Argument

Across the North Korean Border in China, an Economic Winter That Never Ends

The pandemic killed hopes of a trade boom.

Jian, China, border with North Korea
Two Chinese men sit across from the barren North Korean mountains on the bank of the Yalu River in Jian on May 28. Jing Feng for Foreign Policy
Jian, China, border with North Korea

Two Chinese men sit across from the barren North Korean mountains on the bank of the Yalu River in Jian on May 28. Jing Feng for Foreign Policy

Sitting on a lacquered tree trunk stool in the middle of his shop, Wang Yaoli explained why North Korean paintings possess a unique kind of beauty. “Their landscapes are more true to life,” he said, looking at a painting of Heaven Lake, a famous crater lake on the border of China and North Korea.

In retirement, the former government official has turned his love for artwork from across the border into a business serving a small but devoted group of buyers. Wang, however, is running out of supplies. In January 2020, soon after the outbreak of COVID-19, North Korea went into a near-total lockdown, ostensibly to limit the impact of the pandemic. The country has reported zero infections to the World Health Organization—although outside observers are highly suspicious of the numbers.

Last year, the two countries’ trade volume plummeted by over 80 percent compared with 2019.

Isolated even in normal times, North Korea does nearly all of its international trading with China, with which it shares a border that largely traces the snaking Yalu River. But last year, the two countries’ trade volume plummeted by over 80 percent compared with 2019. In the Chinese cities and towns on the opposite bank, the cross-border trading industry is reeling.

More than two-thirds of trade between China and North Korea goes through Dandong, the area’s biggest city. Currently, however, the trade shops that line the streets near the main cross-border connection, the Sino-Korean Friendship Bridge, are either closed or idle. The city’s largest supervised warehouse, which stores goods that have passed customs, is practically deserted, its doors covered in posters reminding would-be visitors to record their body temperature. The handful of trucks on the warehouse parking lot haven’t been used since last year, said a young man surnamed Yang who is in charge of the gate but spends most of his time watching videos on his phone. “The goods have all been piled up here,” he said.

A building in North Korea

A North Korean building sign reads “regeneration through our own efforts,” as seen from the Chinese border city of Jian on May 28. Jing Feng for Foreign Policy

“We used to have over 20 people in our company, but now we have all returned home and are living on unemployment benefits,” said a Dandong customs broker who requested anonymity due to the sensitivity of talking to the media about border activity. Her husband, who previously also worked in cross-border trade, recently became a driver to provide the family with some stable income.

This year, the only commercial connection with North Korea accessible to traders is by sea, the broker said, with Longkou in eastern China’s Shandong province and Liaoning’s Dalian still open for North Korean boats. “Many clients are now storing their goods in Longkou, waiting for North Korea to send ships. But the ships have been unpredictable, and there have not been many of them,” she said.

“There is an extreme shortage in North Korea right now of daily necessities that rely on imports from China.”

The broker said she handled some sporadic business between last April and September, when North Korea had briefly opened up the border to allow in emergency supplies like face masks and thermometers. But even then, only around 10 trucks crossed the Yalu per week, compared with hundreds in normal times, she said. After a flare-up of COVID-19 infections in China, the border closed again in the fall.

There was another uptick in trade in the first four months this year, according to data from China’s General Administration of Customs, which analysts said was likely due to an acute need in North Korea for fertilizer, agricultural goods, and food for the farming season. In April, North Korean leader Kim Jong Un told his country to prepare for another “Arduous March,” a euphemism for the country’s disastrous famine in the 1990s and a possible indication the country’s year of isolation has had dire consequences.

“There is an extreme shortage in North Korea right now of daily necessities”—from sugar and cooking oil to toilet paper and cleaning products—“that rely on imports from China,” said Lu Chao, a North Korea specialist at the Liaoning Academy of Social Sciences in Shenyang, China. “I think it is an urgent matter to resume or partially resume Sino-North Korean trade. I believe both sides have attached great importance to it,” he said, adding that North Korea has improved its viral outbreak prevention measures for both products and people in preparation for an eventual border reopening.

Gift shop in China selling Korean costumes

Traditional Korean costumes hang in a Chinese gift shop in Jian near the Yalu River on the border with North Korea on May 28. Jing Feng for Foreign Policy

For Chinese traders, that day cannot come soon enough. So far, however, the art dealer Wang said he has only been given false hope. Someone told him the border would possibly reopen in April, which came and went. Another tip said trade would resume shortly after May’s Labor Day holiday. That, too, didn’t happen. “There is no accurate, official news. It’s all hearsay,” he said.

Only a few years ago, many businesspeople saw Dandong as a future boomtown. In 2010, anticipating a boost in trade with North Korea, the city invested in building an entirely new district south of the city center. It includes the imposing four-lane New Yalu River Bridge, built for 2.2 billion yuan ($345 million) to replace the aging single-lane Sino-Korean Friendship Bridge.

But in 2013, the execution of Jang Song Thaek, a reformist North Korean politician, threw the country’s direction into question and cast a chill across the border. Four years later, North Korea’s nuclear ambitions triggered one of the United Nations’ strictest sets of sanctions yet, banning the imports and exports of a wide range of commodities, including timber and metals, on top of goods that had been restricted under earlier sanctions such as seafood and textiles. The New Yalu River Bridge was completed in 2014, but it has gone unused ever since.

Chinese companies involved in cross-border trade either shut down or tried to stay afloat by pivoting to items still allowed through customs, such as shoes and toothbrushes. “When the sanctions went into effect in 2018, I really thought it was too difficult,” the Dandong broker said. “But slowly I got used to it, learning which things weren’t allowed and which ones were.”

When North Korea’s international relations showed signs of improvement later that year, including a summit between Kim and then-U.S. President Donald Trump, the new district’s real estate market experienced a sudden boom. Investors rushed in to buy apartments in the hope the district would become a new trading hub. But when the detente proved short-lived, all the city was left with was some of the highest housing prices in the province, locals complain. Now, even though the municipal government has moved its offices to the new district, there is a noticeable lack of activity. Rows of high-rise apartment buildings look out over a sprawling yet empty road network.

North Koreans laying bricks on a riverbank

North Koreans lay bricks for their border riverbank as seen from the Chinese city of Jian on May 28. Jing Feng for Foreign Policy

With such risks, most of the Chinese companies that still do business with North Korea are small private companies, said Lu, the North Korea expert. Large state-owned firms steer clear. It’s an industry with high risks and high returns, and traders say they have faith the days of opportunity will return at some point in the future.

Traders say they have faith the days of opportunity will return at some point in the future.

Such optimists point to positive signs of late. The customs office in Sinuiju, the North Korean city across from Dandong, has reportedly restarted operations; a procurement document from March shows a company affiliated to the Liaoning provincial government had opened bids for inspecting the New Yalu River Bridge’s structure, appearance, and ability to bear loads; and satellite images show the connecting roads on the North Korean side finally nearing completion. Lu said he expects the bridge will soon be put into use.

Farther inland, in the border city of Jian, Jilin province, trade has also decreased sharply. “There is basically no work due to the pandemic,” said Lu, a customs broker who asked for only his family name to be used. Last year, his agency’s orders shrank to next to nothing. As his employer struggled to stay afloat, Lu faced the reality that he wouldn’t receive any of his salary until the border opened up again. He now helps his wife sell ginseng, an herbal supplement native to parts of China and the Korean Peninsula, to support their three daughters. He doesn’t think an eventual reopening of the border will mean the return of the good days. “To be honest, business already began declining after 2015,” Lu said.

A short distance upriver, on the outskirts of the North Korean city Manpho, right across from the Chinese border, stands a frustrating reminder of the up-and-down border situation between both countries: the Manpho August 2 Cement Factory.

Chinese villagers point to a cement factory across the border in North Korea

Chinese villagers in Jian point to the Manpho August 2 Cement Factory in North Korea, which has been polluting Chinese farmlands, on May 28. Jing Feng for Foreign Policy

A farmer in Jian, China

A farmer works in her vineyard in Jian amid pollutants discharged from the Manpho August 2 Cement Factory in North Korea on May 28. Jing Feng for Foreign Policy

For over 20 years, the plant has spewed clouds of thick, white dust over the surrounding countryside, residents of the nearby Xiajiefang village say. The emissions from the riverside plant—which they nickname “Goryeo Dust” after the name of an old Korean kingdom—will often travel across the Yalu and cover their clothes and crops. “It chokes you,” said Xia Yunfang, 59. “Almost like it is snowing,” added Xia’s husband, Xu Chuanzhong. The couple grows grapes, a local specialty, but complain that when they’re plastered in cement dust they cannot be sold at a good price.

A cross-border trader from Jian, who requested anonymity because of the sensitive nature of his business dealings, thought he had a solution. In 2016, he signed a contract with Manpho to upgrade the cement factory so it would be both more efficient and less polluting. In return, the trader would be paid back in timber, minerals, and cement. But when the U.N. sanctions came into effect in 2018 and disrupted shipments of equipment, the project was only halfway done. The project was suspended ahead of completion, with the trader only compensated for about 3 million yuan ($470,000) of his initial 9 million yuan ($1.4 million) outlay, money he said might be wasted.

In mid-May, the chimneys across the river were still discharging heavy fumes—although they can’t compare with the smoke captured in videos from earlier years that villagers had uploaded to social media. Locals say that, though the project is unfinished, it seems to have helped lower pollution levels. But there’s no way to know for sure. Perhaps the wind just hasn’t been blowing in their direction, they say. The trader, meanwhile, thinks prospects for completing the refurbishments are dim, as the North Korean officials he had established relations with have since changed posts.

Despite increasing signs of a border reopening, the trader is wary of putting too much stock in them, pointing to recent COVID-19 cases in Liaoning province. “They open the door a bit wider if the outside is safe, and if it is not, they will immediately close the door again,” he said. “We’ll wait.”

Jing Feng and Kevin Schoenmakers contributed to this piece.

Tang Yuan is the pen name of a Chinese journalist.