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North Korea sanctions

Do luxury food imports point to a stronger North Korean economy?

Chinese customs data shows increased demand from the reclusive state for chocolate and alcohol

PUBLISHED : Friday, 15 September, 2017, 9:27pm
UPDATED : Friday, 15 September, 2017, 11:26pm

China’s exports of chocolate and alcohol to North Korea surged in the first two quarters of the year, which analysts say indicates the economy of the reclusive state is doing better than expected.

The communist nation last year notched up its strongest economic growth in 17 years. Its per capita gross national income is only about 5 per cent of South Korea’s, but a series of economic reforms launched by Kim Jong-un giving more recognition to the market economy have boosted the nation’s development.

North Korea has traditionally been reliant on China for essentials such as food, especially staples, but Chinese customs data has revealed that its demand for other food items is on the rise.

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China exported 93.8 tonnes of chocolate – worth US$253,583 – to North Korea in the first quarter of 2016, according to the official figures.

But in the first quarter this year, it went up 1.8 times to 167.9 tonnes of chocolate – worth US$397,708.

A thirst for beer was also shown in the data, with the export volume at 3.4 million litres in the first half of 2016 – worth US$1.6 million.

That increased to 12 million litres in the first half of this year – with a value of US$5.23 million.

Exports of strong liquor, with 80 per cent alcohol or above, also increased sharply – from 4 million litres in the first half of 2016, valued at US$2.52 million, to 15.6 million litres in the first half of this year, worth US$7.54 million.

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Analysts said that despite the United Nations Security Council imposing tougher sanctions on Pyongyang over its nuclear weapons programme, the regime was continuing with its testing – and it was also continuing to develop economically under reforms brought in by Kim.

North Korea fired another intermediate-range ballistic missile that flew over Japan before landing in the northern Pacific Ocean on Friday, after its sixth nuclear test triggered a new round of UN sanctions on Monday.

The nation’s economy grew in 2016 at the fastest pace since 1999, with gross domestic product expanding 3.9 per cent from the previous year, helped by its recovery from a drought in 2015, according to an estimate from the Bank of Korea in July.

Although military spending – including on testing nuclear weapons and missiles – has raised tensions in the region, it has also helped to boost growth as component manufacturing is included in the calculation, the report said.

Soon after Kim took power in 2014, Pyongyang began a programme to invigorate its economy by giving more control and personal rewards to key sectors of the workforce. Some of the measures included giving managers the power to set salaries and fire employees.

Some state-run and state-owned farms have reportedly been disbanded in recent years, while family farms have become the nation’s major agricultural production unit.

Tens of thousands of new homes were built in 2016, Pyongyang’s official Korean Central News Agency reported in December.

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Sun Xingjie, a Korean affairs expert at Jilin University, said the North’s GDP growth suggested its economic reform policies were slowly having an effect.

“Kim has reportedly enforced some reforms to make the economy more market-driven, and the growth in GDP is a reflection that his policies are really starting to work – although we don’t have the concrete details,” he said. “The planned economy in North Korea has loosened and every individual has been encouraged to some extent to follow the market needs.”

Lee Kyu-tae, a geopolitical analyst at South Korea’s Catholic Kwandong University, echoed Sun’s view, saying the developing free market was the main economic driver.

“The government has introduced some economic reforms and selling is now freer than before – and that has become the catalyst driving economic development,” Lee said.