Why North Korea is Now Exporting Clothes to China

August 22, 2017

After United Nations Security Council imposed its latest sanctions on North Korea earlier this year, Q2 figures showed that the country shifted to exporting clothing — instead of coal — to China.

According to the data sourced from Chinese Customs, garments accounted for $147.5 million, or 38%, of the total goods China imported from North Korea, which amounted to $385.2 million. Three months earlier, the figure was significantly lower at $120 million.

The figures also indicated that China exported $35 million worth of clothing to North Korea in the same period, reported the South China Morning Post.

And before the recent seafood ban China imposed, North Korea was also able to export $68 million worth of seafood. In addition to seafood, iron and iron ore are also included in the updated list of banned imports.

China announced the additional import bans on Tuesday in accordance with the recent sanctions the U.N. slapped to North Korea for last month’s missile tests.

The data also provided details on the effect of the sanctions to North Korean coal imports; in the first quarter, Pyongyang shipped 2.7 million tons of coal valued at $220.6 million to China, accounting for 43 % of its total imports then. The following quarter, the coal imports hit zero.

The ban on coal imports, which was announced in February, resulted in Pyongyang’s loss of a major source of foreign income.

However, according to Hwang Jae-ho, regional security analyst from Hankuk University of Foreign Studies, the garment trade could undermine the currently implemented sanctions on Pyongyang.

“Beijing’s quick response to ban North Korean coal, iron ore, and seafood is not aimed at hurting Pyongyang’s economy at all, but merely a gesture to Washington, showing Beijing is not happy with North Korea,” Hwang was quoted as saying.

Observers noted that the recent sanctions would continue to elevate clothing as North Korea’s main trading product with China.

“Textiles are a non-time-sensitive, low value-added sector, which is ideal for low-wage, inefficient North Korean workers. Chinese companies take advantage of that to produce cheap clothes, and then export them to China,” noted University of Sydney international relations specialist Justin Hastings.

Hastings further explained that Chinese firms have been taking advantage of the relatively lower costs in North Korea. He said, “Garments are produced by Chinese-North Koreans joint ventures, or by North Korean companies under contract to Chinese companies, and are then exported to be sold in China and elsewhere by Chinese sellers.”

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