not affected by border closures due to the pandemic. Notably, North Korea's electric energy export volume has increased since 2020.

KDI Research Fellow Kim Gyu-cheol explained, "North Korea, suffering from chronic power shortages, increased electric energy exports as coal exports were blocked by economic sanctions. They shifted to thermal power generation and exported the produced electric energy to earn foreign currency."

Once North Korea's largest export item, 'movements for portable watches,' saw a significant decline in exports after the pandemic but is expected to return to an increasing trend from this year onward.

Top import items from China to North Korea last year included 'plastic products' ($211.61 million), 'materials for wigs' ($160.20 million), 'soybean oil' ($90.91 million), 'synthetic filament woven fabrics' ($80.90 million), and 'mineral fertilizers' ($80.66 million).

[Image source=Yonhap News]

Economic exchanges with Russia are also expected to expand. Research Fellow Kim noted, "Although not confirmed through official statistics, various circumstantial evidence suggests that North Korea and Russia have started economic exchanges that complement each other's deficiencies." He added, "In this regard, Russia's importance in North Korea's foreign trade is expected to gradually increase."

North Korea-Russia relations rapidly tightened following the summit between North Korean Supreme Leader Kim Jong-un and Russian President Vladimir Putin in September last year, during the height of the Ukraine war. At the summit, North Korea was represented by O Su-yong, head of economic affairs, and Pak Hun, deputy prime minister in charge of construction projects, accompanying Kim Jong-un. On the Russian side, the defense minister, as well as ministers of industry and trade, transportation, and natural resources, were reported to have attended.

KDI assessed, "North Korea's foreign trade is likely to continue its recovery this year, but fluctuations will depend on how internal and external uncertainties unfold, including the authorities' foreign currency supply situation, the strategic competition between the U.S. and China, and the wars in Ukraine and the Middle East."