Diplomatic aid to North Korea from China, based on energy

Diplomatic aid to North Korea from China, based on energy

Lifan Li | Associate research professor, Shanghai Academy of Social Sciences
China's economic support to North Korea dates back to the beginning of the Korean war; since 2005 exports from China to North Korea have increased significantly and Koreans talk about "blood alliance". Nevertheless, following the nuclear tests, security and stability in the area remain Xi Jinping's primary concerns

North Korea is rich in mineral resources, has proven more than 300 kinds of minerals, of which more than 200 kinds of useful mines. The DPRK is also rich in metal minerals and energy minerals, 70% of industrial raw materials and fuel can be self-sufficient by the domestic market, but only has a small amount of oil and natural gas resources, actually, coal is rich in anthracite and lignite burial, but the lack of coking coal as necessary in steel industry, in addition to North Korea , also has a wealth of hydropower resources.

Money is in coal

 At present, the proportion of minerals in North Korea is mainly on coal, iron ore, lead and zinc and limestone, but basically are primary products, mainly sold to China. Coal is North Korea's most important mineral, North Korea's proven reserves of 14.74 billion tons of coal, of which 11.74 billion tons of anthracite reserves, lignite reserves of 3 billion tons, the available conditions of existing mining capacity is about 7.9 billion tons. North Korea coal is divided into anthracite and bituminous coal , anthracite origin mainly in the region of Pingyon North , bituminous coal is mainly distributed in the region of Hamgyong North and South. At present, the central level of North Korea coal mines has totally of more than 100, including more than 70 anthracite coal, more than 30 coal mines, local-level coal mines have more than 500. In 2011,North Korea estimated 661 million tonnes coal reserves , mainly for exporting China ,which covers 10% of gross domestic product.

 In North Korea, because of the lack of oil and gas, the lack of funds for developing  hydropower resources, coal has become the key resource in the power and energy production. in order to solve the power shortage ,DPRK decided by mining a lot of coal, and its coal workers primarily  forced to work on coal exploration and mining. But the rate of North Korea's coal mining is not so high, only because of the limitation of new coal mining methods and advanced blasting methods.

The main ally

China and the DPRK are friendly neighbors, the China needs to import mineral resources for its economic development, and the DPRK needs food, fertilizer, oil and gas for the people's livelihood, the two sides continues to deepen cooperation in the field of mineral resources. According to the report, China's National Gold Co., Ltd. has signed a contract with the DPRK for copper mining, the content is operating 25 years in the ratio of 50 to 50 of sharing North Korea's largest copper mine "  Hyesan Copper" in the region of Ryanggang. China's investment is 8 million Euros. Earlier, China's Jilin Provincial Department of Commerce and the North Korean government signed an iron ore mining contract, the content is 7 billion RMB to ensure 50 years of mining rights of North Korea's largest iron ore " Musan Iron Mine". As a result, China can use 10 million tons of iron ore from “Mausan Iron Mine” every year. In addition, China's largest mineral resources import companies: CMC planned to invest the largest North Korea's largest smokeless carbon mines with annual production capacity of 3 million tons. Moreover, China is also promoting the joint development of molybdenum mine and the West Sea oil field nearing Pyongyang.

How to overcome the lack of oil

But interesting thing was, the fuel in North Korea was scarce and now relies on fuel import from China and Russia, according to the Information of US Energy Administration, North Korea has not proven oil reserves, and no oil or other liquid production. It is reported that North Korea's oil consumption in 1991 was 7.6 million barrels per day, when it was purchased from China and the Soviet Union at low prices. This figure dropped to 1.7 million barrels in 2013, the capacity of its crude oil refinery 640 hundreds barrels per day, the actual utilization of oil was only 20%. In addition, North Korea has no exploration and mining capacity. Although North Korea has seven fully exploited geological basins, only 22 wells had been drilled. So far there is no exploration activity with joint venture (HBO)operated  by both  North Korea's oil exploration company and Mongolia's HBOil. In July 2014, HBO planed to open the country's oil and gas industry data room to overseas, hoping to attract foreign investment. But because of the organization of ecological problems, there had not attracted by Western investors. While North Korea sought overseas forces to help develop its oil and gas industry, none of the foreign companies went to do only on preliminary exploration. This because, DPRK  have not the local expertise and technology to extract their own oil and gas, and no money to do anything. Although China Railway Construction Investment Corporation has announced its large-scale investment in North Korea, including investment in the oil and gas industry. But in view of the current situation on nuclear tension , large-scale investment is simply impossible.

China 's relations with DPRK after sanctions

As for the implementation of UN Security Council Resolution No. 2321 on the DPRK sanctions, February 18, 2017, the Chinese Ministry of Commerce and the General Administration of Customs issued a public notice, in strict accordance with the UN Security Council resolutions and the relevant state laws and regulations, since February 19,2017 China stopped importing coal from the DPRK as Annual suspension of the major measures. In the first quarter of 2017, China imported 2.688 million tons of coal from North Korea, down 51.6% from the same period last year, all of which were imported before the announcement.

China's economic aid to North Korea began in the early days of the Korean War. No matter how, the Chinese government to the DPRK to provide food and energy, including free assistance. In August 1992, China and South Korea formally established diplomatic relations, China and North Korea relations back, but China's energy aid to North Korea has not been interrupted, energy trade coal and oil maintained the economic cooperation between the two sides also showed a normal relationship gradually in the economic field Push open. Since 2005, China's exports to the DPRK have improved significantly, and China's trade surplus with North Korea has soared from $ 810 million in 2007 to $ 1.3 billion in 2008, much higher than the $ 214 million in 2004.

A question of security

North Korea did nuclear tests sparked dissatisfaction with China and voted in favor of the Council's stern sanctions. Traditionally, between China and the DPRK maintained a brotherly state relationship, one from the DPRK has "with blood clinging friendship", and second, North Korea has been considered as China's important "strategic buffer zone" in Northeast Asia. However, North Korea frequently through the nuclear test to challenge the international order, especially after this hydrogen bomb test on September 3,2017 , China has appeared a lot of rethinking voice toward the DPRK policy. If this time too much to stimulate the DPRK, such as direct cut off the oil supply, there may be have an extreme North Korea ,which will be provoking China's northeast security.

But to maintain peace and stability in the surrounding areas is the primary goal of China's diplomacy, but also in line with China's national interests. Chinese President Xi Jinping said at the UN European Headquarter in Geneva in 2017, that nuclear weapons should be completely banned and eventually destroyed and after then the nuclear-free world should be achieved. In order to achieve denuclearization ,which needs to follow the concept of common security on the Korean Peninsula. Therefore the relationship between the United States and North Korea can be more stable while promoting Northeast Asia's international relations.

I believe , The Chinese government will certainly strictly enforce the United Nations resolution, the implementation of a more resolute embargo on arms materials and scientific technological materials to DPRK, through the severe economic sanctions will clearly aware of the risk of fire and self-immolation. In addition, Persuading the Korean students in Chinese universities, and shut down a large number of Chinese enterprises in North Korea. Since March this year, Chinese regulators have warned North Korea's four financial institutions operating in China,  they are required to operate their business only by the newest license , otherwise they may face a risk of punishment. Additionally, China may be considering the restrictions of export supplies and energy which may be used by the DPRK military.

In general, North Korea as a close neighbor, has a very important significance for China, there are two million Chinese Korean who has inextricably linked with DPRK, once the DPRK becomes turbulence, the Chinese Koreans will have inevitable fluctuations. So I think, China can not prohibit North Korea's maritime energy smuggling, China will not completely shut down the whole trade and assistance with DPRK unless North Korea aimed missiles to China. China will avoid excessive punishment for North Korea, any of humanitarian and social life necessities including the energy supply for the assistance still should be open, but the nuclear weapons development will resolutely stop, Because President Trump is not willing to hit the first shot to DPRK.