Gray trade

By Qiu Yongzheng in Dandong Source:Global Times Published: 2014-1-14 0:33:05

Trucks are bumper to bumper on the Amrok Bridge linking Dandong with Shinuiju, the North Korean border city on December 30, 2011. Photo: CFP

Trucks are bumper to bumper on the Amrok Bridge linking Dandong with Shinuiju, the North Korean border city on December 30, 2011. Photo: CFP

"Like the ancient Chinese verse that goes 'a duck knows the coming of springs beforehand,' the so-called 'gray' trade on the border of China and North Korea serves as a thermometer of North Korea's politics and economy," Lin Jun, a merchant from Dandong, a border city of Northeast China's Liaoning Province, told the Global Times. Lin has 12 years of experience in Sino-North Korean border trade.

Since Jang Song-thaek, allegedly the second powerful man in North Korea, was purged in December, the northeast Asian country has released mixed signals toward the outside world: On the one hand, it seems to be toughening its political stance, but on the other, it pledges continued reconciliation with South Korea and further economic development.

The sensitive border trade between the two countries has witnessed dramatic ups and downs during recent months.

"My North Korean partner came by speedboat on December 30, bringing orders from Sakchu, Bakcheon and Pyongyang, demanding all the goods ready by the next day," said a man surnamed Deng, who works for Lin.

"However, the next day he suddenly called to cancel the deals without giving any reason. There was no such precedent, even after North Korea conducted the nuclear test [in February last year]," he said.

Luxury goods

"Two years ago, North Korean people mainly needed cooking oil, rice, garments and second-hand electric appliances," Deng told the Global Times reporter when taking his ship to Sakchu down the Yalu River.

"Nowadays, they will also ask for Apple computers, iPads, cell phones, Japanese washing machines and brand-new fridges, though the consumers of these luxury goods are mostly officials. Even senior officials in Pyongyang are using tablet computers bought from us," Deng said proudly.

Such gray trade between China and North Korea has been an established fact for a long period, Lü Chao, a Korea expert with the Liaoning Academy of Social Sciences, told the Global Times.

He noted that it was quite commonly seen at border areas that people throw a pack over from one side of the border and those on the other side would pick it up and go away on a motorcycle, hence "gray trade" is also known as "bag-throwing trade."

Given the long border between China and North Korea and the common language people living around the border share, it is hard to eliminate such trade, Lü noted.

However, although gray trade was not fully legal, it was indeed a supplement to the North Korean economy and a market always short of goods, especially for people's daily lives, Lü said.

"Those engaged in the border trade are definitely not ordinary people," Cui Mingxuan, a Dandong businessman who has retired from border trade for more than a year, told the Global Times.

Post-purge business

When asked about the influence of Jang's purge, many Chinese businessmen said they didn't pay much attention to the impact of the incident at first. "After all, trade is carried out by those actually involved," a businessman told the Global Times.

But many businessmen admitted that they were too optimistic toward the trade at that time. At the end of every previous December, North Korea would send around 400 government vehicles to Dandong for festival purchasing. However this year, only about 100 cars came.

"I asked some North Koreans and was told that this was due to political sensitivity, not financial reasons," Lin said.

"I once thought Jang's purge would affect us, but never knew it would mean a zero for our business this year."

Deng said that North Korea has apparently tightened control over the border recently.

In addition to forts, new trenches were dug and it is said that two guards a shift stationed there every night. New stone walls were also built along the Yalu River.

Besides, "Troops are also reinforced at the border these days, guarding the second-line. They are probably reinforcing and inspecting the first-line guard troops and also preventing people from defecting," Deng said.

However, people from North Korea still came at times to either send orders or pick up goods.

"When they came, they would ask us to prepare meals and meanwhile they surf on the Internet for reports on North Korea. For instance, after Jang was caught, they came on the same night and asked to read online reports and the comments from Chinese Net users. They paid great attention to reactions from China and said they need to report after going back," Deng said.

Supervision problem

China's border management authorities have taken a series of actions to deal with gray trade between China and North Korea. Dandong government has formulated policies in regulating specific areas where licensed ships can do small-scale transport across the border.

However, in addition to the usual trade of electronic appliances, food and mineral products, serious crimes such as drug smuggling have emerged in Sino-North Korean border trade, creating a source of illegal drugs to China.

A case of drug dealing around Dandong port was caught on December 31, 2013, with 404 grams of methamphetamine seized, according to the Dandong Anti-Smuggling Office. Half a year ago, another drug smuggling case was busted, seizing 139 grams of methamphetamine. According to Lü, the official border trades between China and North Korea, mainly carried out by aides from China, are strictly regulated as well as administered with export licenses so the influence of the regional situation on official trade is limited.

However, Lü said that the gray trade is more sensitive toward North Korean politics and economy. Since North Korea's government has tight control over the border, it is easier for North Korea to regulate the gray trade. In this sense, it can be seen from Pyongyang's control over the border trade where its economy and market are going.

Posted in: Asia in Focus

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