North Korea Faces Foreign Currency Shortage... Record High Trade Deficit with China

Exports blocked by North Korea sanctions but imports not significantly reduced
Labor dispatch ban, COVID-19 tourism impact worsen foreign currency shortage
Dollar earning suspicions from cryptocurrency hacking... US Treasury "Sanctions"

North Korean State Affairs Commission Chairman Kim Jong Un was reported by Korean Central TV on the 10th to have once again supervised the 'firepower strike training' of frontline long-range artillery units on the 9th. The photo shows Chairman Kim overseeing the training, as reported by Korean Central TV.

According to a report by the Voice of America (VOA) on the 11th (local time), citing China's General Administration of Customs, North Korea recorded its largest-ever trade deficit with China last year.

Due to sanctions against North Korea, its exports have significantly decreased, but imports have not dropped as much. With foreign tourism also hit by the COVID-19 pandemic, North Korea's foreign currency shortage is expected to worsen.

According to the customs administration's import-export data, in 2019 North Korea imported goods worth $2.57382 billion from China. In contrast, North Korea's exports to China amounted to only $215.19 million. This resulted in a deficit of $2.35862 billion, the largest deficit in North Korean history.

The biggest cause of the trade deficit is attributed to international sanctions against North Korea.

Until 2016, North Korea's main export items were minerals, clothing, and seafood, with total exports amounting to about $1.9 billion. These items were successively designated as prohibited goods by the United Nations Security Council (UNSC) in 2017, effectively halting exports.

While exports have drastically decreased, imports have not reduced significantly, which has also contributed to the widening trade deficit. North Korea's imports from China have only decreased by about 30% compared to before the sanctions.

There is no incoming foreign currency, and North Korea is maintaining imports by using its existing foreign currency reserves, raising questions about how long this situation can be sustained.

In particular, overseas labor dispatch, a major source of foreign currency income for the North Korean regime, has been banned by UNSC sanctions, and with borders closed due to COVID-19, tourism income has also sharply declined. The foreign currency shortage is inevitably worsening.

In this situation, there is also analysis that North Korea is actively using cybercrime to procure foreign currency.

On the 2nd (local time), the U.S. Department of the Treasury announced sanctions against two Chinese nationals involved in laundering cryptocurrency stolen through North Korea's "cyber intrusion activities."

The Treasury explained, "They are linked to the hacking group 'Lazarus Group,' controlled by North Korea's Reconnaissance General Bureau," and "after receiving about $100 million stolen from financial institutions by North Korea, they laundered the money to obscure its source."

The United States has long claimed that North Korea is cleverly evading sanctions and securing foreign currency and materials necessary for regime maintenance and weapons development through illegal means.

In a report published in February, the Treasury stated, "North Korea is pursuing fundraising through digital assets," identifying three hacking groups: 'Lazarus Group,' 'Bluenoroff,' and 'Andariel.' The Treasury estimated that these three groups stole approximately $571 million in cryptocurrency from five exchanges in Asia between 2017 and 2018.

This content was produced with the assistance of AI translation services.