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North Korea, China talk trade

Scott Tong Oct 5, 2009

North Korea, China talk trade

Scott Tong Oct 5, 2009


Bob Moon: China dangled some carrots in front of North Korea today in hopes of bringing Kim Jong-iI back to the nuclear negotiating table. Chinese premier Wen Jiabao signed a series of economic deals to increase trade between the two countries. The gateway for that commerce is the Chinese city of Dandong, a place we’re guessing you’ve never heard of, which is why we sent our Scott Tong there. Because what happens at that border crossing affects North Korea’s willingness to bargain with the rest of the world. Hello, Scott.

SCOTT TONG: Hello, Bob.

Moon: Paint us a picture of Dandong, what’s the scene there?

TONG: It’s basically a tale of two countries. We’re on either side of the Yalu River. And I’ve been spending today on the China side. Today I was with my bureau colleague and assistant Cecilia Chen. And we hung out at an American style coffee shop, on the wealthy China side, and we had root beer. Just down the street from a five-star hotel, and there’s a golf course not far away. Across the Yalu River is basically the ghost of China’s past. Locals here say North Korea is basically where China was 30 years, which is economically nowhere. Which means North Korea needs almost everything, and China sends a lot of it across. I had dinner with a Chinese exporter who was pumped up because today in Pyung Yang they announced that China and North Korea are going to build a bigger, wider bridge across the river so more stuff and bigger trucks can head over to North Korea from China.

Moon: And what’s in those trucks? What’s China sending over?

TONG: Well, I peeked at the place where they load the trucks in the morning. And basically, it’s the stuff you see at Home Depot, Bob. Toilet seats, refrigerators, steel pipes, insulation. Everyday stuff presumably for some of the regular people there. And then you have the elites. I went to another customs area where they are selling Scotch, Swiss army knives, Chanel cosmetics, cigarettes, and get this Bob, Timex watches. I thought I was the only one in these parts with a Timex, but apparently it’s a preferred item among the brass in Pyung Yang.

Moon: They just keep going and going. I’m scratching my head, though, Scott. Isn’t the world supposed to be punishing North Korea for misbehaving right now. Just today, South Korea intercepted some North Korean ships with suspicious cargo, so how does this Chinese trade fit in?

TONG: Well, in China’s defense these everyday goods that are going across are not covered by the sanctions. I mean, the luxury stuff is open to dispute. But if you think about carrots and sticks in dealing with North Korea and this nuclear question, China has taken the economic engagement route to try to cajole them the good cop way to do the right thing. And who knows in the next few days we may get more announcements on the six-party talks eventually resuming. But I can tell you in this city the feeling is that China is going to keep trading with North Korea because a whole lot of middle men with a lot of money to make think it’s going to keep going, Bob.

Moon: But why should we believe the Chinese won’t just pull the plug? They assume that Beijing will go soft on Pyung Yang?

TONG: Well, from time to time, analysts say China does get miffed with North Korea, but basically all it does is give kinda brief economic timeouts. You know, go to your room kinda of thing. I mean once China set over railcars with a butch of stuff to North Korea, and the North Koreans didn’t send back the empty railcars. So China got unhappy, and they closed the train border for a little bit. But fundamentally the conventional wisdom here is China doesn’t want to make North Korea implode politically, because bad things can happen from Beijing’s perspective. It could create a refugee crisis on the border. If North Korea goes away suddenly, a lot of U.S. troops that are on the Korean DMZ suddenly can come up right to the border. China didn’t like that scenario in the 50s, during the Korean war, they don’t want it now, which is why they’re taking the trade route for the foreseeable future, Bob.

Moon: So for the foreseeable future the trucks are going to keep rolling.

TONG: Well, we’re $2 billion a year in Chinese exports to North Korea, and most people think that number is going to keep going up.

Moon: Marketplace’s Scott Tong is in the Chinese border city Dandong. Thank you for joining us.

TONG: All right, Bob. Thank you.

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