LG Expects 80% China Reliance by 2011

China’s importance to North Korea in terms of trade is set to exceed 80% by the end of this year, according to a new report.

Yoo Seung Kyung, a researcher with the LG Economic Research Institute, anticipated in the report, “North Korea’s economic dependence on China increasing” released on September 19th, “North Korea’s trade dependence on China has increased from 20.4% in 1999 to 52.6% as of 2009. China’s share in genuine foreign trade excluding that with South Korea is 78.5%.”

“With the exception of March, trade between North Korea and China this year through July showed a sharp increase when compared to the same period of last year. If this tendency can be maintained until the end of year, trade between North Korea and China will increase by more than 20% in this year alone,” it continued.

So, the report reconfirmed, “If the trend until July in trade between North Korea and China continues… North Korea’s trade dependence on China will increase still more and may exceed 55% of total trade and 80% of genuine foreign trade.”

The report points to sanctions resulting from the nuclear issue, trade stagnation between the two Koreas, and China and North Korea’s increasingly intimate relationship following the reinforcement of the ROK-U.S. military alliance after the Cheonan incident as the main reasons for the rising North Korean trade dependence on China.

Looking in more detail, the report explained, “The matters we need to pay the most attention to in the economic relationship between North Korea and China are two horizontally connected movements; that between the north eastern build-up program, the development strategy for north east China, and North Korea’s development plan for Special Economic Zones like Rajin-Sunbong and Sinuiju.”

The report also pointed out, “That North Korea’s resource development is being conducted by Chinese corporations could also be a lost opportunity for the South Korean economy, since a joint development strategy for north east China and North Korea could be applied against the South Korean economy in the competition to become an economic center for Northeast Asia.”

Furthermore, Yoo added, “If North Korean economic development, like selecting industrial locations and restructuring of industry, continues to progress along the lines of China’s long term development strategy, it could become an obstacle to the integration of the South and North Korean economies when establishing a united economy in the future.”

However, the report pointed out positively, “Even if North Korea is leaning too much toward China, positive change could take place in both North Korean society and its economy if it expands foreign cooperation. If financial stabilization is reached through such a process, it could provide an advantageous environment for stabilizing the Korean Peninsula and improving inter-Korean relations.”

On this, Choi Chun Heum, a senior researcher with Korea Institute for National Unification, proposed during a phone conversation with The Daily NK following the release of the report, “Since North Korea does a lot of trade with China, we should use the strategy in which Chinese corporations choose when they enter North Korea.”

Choi went on, “China’s influence on North Korea is larger than anyone’s imagination. If South Korea and China enter North Korea cooperatively, we can induce reform and opening of North Korea and increase our voice as well. It means that our influence will increase gradually.”

He asserted, “Trade with North Korea until now has had a political color, and governmental support has been given to those corporations which directly trade with North Korea. However, support at the government level should also be given to those corporations which try to enter North Korea through cooperation with China.”

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