Frozen North Korea-China Trade... Record Low for Two Consecutive Months

On September 5th, North Korean People's Army soldiers in Hyesan City, Yanggang Province, are hanging light bulbs on the wire fence along the Yalu River. Photo taken in Changbai Korean Autonomous County, Jilin Province, China.

North Korea's trade volume with China remained at around 1 million dollars in November, marking the lowest level for the second consecutive month. Due to the impact of the novel coronavirus disease (COVID-19), North Korea's largest foreign currency inflow channel, trade with China, has frozen.

According to the website of the General Administration of Customs of China on the 23rd, the total trade volume between North Korea and China in November was confirmed to be 1.273 million dollars, a decrease of about 400,000 dollars from 1.659 million dollars in the previous month. It is considered extremely rare for the North Korea-China trade volume to record a monthly level in the 1 million dollar range. This trade cliff is interpreted as a result of North Korea closing its borders as a measure to respond to COVID-19.

In November 2020, the total trade volume between North Korea and China recorded 1,273,000 dollars (yellow).

As trade routes have been blocked since the beginning of the year, market prices have fluctuated frequently. The North Korean won exchange rate has continued a long-term decline. The National Intelligence Service reported to the National Assembly's Foreign Affairs and Unification Committee last month that "due to a significant reduction in the import of goods from China caused by COVID-19, prices of North Korean food products such as sugar and seasonings have soared." Seasonings, which were priced at around 16,500 won, rose to 75,900 won, and sugar, which was priced at 6,000 won per kilogram at the beginning of the year, jumped to 27,800 won.

In response, North Korean authorities appear to have implemented a won appreciation policy to stabilize prices. This is aimed at lowering price levels through an increase in currency value. According to the North Korea specialist media Daily NK, the North Korean won exchange rate fell from 8,400 won per dollar on September 29 to 7,150 won on the 12th of this month.

However, short-term adjustments inevitably place a burden on the market. It is an open secret that North Korean residents prefer to save in dollars, North Korean won, and Chinese yuan, and dollarization (preference for the dollar over the domestic currency) is steadily progressing. In this context, a decline in the value of foreign currency inevitably causes dissatisfaction among North Korean residents. The North Korean authorities made the currency exchangers in Pyongyang scapegoats for the economic difficulties. The National Intelligence Service reported in the November National Assembly briefing that due to the surge in the won’s value, residents’ hardships and dissatisfaction increased, and "Kim Jong-un, Chairman of the State Affairs Commission of North Korea, executed a prominent currency exchanger in Pyongyang."

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