China’s Sneaky Trade with North Korea: Importing Tech Minerals, Exporting Banned Goods

Analysis of data from China’s General Administration of Customs from January to October
Five out of the top ten imported items are key minerals and materials
Significant exports to North Korea including industrial machinery and steel, items violating sanctions
RAND Corporation: “North Korea’s mineral sales aim to secure hard currency”

China has been actively importing key minerals related to semiconductors and electric vehicle batteries from North Korea over the past two years. Conversely, it has begun exporting goods sanctioned by the United Nations Security Council to North Korea this year.

Increase in Mineral and Material Import

An analysis of data released by China’s General Administration of Customs revealed that five of the top ten products (by trade value) imported from North Korea from January to October are key minerals and materials related to semiconductors or batteries.

In order of import volume, these include ferrosilicon (with a silicon content of 55% or more), tungsten ore and concentrates, molybdenum ore and concentrates (excluding roasting), silicon carbide, graphite, and carbon-based products.

Ferrosilicon, a crucial alloy in producing pure silicon essential for semiconductor manufacturing, represented a significant portion of Chinese imports from North Korea, totaling 181.53 million yuan (around $28.3 million). This positioned it as the second-highest import from North Korea. Additionally, tungsten ore and concentrates, vital for battery production, recorded imports worth 151.92 million yuan, making it the third-largest import. The previous year, tungsten and ferrosilicon were the top two imports. Other essential minerals for the semiconductor and battery industries, such as silicon carbide and graphite, also play a significant role in trade.

China, which only bought a small amount of ferrosilicon and silicon carbide in 2021, has generally expanded the scale of mineral and material imports since last year. Imports have significantly increased even compared to 2019, before the COVID-19 pandemic.

Export of Sanctioned Items to North Korea

On the other hand, China started selling items sanctioned by the UN Security Council to North Korea this year, which it had not exported until last year. These include reactors, boilers, machinery, motors or electrical equipment, aluminum, steel, etc., all included in UN Security Council Resolution 2397. The UN Security Council adopted Resolution 2397 as its latest agenda in 2017.

The Security Council specified in the resolution that “all member states are prohibited from directly or indirectly supplying, selling, or transferring all industrial machinery (HS codes 84, 85) and transport vehicles (86-89), iron, steel, and other metals (72-83) to North Korea.”

Last year, these items saw zero exports from China to North Korea, but this year, their trade ranged from several hundred thousand yuan to over 6 million yuan.

In an interview with Bruce Bennett, a senior researcher at the RAND Corporation in the U.S., shared his insights on North Korea’s economic strategies. He noted that North Korea’s mineral exports align with its broader efforts to acquire hard currency, a tactic that he believes China is aware of. Bennett also raised the possibility that North Korea might be receiving items sanctioned by the UN Security Council, attributing this to China’s lax enforcement of sanctions and additional support to North Korea.

However, Bennett mentioned North Korea’s apparent interest in manufacturing high-quality electronic products. He expressed uncertainty regarding China’s willingness to aid North Korea’s nuclear weapons development through such trade, suggesting that the intentions and extent of China’s support in this realm remain unclear.

By. Ko Dae Young