N. Korea’s trade dependency on China to top 80%

By Kim Tae-gyu

North Korea seems to be increasingly dependent on China as the latter is expected to account for more than 80 percent of the former’s international trade in 2010, according to a private think-tank.

LG Economic Research Institute (LGERI), an affiliate of the LG Group, said Sunday that the overly high dependency is feared to bode ill for inter-Korean relations down the road.

``When looking at the trade volume of North Korea over the first seven months of this year, China is projected to take up about 84 percent for 2010, up from 78.4 percent last year,’’ LGERI analyst Yoo Seung-kyung said.

``The rate might rise beyond the 84-percent mark following the meeting between the leaders of the two countries. Such a high rate might not be good for economic cooperation between the two Koreas.’’

Late last month, the North’s reclusive leader Kim Jong-il met with China’s top-ranking officials including President Hu Jintao to discuss bilateral and regional issues.

On top of the succession of the North’s heir apparent Jong-un, Kim’s third son, many Seoul analysts point out that stronger economic collaboration between the two allies would have been one of the top issues.

LGERI said that trade between the two communist regimes has been beefed up amid the North’s diplomatic disputes with neighboring economic powerhouses of South Korea and Japan.

``In the early 2000s, Japan and China were the two biggest trade partners of North Korea, each with about a 20-percent share. However, Japan almost completely cut transactions with Pyongyang thereafter,’’ Yoo said.

``By contrast, China has substantially ratcheted up its economic activity with the North over the first decade of the new millennium in the midst of uncertain situations across the world.’’

LGERI notes that tragedies of the Sept. 11 terrorist attacks on the United States in 2001 and the Cheonan frigate incident are most responsible for the North’s lop-sided reliance on China.

The Cheonan was sunk in the West Sea on March 26 due to an unprovoked torpedo assault as determined by an intensive investigation by a multinational team.

The team concluded that the North was behind the attack, which prompted the Seoul administration to slap a slew of sanctions on North Korea. But Pyongyang adamantly denies its involvement and China has been by and large supportive.

But Yoo said that the ever-strong tie-up between China and the North is not all doom and gloom.

``It’s much better for the North to continue trading with China rather than employ the so-called closed-door policy. At the end of the day, the North would learn the benefits of free markets, industrialization and open-door policies,’’ Yoo said.