China stops North Korean coal imports

By Dhruba Sattwata Roy Choudhury

China and North Korea have mostly enjoyed close diplomatic ties. However, their relations have steadily deteriorated over the past few years. This has been primarily due to the growing concerns among Chinese officials over issues such as the testing of nuclear weapons, and the impoundments of Chinese fishing boats. A 2014 BBC World Service Poll revealed that 20% of the Chinese population sees North Korea as a positive influence, whereas 46% views it negatively.

On 18th February 2017, in a surprising move, the Chinese commerce ministry announced that it was suspending all imports of coal from North Korea. China claims that this move is a part of its effort to enact the United Nations Security Council’s sanctions aimed at stopping North Korea’s nuclear weapons and ballistic missile program.

This is not the first time China has made a move to comply with the U.N. sanctions against North Korea. China also signed a similar resolution last year. However, it insisted on a “livelihood exemption”. Livelihood exemption allows a country to continue the trade of a product if cutting it off affects the livelihood of the partner. The condition was that the revenue would not be used for North Korea’s nuclear program.

Speculating the tipping point: Missile test or outside influence?

China did not specifically mention a concrete reason behind the embargo. However, the move comes in turbulent times. North Korea’s recent ballistic missile test in the Sea of Japan, and the assassination of Kim Jong-un’s half-brother, Kim Jong-nam, seemed to be the tipping point for China. Kim Jong-nam was reportedly under the protection of the Chinese government and was living in the former Portuguese colony of Macau.

President Donald Trump, during his campaign, had said that he could “negotiate with Kim over a hamburger”. However, this month, he promised to deal with North Korea “very strongly” after its latest missile test. He also called on China to get tougher. The U.S. is putting a defence system called “THAAD” in South Korea. This move potentially threatens Beijing’s military capabilities.

China may soon have company in making the shift. South Korea’s President Park Geun-hye was impeached in December. The leading candidates to replace her all take a softer line on North Korea, with front-runner Moon Jae-in saying that the next administration should review the decision to deploy “THAAD”.

North Korea-China Trade Relationship

China is North Korea’s largest trade partner, while North Korea ranked 82 on the list of China’s trade partners (2009 estimate). China provides about half of the North Korean imports. A quarter of North Korea’s exports is bought by China. The coal makes up about 40% of the total exports of North Korea. With the international community enforcing sanctions on North Korea after a series of nuclear tests, China now accounts for more than 90% of its total trade of coal, according to Bloomberg data.

What does this embargo mean for North Korea?

China’s decision has the capacity to cripple North Korea’s already moribund economy. China has long been reluctant to do anything that might threaten the stability of the North Korean regime. This is mainly because it fears that the reunification of the Korean Peninsula could bring South Korea, an American ally that hosts U.S. troops, right up to its border. Given that a total ban on coal imports could be destabilising, it remains to be seen how firmly China goes ahead with the move.

Responding to the coal sanctions by the Security Council, North Korea said it was “utterly childish” to assume that it would discontinue its nuclear weapons programs for a “few pennies”. It is doubtful that coal sanctions alone are enough to influence the nuclear aspirations of the regime in Pyongyang. The economic effect, however, will be detrimental.

North Korea: Road to nuclear power to become difficult

The effect of the sanctions on North Korea’s nuclear policy remains to be seen, but the patronage of its most important supporter is uncertain and the road ahead for Pyongyang is looking lonelier than before. The uncertainty of the biggest source of funding will almost certainly lead to political chaos in the communist nation. The new middle class has changed the equation. A suffering economy will lead to unrest and chaos, rather than a “rally round the flag” like phenomenon in the 1990s.

Will Kim Jong-un, after years of persisting with his ballistic missile tests, finally launch a rocket into one of the neighbouring nations? Trump administration has said it will deploy the missile defence system this year in South Korea and back Japan “100 percent” in moves to deter North Korea. Since it may have no choice but to test this defence system in the near future, one hopes that North Korea’s “desperate” launches are contained