North Korean authorities are conducting large-scale inspections aimed at cracking down on unauthorized trade. This has led some North Korean trading companies involved in the trade of “unauthorized items” to cancel their transactions with Chinese traders.

According to a Daily NK source in China on Sunday, an unnamed North Korean trading company recently requested its Chinese partner suspend a transaction. The Chinese partner found this absurd as it was already prepared to ship the construction materials, paper, soap, and other sundries that had been ordered.

The source, who spoke on condition of anonymity, said the North Korean trading company did not explain why the transaction had been suspended. It simply notified the Chinese side that the deal had been nullified.

Based on the source’s account, the trading company had ordered about 1,800 tons of goods from China, a deal of considerable size and cost. The cargo is in storage in a warehouse in Longkou, Shandong Province.

The source said the cargo can be stored there for some time since the items ordered by the trading company contained no foodstuffs with expiration dates.

The trading company is reportedly a large, well-known entity in North Korea.

friendship bridge
The Sino-North Korean Friendship Bridge / Image: Daily NK

Another source in China said North Korean authorities have refused to unload a consignment a trading company ordered in April, even though the goods have already been shipped. 

“Since the North Korean trading company isn’t accepting the ordered goods, the freighter is currently moored near Nampo Port,” said the source, who requested anonymity for security reasons. “It seems there’s an internal situation that won’t let [the company] unload the cargo.”

A Daily NK investigation – based on information from multiple sources in North Korea – has determined that the Ministry of State Security, Ministry of Social Security, and disease control authorities launched a joint inspection into illegal trading activity last month.

On June 3, North Korean authorities issued an order that warned traders against engaging in trade without prior approval from the Workers’ Party, regardless of whether they received a new waku (trade certificate). According to the order, unauthorized trade will be regarded as “smuggling” and subject to punishment.

The authorities subsequently formed inspection teams, which are now scrutinizing recent transactions by the country’s trading companies.

Trading companies that tried to import unauthorized goods along with authorized items now appear to be “scrambling” to cancel their deals with Chinese traders or are simply refusing to accept the cargo.

“North Koreans say you can trade only if you’ve gotten permission from that person [North Korean leader Kim Jong Un] – even if you’ve got a waku,” one of the sources in China told Daily NK. “Instead of trade returning to [pre-pandemic] levels, it’s getting harder [for Chinese traders] to conclude deals with North Korea.”

During an enlarged meeting of the politburo on June 29, Kim Jong Un criticized “negligence” by government officials while stressing the “sustained consolidation of the state emergency epidemic prevention system.” This suggests that North Korea’s leadership wants to intensify efforts to prevent the spread of COVID-19 into the country. 

North Korea continues to erect concrete walls and high voltage wires along the Sino-North Korean border, ostensibly as part of an attempt to prevent the spread of the coronavirus. As such, more time may be needed until cross-border trade returns to pre-pandemic levels.

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