2011 report to congress - U.S.-China Economic and Security Review ...

dkrause on DSKHT7XVN1PROD with $$_JOB247international data estimate bilateral trade between China andNorth Korea in 2010 reached $3.46 billion, an increase of 29 percentover 2009. 21 In 2010, China exported to North Korea $2.3 billionworth of goods and imported $1.2 billion. China’s top five importsfrom the North in 2010 included coal (33 percent of total imports);mineral ores (21 percent of total imports); apparels (14 percentof total imports); finished iron and steel (9 percent of total imports);and fish and seafood products (5 percent of total imports). 22China’s primary exports to North Korea in 2010 were mineral fuelsand oils (21 percent of total exports), followed by machinery (11percent of total exports); electronics (8 percent of total exports); vehicles(7 percent of total exports); and plastics (4 percent of totalexports). 23Despite the large trade deficit with China, North Korea gainsmore from the trade, since it is desperately dependent upon Chineseimports. In 2010, 52 percent of North Korea’s imports camefrom China, more than double the amount imported from SouthKorea, the North’s second-largest import source. 24 JayshreeBajoria, a senior staff writer at the Council on Foreign Relations,estimated that China may provide an estimated 90 percent ofNorth Korea’s energy, 80 percent of its consumer goods, and 40 to45 percent of its food. 25 In contrast, bilateral trade with NorthKorea constituted less than 0.2 percent of China’s 2010 total globaltrade. 26 North Korea’s dependency on China likely has increasedover the past year, since South Korea, the North’s other main tradepartner, began curtailing trade with the North after last year’ssinking of the Cheonan. 27 In May 2010, South Korea took the unprecedentedstep of banning all inter-Korean trade, except foritems produced at North Korea’s Kaesong Industrial Complex, aNorth Korean-South Korean joint industrial park. As a result ofthe partial ban, inter-Korean trade, from imposition of the ban toMay 2011, decreased by 54 percent, down to $118 million (excludingKaesong Industrial Complex trade).*China also provides North Korea with much-needed foreign directinvestment. China’s investments in North Korea are concentratedin a few sectors. According to the Open Source Center,43 percent of publicly listed Chinese-North Korean joint ventureswere involved in some facet of natural resource production. 28 Thetwo countries have established three joint special economic zones,all located in North Korea near the border with China.† 29 Chineseentities have also pledged to invest in several infrastructureprojects. China’s Shangdi Guanqun Investment Company, for example,is renovating North Korea’s Rason port. 30 Of note, the announcementof the port project came just one month after NorthKorea’s shelling of Yeonpyeong Island and the revelation of a sec-eral_TS.aspx; and United Nations, ‘‘United Nations Commodity Trade Statistics Database.’’http://comtrade.un.org/db/.* Of import, trade through the Kaesong Industrial Complex actually grew for the same period,reaching $1.44 billion in 2010, a growth of $103 million (54 percent) over 2009. Evan Ramstad,‘‘Strong Kaesong Boosts Inter-Korean Trade,’’ Wall Street Journal, May 27, 2011. http://blogs.wsj.com/korearealtime/2011/05/27/strong-kaesong-boosts-inter-korean-trade/.† The zones are in the North Korean cities of Rason and Sinuiju and on the North Koreanislands of Hwanggu’mp’yo’ng and Wihwa. Xinhua, ‘‘China, DPRK [Democratic People’s Republicof Korea] to develop two economic zones,’’ June 9, 2011. http://www1.chinadaily.com.cn/china/2011–06/09/content_12667570.htm; and Jay Solomon and Jeremy Page, ‘‘Chinese Firm to Investin North Korea,’’ Wall Street Journal, January 19, 2011. http://online.wsj.com/article/SB10001424052748704678004576090270026745368.html.VerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00259 Fmt 6601 Sfmt 6601 G:\GSDD\USCC\2011\067464.XXX 067464