December 1, 2017 6:08 am JST

Crackdown on North Korean workers starves Pyongyang of cash

China is shutting restaurants and other businesses run by the North

DAISUKE HARASHIMA and HIROSHI MINEGISHI, Nikkei staff writers

The Chinese border town of Dandong accounts for 70% of China's trade with North Korea.

DANDONG, China/SEOUL -- A slew of North Korean businesses in China have closed amid ever-stricter international sanctions on the isolated state, a sign that efforts to curb Pyongyang's income from citizens employed abroad are working as intended.

A once-thriving North Korean restaurant occupying a five-story building in the Chinese city of Dandong stood deserted at the end of November, tables and chairs strewn haphazardly around the dining room. A sign on the door announced the eatery was closed for maintenance. But a little repair work is unlikely to get the restaurant up and running again.

The business had been regarded as one of the largest North Korean restaurants in China, employing around 100 women from the North. Many were in their 20s, doing double duty as restaurant workers and performers of song and dance. Yet the bulk of these employees have returned to North Korea, a source in Dandong said.

Crackdown

China accounts for 90% of all trade with North Korea, and the border city of Dandong produces 70% of the exchange between the nations. But the business long serving as a key source of foreign currency for Pyongyang seems to be steadily dwindling: Three of Dandong's eight North Korean restaurants shut down in November.

After North Korea conducted its sixth nuclear test in September, the United Nations introduced new, tougher sanctions designed to curb further weapons development, including restrictions on oil shipments to the North. U.N. members were banned from granting visas to North Korean workers. China said it would close all businesses wholly or partly owned by Northern citizens or groups within four months, in line with the sanctions.

China appears to be terminating current employment contracts as well. A man living near a factory said that groups of North Korean workers vanished in October. Though the employees were prized for their willingness to work hard even for low wages, China's central government "ordered that they be quickly sent home," a public safety official said.

Tour operators out of Dandong were ordered in November to halt all trips into North Korea of three days or longer. Even day trips have been restricted.

Feeling the pinch

Bans on Pyongyang's exports of coal and iron also are having an impact, according to multiple North Korean sources. Facilities such as iron mills have curtailed production and are said to be laying off workers.

Trade between China and North Korea from January through October fell more than 10% on the year. Fewer Chinese goods can be found on the black market, and gasoline prices are climbing. The government is cracking down on the use of private vehicles in Pyongyang, and even officials in the ruling Workers' Party of Korea face restrictions on nonessential driving. Prices are less affected for goods such as rice, in which the North depends little on imports.

The sanctions are expected to have a dire impact overall. The economy could shrink as much as 5% in 2018 after growing 3.9% in 2016, the South Korean National Intelligence Service said Nov. 2. This would produce an economic crisis on par with that in the 1990s, which led to widespread starvation.

U.S. President Donald Trump wrote Thursday on Twitter that "the Chinese Envoy, who just returned from North Korea, seems to have had no impact on Little Rocket Man," referring to North Korean leader Kim Jong Un. The president has indicated the U.S. will pursue even tougher sanctions on Pyongyang.

Get Insights on Asia In Your Inbox

To read the full story, Subscribe or Log in

Get your first month for $0.99

Redeemable only through the Subscribe button below

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

Resubscribe now to continue reading.
BEST OFFER:
Only US$ 9.99 per month for a full-year subscription

To read the full story, Subscribe or Log in

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.