NK’s economic reliance on China increases

North Korea’s trade dependence on China grew by leaps and bounds last year while economic relations with South Korea remain frozen, according to a report released Friday by Korea Trade-Investment Promotion Agency (KOTRA).

In 2011, 89.1 percent of Pyongyang’s total external trade came from its neighboring economic powerhouse China recording $5.6 billion, a 62.4 percent increase compared to the previous year.

North Korea’s total trade volume amounted to $6.3 billion in the cited year, up from $4.1 billion year-on-year, with a trade deficit of $740 million.

The figure excludes trade between Pyongyang and Seoul.

During the same period, the trade volume between the two Koreas decreased from $1.9 billion to 1.7 billion, according to the trade agency.

“The May 24 measure which halted most of the inter-Korean trade except for the joint cooperation at the Gaeseong Industrial Complex has played a role in such an outcome,” said Park Kee-won, a KOTRA official.

Seoul’s bilateral economic ties with Pyongyang remain numb as Seoul cut most of the inter-Korean trade in May 2010, two months after Pyongyang’s torpedoing of South Korean warship Cheonan. The deadly incident took the lives of 46 South Korean sailors.

Experts expressed concern, saying Pyongyang’s increased economic dependence on China may hurt Seoul’s leverage in dealing with North Korea.

“North Korean employees in the Gaeseong Industrial Complex are increasing in numbers and the jobs created through inter-Korean trade have been attractive to the North Korean people,” said Cheong Seong-chang, a senior fellow at the Sejong Institute. “But if Pyongyang’s economic ties with Beijing start to grow bigger and bigger, those workers might choose to work at Chinese companies, causing us to further lose influence on North Korea.”

“This means higher costs in bringing Pyongyang to the negotiation table when Seoul seeks to engage with Pyongyang,” added Cheong.

Inter-Korean relationship have deteriorated since 2008 as the hard-line Lee Myung-bak administration ended a decade-long engagement policy toward the North urging them to earn economic benefits by taking steps towards denuclearization.

On a positive note the analyst pinpointed that overall Pyongyang’s increase in external trade is a good thing as it could slowly lead to the isolated regime’s opening up following the path of China. <Korea Times/Chung Min-uck>

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