Hongxiang Group executives return to Pyongyang years after U.S. froze assets for sanctions violations

Representatives from Chinese companies that previously dealt with North Korea recently visited the country, including a company that was sanctioned for providing supplies for use in North Korea’s nuclear program.

According to a Daily NK source in China recently, Chinese companies have been sending people to Pyongyang to discuss trade since mid-October.

The businesspeople used flights from Beijing to Pyongyang. According to the commercial flight tracking website FlightAware, Air Koryo operates flights between Beijing and Pyongyang Sunan International Airport.

One of the companies that sent representatives to North Korea was the Hongxiang Group, which had previously been punished for violating international sanctions on North Korea.

The Hongxiang Group—based in Dandong, Liaoning province, China—was involved in a range of businesses, including trade, logistics, tourism and information technology. One of its core units was Dandong Hongxiang Industrial Development (DHID).

From sanctions to return

DHID conducted over $500 million in trade between North Korea and China between 2011 and 2015.

In 2016, the company was accused of not only exporting aluminum oxide—a key material in the development of nuclear weapons and missiles—to North Korea in violation of international sanctions, but also of laundering North Korean money by facilitating dollar payments. The U.S. government sanctioned the company in response, freezing its assets in the United States and indicting its executives.

Even the Chinese government investigated the company for alleged economic crimes and arrested its executives, including the company’s chairwoman, Ma Xiaohong.

The Chinese government freed the Hongxiang Group’s major executives after criminally punishing them. They kept a low profile afterwards, but have recently returned to trade with North Korea.

Which trade items the Hongxiang Group discussed when its representatives went to North Korea remains unknown, but the source said they would “definitely have included discussions of mineral exports, such as iron ore, coal and aluminum.”

Other Chinese companies that previously imported North Korean iron ore or coal have visited Pyongyang to expand imports of North Korean minerals.

The North Koreans are actively encouraging Chinese companies to participate in developing mines by providing production equipment or transferring technology, enabling them to import more minerals.

North Korean trade officials active in Chinese cities like Dandong or Shenyang are reportedly searching for Chinese companies that want to send production equipment or technology to North Korea.

“Trade between North Korea and China will likely skyrocket going forward,” the source said. “In the past, Chinese small- and medium-sized trading companies got involved in craft, fishery and industrial goods exports, but now, companies in both countries are actively.