Chinese Investors in North Korea Suffer Heavy Losses

2018-01-19
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Trucks move along a bridge connecting North Korea with the Chinese port city of Dandong in a file photo.
Trucks move along a bridge connecting North Korea with the Chinese port city of Dandong in a file photo.
Reuters

Chinese businessmen with investments in North Korea are suffering heavy losses as China tightens sanctions on the nuclear-armed state in response to its provocative weapons tests and missile launches, sources in the region say.

In December, Pyongyang’s longtime ally China backed U.N.-approved bans on the importing to North Korea of crude oil and refined oil products essential to the country’s economy, adding to the restrictions already in place on trade in a wide range of other products.

China-invested businesses in North Korea are now being severely hurt as wider customs controls are established along the border, sources working in the area say.

One businessman with a paper mill in North Korea’s border city of Sinuiju, across the Yalu River from China, has lost his entire investment because of tightened bans on commerce imposed by Beijing, one source told RFA’s Korean Service.

“He is now facing bankruptcy, and he blames the Chinese government for his situation,” RFA’s source said, speaking on condition of anonymity.

“The paper mill uses reeds from a swamp in the Yalu River and produces very low-quality paper often used by Chinese to burn in the street on national holidays as an offering to their ancestors,” the source said, referring to the practice of burning fake money for ancestors.

“Bans on minerals and underground resources are understandable, because these things are on the U.N. Security Council’s sanctions list, but it’s not clear why cheap paper is being banned,” the source said.

Wigs, false eyelashes

Also speaking to RFA, a Chinese businessman working on the border said that even his trade in wigs is being blocked.

“I have been supplying raw materials to North Korea, and then re-import finished and semi-finished wigs and false eyelashes from there, but now it is difficult to get anything passed through Chinese customs,” he said.

“I can’t just sit back and do nothing, so I’m smuggling these products into China along secret routes, and this is causing me additional expense.”

Powdered talc, a nonmetalic mineral used in the production of ceramics and cosmetics, is also being barred from trade, with stocks piling up unsold, another Chinese investor told RFA this week.  

“I took someone’s word that talc was not on the [U.N.] Security Council’s sanctions list, so I invested in a talc mine in North Korea,” the businessman said, also asking that his name not be used.

“We recently began production, but there is no way now that I can bring the talc into China, and I’m having difficulties because the ships aren’t running now between North Korea and China because of the U.N. sanctions.”

“The talc is just piling up,” he said.

Uncertain future

A Chinese-invested vehicle maintenance center being built in Sinuiju also faces an uncertain future because of restrictions on trade, another businessman said.

“The center is about to finish construction, but we won’t be able to operate it because the Chinese government has prohibited the export of steel products and machinery,” he said.

Stung by what it sees as Beijing’s betrayal, North Korea is now stirring up anti-China sentiment among ordinary citizens as the closed, authoritarian country’s economy continues to be hit by the tough new sanctions supported by its traditional longtime ally, sources in the country say.

Reported by Joonho Kim for RFA’s Korean Service. Translated by Leejin Jun. Written in English by Richard Finney.

CH. 1: MANDARIN | CANTONESE

CH. 2: VIETNAMESE | BURMESE | KOREAN

CH. 3: KHMER | LAO | UYGHUR

CH. 4: TIBETAN

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