China's Trade with N.Korea Surges in August

China's trade with North Korea surged in August, raising concerns that Beijing is deliberately loosening sanctions against the North amid an escalating arms race in the region.

Trade between China and North Korea had been declining gradually since Beijing got behind international sanctions against the North in April. That it has picked up again exposes a fundamental weakness in the sanctions, which allow trade of goods not explicitly linked to the North's nuclear and missile programs to continue.

Experts say it is difficult to distinguish between trade that is vital to the livelihood of ordinary North Koreans and money used for military purposes.

According to Chinese customs officials, trade between the two countries totaled US$628.3 million last month, up a whopping 30 percent from the same period last year, before the tougher sanctions went into effect.

China's exports to North Korea jumped 41.6 percent to $336.9 million, while the North's exports to China rose 18.7 percent to $291.3 million. Trade fell 8.2 percent in May, the month after the sanctions kicked in, rose again 9.4 percent in June, and then fell 15.7 percent in July, raising hopes that China was serious about cracking down.

Some worry that China softened against the North because of a spat with South Korea and the U.S. about the stationing of a Terminal High-Altitude Area Defense battery here, which Beijing considers a threat. Others believe China is simply trying to avoid damage to Chinese businesses.

Whatever the reason, China is clearly the weakest link in international sanctions, and any slacking of controls opens backdoors for military equipment.

An example is China's Hongxiang Industrial Development Co., which is accused of supplying Pyongyang with key ingredients for nuclear weapons.

In April, China's Commerce Ministry banned the import of 20 items from North Korea, including coal and iron ore, while prohibiting the export of five, including jet and rocket fuel. But trade in other products was left off the sanctions list.

But China's imports of North Korean iron ore surged 81.4 percent in July compared to the same month of last year. One source in Jilin, China said, "Iron ore from North Korea is imported through customs in Jilin, and Chinese trading companies have never stopped dealing with North Korea since the sanctions kicked in."

Chinese imports of North Korean coal did decline, but this was mainly due to a saturated Chinese market. One source living close to the border said, "If you look at the trade by Hongxiang, which accounted for more than half of China-North Korea trade, only a small portion of the exports really supported the livelihood of North Koreans. It all depends on China strictly enforcing controls."

Jon Wolfsthal of the U.S. National Security Council on Wednesday urged China to cooperate. "It doesn't matter if it's a pencil or an ounce of gold or a boatload of coal... Everything that North Korea does, we believe is linked or supportive of their weapons of mass destruction program," he said.

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