Why has North Korea struggled to normalize trade with China? – The diplomat
According to recent reports, North Korea and China are on the verge of resuming trade. However, this is not the first time since the start of the pandemic that reports suggest the two sides were on the verge of restarting trade on overland routes. Each ultimately turned out to be a false start.
With the rest of the world largely resuming trade over a year ago, why is North Korea struggling to normalize trade?
The outlook improved earlier this year. There had been multiple indications that North Korea might ease its border restrictions to allow more trade. After hitting a low in May, trade also appeared to increase. For four consecutive months, trade has increased and reached a new pandemic high in September. However, trade between North Korea and China fell 40% in October.
October’s drop was likely due in part to China’s self-inflicted coal shortage, which followed an import ban on Australian coal to punish Canberra for calling for an investigation into the origins of COVID-19. The resulting power shortages impacted the border region.
In addition, the spread of the Delta variant in China remains a major drag on trade. While North Korea and China resumed regular rail service on November 1, rail service had to be suspended about a week later due to a COVID-19 outbreak in Dandong. Containment in Dandong could last a month.
In addition to the outbreak in Dandong, China is now grappling with its largest Delta variant outbreak in Dalian, another large city near the North Korean border.
The harsh reality is that these four months of growth in China-North Korea trade masked a more difficult year. Since the start of the pandemic, trade between North Korea and China has been declining, and this has continued so far into 2021.
In 2020, Chinese exports to North Korea fell 81% from 2019, while North Korea’s exports to China fell 78%. 2021 has not seen a recovery. As of October, imports from China had fallen from $ 487.5 million in 2020 to just $ 191.5 million this year, a drop of 61%. North Korean exports to China did not fall as drastically, but were still down 21% until October of last year and stood at just $ 35.6 million.
We shouldn’t expect November’s trade numbers to be any better.
As the pandemic continues to impact trade, the main reason North Korea and China have not been able to normalize trade is that the two continue to follow zero COVID-19 policies. . These include the use of strict lockdowns and strict border controls to prevent the spread of COVID-19.
In China, cities can be locked down for weeks and undergo mass testing for COVID-19. These local shutdowns have resulted in factories shutting down and shutting down transportation links, further exacerbating disruptions to the global supply chain.
North Korea has taken an equally strict approach, but more out of necessity than choice. North Korea was among the first countries to tighten its borders when the pandemic began. On January 22, Pyongyang halted tourism. A few days later, he imposed border control measures. While in the process of closing his border, he set up his own emergency quarantine system on January 24.
Because North Korea did not have access to COVID-19 test kits, it extended the quarantine period for suspected infectious diseases from 14 to 30 days. North Korea initially put in place a 10-day quarantine for goods entering the country, but reportedly reduced it to seven days as part of its efforts to resume rail traffic.
Much like China, North Korea has locked down entire cities, like Kaesong along its border with South Korea, over suspected outbreaks (although Pyongyang has yet to confirm a single case of COVID-19 in the country). It also has mask requirements, non-state event bans and travel restrictions.
However, in some cases North Korea has taken stronger action than China. It has established a buffer zone along its border with China where troops are ordered to shoot those who enter, and it uses draconian fines and threats of being sent to a labor camp to enforce its national protocols. COVID-19.
The need to suspend rail service so quickly after it resumed in early November illustrates the challenges of normalizing trade under a zero COVID-19 policy.
With no vaccines, therapies to treat COVID-19, and access to robust testing, North Korea has had to maintain strict measures and limit its trade to forms that require less human interaction, such as freight trains. This means excluding the regular use of trucks, which require more human interaction and therefore pose a higher risk of the spread of COVID-19.
Even getting to this point has been a challenge. Earlier this year, North Korea developed its own PCR test with help from the WHO, which should allow it to better track COVID-19 cases among those dealing with trade. It has also built quarantine facilities along its border to decontaminate goods entering the country.
While developing a PCR test and building quarantine facilities should help, capacity is likely to be an issue. Part of the recent WHO COVID-19 aid shipment to North Korea included masks and reagent agents for testing. It is not known what capacity North Korea has for producing its own tests without imports of reagents. It is also unclear how many cargoes can be transported to quarantine facilities in North Korea with seven-day quarantines. Each of these factors, along with the inability to resume regular truck traffic, will constrain North Korea’s ability to import and export goods.
North Korean officials also recently called for better measures to prevent the spread of COVID-19 along the border with China in hopes that conditions could worsen during the winter. In essence, North Korea is seeking to tighten rather than relax its quarantine provisions, which augurs well for further strain on trade.
North Korea has also said the public may have to endure three more years of hardship due to the pandemic. This suggests that North Korea does not expect trade with China to resume to pre-pandemic levels in the near future, even if border restrictions are relaxed.
As long as China and North Korea use versions of the zero COVID-19 policies to prevent the national spread of the coronavirus, trade will continue to be disrupted. Trade for the foreseeable future will likely be limited to rail service, but will still face constraints related to the entry and exit of quarantine goods. As a result, trade levels are unlikely to reach pre-pandemic levels anytime soon. Until North Korea can deal with these problems through the acquisition of vaccines, therapeutic drugs and mass testing, it will continue to struggle to normalize its trade with China.