North Korean trading companies in China look to South Korea for sanctions relief after talks

North Korean traders operating in China are feeling renewed optimism over potential inter-Korean economic cooperation as high-level talks between North and South Korea kick off this week. 
“Traders working for state companies residing in Dandong (Liaoning Province, China) started hearing news about the inter-Korean talks and North Korea’s plans to send a delegation to the Pyeongchang Olympics in South Korea. They’ve been discussing the possibilities and reacting very positively, and are hoping that Pyongyang’s efforts to speak with the ‘hostile’ enemy South Korea are a positive sign that there will be new trade opportunities (with the South) soon,” a source in China close to North Korean affairs told Daily NK on January 9.
The source reported that trading company officials began expressing optimism after Kim Jong Un’s New Year’s address on January 1 stating potential for a North Korean delegation to participate in the Pyeongchang Winter Olympic Games. For North Korean residents, the source said, this statement amounted to attendance by North Korea at the Olympics as a “foregone conclusion.”
The hope is that cooperation during the Pyeongchang Olympics will herald the beginning of greater economic cooperation between the two countries in general, perhaps also leading to a breakthrough in overcoming China’s strict enforcement of international sanctions against the North.
In other words, these North Korean trading companies are hoping to expand out of China and start new operations focusing on South Korea.
“Traders are experiencing an indiscriminate blockade by China of items that North Korea feels are needed to improve their industry, so naturally they are becoming interested in improving relations with South Korea (as a potential replacement),” a separate source in China said.
China has in recent months intensified its enforcement of a series of UN sanctions that it helped pass in 2017.
“A few months ago officials in Pyongyang directed us (a North Korean trading company in China) to secure equipment needed for bread and snack manufacturing, but it was all blocked from entering the North by Chinese customs in Dandong. They explained that parts of the equipment could actually be used for other purposes, meaning they were effectively regulated by international sanctions,” the second source added.  
 
Chinese customs have in recent months continued to add items to their list of prohibited exports to North Korea. On January 6, China’s Department of Commerce announced that in accordance with UN Sanctions Resolution 2397, exports of steel, metals, machinery, automobiles, and other items would be prohibited, and that crude and refined oil exports would be further limited. 
 
Consequently, the source at the trading company in China expressed doubt over their future in the country. “The snack manufacturing equipment that we planned to take over the border and down to Pyongyang is just sitting in a warehouse now. As these types of incidents continue to occur, trading companies are seeing China in a more negative light,” he said.
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