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N. Korea trade sanctions bite on borders with China, Russia
By Sebastien BERGER
Rason, North Korea (AFP) Nov 30, 2017

China reluctant to cut off oil to North Korea
Beijing (AFP) Nov 30, 2017 - The United States has renewed pressure on China to stop crude oil shipments to North Korea to close a crucial economic lifeline to the regime following its latest missile threat.

US President Donald Trump personally appealed to Chinese leader Xi Jinping to turn off the oil tap during a phone call after nuclear-armed North Korea launched a new intercontinental ballistic missile.

"That would be a pivotal step in the world's effort to stop this international pariah," US ambassador to the United Nations Nikki Haley told an emergency meeting of the UN Security Council on Wednesday.

China has gone along with a series of punitive UN measures against its Cold War-era ally, but it has resisted calls to shut the "Sino-DPRK Friendship Oil Pipeline".

Washington had already sought an oil embargo after North Korea conducted its sixth and most powerful nuclear test in September, but faced resistance from China and Russia.

Instead, the US settled for UN sanctions that limited exports of refined petroleum products to North Korea.

So why is China so reluctant to completely cut off the steady flow of petroleum into North Korea's fuel tanks?

How much does China export?

No one really knows. China has not published data on its oil exports to the North since 2014.

The US Energy Information Administration estimates that the country consumes only a small amount: around 15,000 barrels a day.

The majority of that likely comes from China. According to UN customs data, China sent 6,000 barrels a day of oil products to North Korea in 2016.

Where does it go?

Crude oil flows across the Yalu River from the Chinese city of Dandong to the Sinuiju oil depot in North Korea through the 30-kilometre (18-mile) "Sino-DPRK Friendship Oil Pipeline".

The pipeline went into operation in 1975 with a capacity of three million tonnes per year, but the China National Petroleum Corporation said in 2015 that annual capacity stood at 520,000 tonnes.

The majority of that oil, if not all of it, is used by the military and Pyongyang's nuclear and missile programme, according to Wang Peng, a Korea expert at China's Charhar Institute.

"I suppose there would be nothing left after the troops are finished. I don't think ordinary people can take a share," Wang told AFP.

Why won't China stop?

China fears that stopping the flow of energy could trigger the collapse of the North Korean government or provoke a violent response from Pyongyang, said Daniel Russel, senior fellow at the Asia Society Policy Institute.

"There is no way the Chinese will turn off oil shipments. They have been very clear about that," Russel told AFP.

"I think Xi Jinping is moving on a much slower timeline because his priority is avoiding chaos, not avoiding a nuclear capable-ICBM," he added.

Beijing is likely unhappy with Kim Jong-Un but it fears that the collapse of his regime would trigger a flood of refugees across its border and eliminate a strategic buffer separating China from the US military in South Korea.

Beijing is wary of cutting off oil because the move would "utterly destroy ties" with its neighbour, Wang said.

China was more likely to "kick the ball back to the US" rather than take immediate action as a direct response to the latest missile threat, he said.

"I think that Beijing definitely cannot make up its mind to (cut off oil) because it's unsure whether China is able to manage the consequences and chain reaction of outcomes of completely cutting ties," he explained.

At the northeastern tip of North Korea, where the isolated, nuclear-armed country meets its giant neighbours China and Russia, United Nations sanctions on the regime over its weapons programmes are having an impact.

And with the North possibly facing further sanctions following its ICBM missile test on Wednesday, things are unlikely to get any easier for traders involved with the remote region's Rason Special Economic Zone (SEZ).

Rason is one of Pyongyang's showpiece development projects, looking to exploit its geographical location between the borders with China and Russia, and the Pacific Ocean.

Formally established in 1991, it was the first of its kind in the country and has only come up to speed in recent years, but officials are defiant about the setbacks.

Foreign firms are given tax, visa and legal concessions -- they can set up wholly-owned units, rather than joint ventures -- to lure them to the SEZ, as leader Kim Jong-Un seeks to pursue a policy of "byungin", or "simultaneous development", of both the economy and atomic arms.

But eight sets of UN Security Council sanctions have been imposed on Pyongyang over its nuclear weapons and ballistic missile programmes.

North Korean coal exports have been banned, leaving the material piling up on quaysides in Rason, as have iron ore and seafood.

The most recent resolution -- passed in September after Pyongyang detonated by far its most powerful nuclear device to date -- forbade trading in textiles and imposed limits on oil supplies to it.

"There is some impact," said Han Yue, deputy manager of the Chinese-owned Rason Songsin Building Materials cement plant.

"Many things can't be imported from China anymore because of the UN sanctions, in terms of the transfer of funds from both sides you could say it has been cut off."

Beijing -- Pyongyang's sole major ally -- has long been accused of failing to enforce UN resolutions against its wayward neighbour, with US President Donald Trump constantly demanding it do more.

- 'People don't have money' -

But Han -- aged 43, who comes from Singtai in Hebei province, next to Beijing -- said China's actions had slowed development and construction in Rason.

"This is affecting our sales," he said, with parts imports another problem. "Because of the economic sanctions, so far this year we have only completed 70 percent of the output of last year."

The company was seeking North Korean suppliers for the limestone and coal raw materials it has so far brought in from China, he said, and measures on oil and natural gas were affecting ordinary citizens. "We see fewer vehicles on the road."

Cho Bong-hyun, director of the IBK Economic Research Institute in Seoul, said increasingly strong sanctions were likely to deal "a big blow" to the economy at Rason.

"North Korea's plans for the development of these economic zones will be hard to carry out for now," he added.

There used to be more than 5,000 foreign businessmen in Rason, around 80 percent of them Chinese, but officials privately admit some have left.

Chinese trader Pai Yuenlong has been selling shoes in North Korea for a decade, and would also like to switch businesses.

"Of course there's an impact. People don't have money, there's little consumption," he said. "But I have massive stocks, so I can't change even though I want to."

Even so, North Korean officials insist they will not be cowed -- and are working on ways to minimise the effects of sanctions.

So far around 500 million euros ($595 million) have been invested in the SEZ, a third of it by North Korea and the rest by foreign investors, according to Kim Yong Nam, who has the challenging task of trying to draw in foreign investors as director of the Rason local government's economic co-operation bureau.

- Crumpled tin can -

"Of course, it is poorer than the previous period," he says of trade with China. "But only fisheries have been affected," he said, and the impact was "not that big".

North Korean seafood producers could sell their products domestically instead, he added.

The textile trade ban is clearly on his mind. Asked about its impact, he responds instantly that it only comes into force on December 11, and so has had no effect yet.

"We can manufacture other textile goods with our clothing manufacturing facilities so we are making adjustments in that direction," Kim said. "It could be things like bags and gloves."

According to the US mission to the United Nations, North Korea earned an average of $760 million from textile exports in the past three years.

The SEZ is looking to develop transshipment trade, Kim said, bringing in more Chinese and Russian goods to ship them on to other destinations from the renovated port of Rajin.

Tourism is another growth target -- despite winter temperatures that fall to minus 30 Celsius (minus 22 Fahrenheit) cold enough for the sea to freeze -- as are services.

"Sanctions will have little impact on us," Kim insisted. "I am over 50 and I've been hearing the word 'sanction' almost since my birth but we are still alive and well.

"We Korean people know how to survive under sanctions," he went on.

"We are nothing like a tin can that simply crumples when it is beaten. We are more like steel that becomes stronger when you pound it".

China voices 'grave concern' over N. Korea missile test, urges talks
Beijing (AFP) Nov 29, 2017
China on Wednesday voiced "grave concern" over North Korea's test of a missile capable of striking anywhere in the United States and called for talks to peacefully resolve the nuclear crisis. Foreign ministry spokesman Geng Shuang said Beijing's proposal for North Korea to freeze weapons tests in return for the US to suspend military drills in the region was the best approach to ease tension ... read more

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