- (Analysis) DPRK-Russia-China Economic Triangle - November 8, 2023
- (REPORT) Italy and the BRI: in the Shadow of Sino-American Competition and Balancing National Interest - October 27, 2023
Russia, China, and DPRK Flags. Source: CGTN
Amid Sino-American power competition, there has been a recognizable shift towards bipolarity. Groupings along the fault lines of the Washington and Beijing consensus have been forming. Greater alignment between the Republic of Korea and Japan, the Philippine’s exit from Belt and Road Initiative (BRI), Italy’s possible exit, and the EU’s de-risking approach vis-à-vis China show one side of the coin. On the other hand, recent developments in trilateral and bilateral relations involving the Democratic People’s Republic of Korea (DPRK), the People’s Republic of China (PRC), and the Russian Federation signal a significant shift towards greater long-term trilateral economic alignment.
The DPRK’s gradual easing of border restrictions, first imposed in response to the COVID-19 pandemic that emerged in early 2020, has garnered notable attention in recent months. This gradual reopening began with the reception of Chinese and Russian delegations in Pyongyang last July during the commemoration of the 70th anniversary of the Armistice Agreement. The implications of this easing of restrictions are especially pertinent for the DPRK’s immediate neighbors and allies, primarily the PRC and Russia.
Notably, Chinese state media reported that the DPRK would reopen its borders to foreign nationals for the first time since the pandemic on September 25th. According to CCTV, Pyongyang authorities would permit foreigners to enter the country following a two-day quarantine period upon arrival. While DPRK state media had not yet officially reported this development, it underscored a fundamental shift in the DPRK’s approach to safeguarding its national interests, with a continued focus on national security and self-sufficiency, albeit with a pragmatic outlook on how to engage its neighbors on its own terms, drawing on the lessons learned from the pandemic.
The initial decision to implement a strict “iron curtain” around North Korea was a rational choice to protect the nation’s susceptible healthcare system from being overwhelmed. Over time, the rationality behind these decisions warped into irrational paranoia. However, the leadership in Pyongyang, after rationalizing and taking stock of the mistakes and gains of its policies, appears to have recognized the “advantages” of COVID-19 protection measures. In other words, the DPRK, more separated than ever from the rest of the world by both sanctions and pandemic emergency measures for almost 5 years, is attempting to return to a new stable equilibrium for self-sufficiency, drawing on the lessons from the pandemic to reengage its neighbors on its own terms. As a result, Pyongyang is positioning itself to pursue deeper economic cooperation with both Moscow and Beijing, with a preference for continued limited interaction with the wider international community. Examining the infrastructure developed along the borders with Russia and the PRC during the pandemic, it appears that the DPRK may repurpose much of it to support the advancement of a more sophisticated trade infrastructure with Beijing and Moscow.
The decision to label Russia as the DPRK’s “top priority” is intended to mitigate overdependence on the PRC and counter the U.S. strategy of maximum pressure. There has been a discernible shift in the narrative pre- and post-pandemic within the international community regarding the enforcement of sanctions. The reputational damage of bypassing sanctions currently seems minimal on both the international and bilateral fronts for both Russia and the PRC. However, there is a distinction to be made between Russia’s and the PRC’s positions. While fundamentally behaving in a similar manner, namely vetoing sanctions at the UN and pursuing backdoor deals to bypass sanctions, Beijing does so in a much less overt manner as opposed to Moscow. While Russia has an already tarnished reputation due to the War in Ukraine, the PRC still wants to maintain a semblance of legitimacy and retain its renown as a supporter of multilateral institutions.
The DPRK has devised over the years multiple methods—hard-currency generation, restricted and dual-use technology acquisition, covert transport, and covert finance—to circumvent the wide array of both bilateral and multilateral sanctions it is under and has depended on a very meager list of partners to do so, most notably the PRC and Russia. Particularly given the already strained states of both Sino-American and Russo-American relations, any engagement with the DPRK is unlikely to meaningfully exacerbate the situation further. Additionally, both Russia and the PRC have, throughout the pandemic, made a point of stressing the absence of nuclear tests and the compounding impacts on the DPRK’s economy and populace from both the lockdowns and sanctions regime. Given the above, the UNSC sanctions imposed on the DPRK since 2006, peaking in pressure in 2017, have been rendered thoroughly ineffective.
All of this comes amid a shift in international attention, with the global focus shifting to crises such as Cross-Strait tensions, the Ukraine War, and the Israel-Palestine conflict. The PRC and Russian re-engagement with the DPRK will thus provide the latter with a larger platform on the international stage, thereby undermining the already crumbling effectiveness of maximum pressure and internationally enforced isolation strategies. This underscores the accuracy of earlier assessments that maximum pressure was a flawed approach.
However, despite the possibility of renewed international focus, the DPRK has realized that the International Community’s strategic attention span is likely to diminish further, regardless of any leverage it gains through these interactions. Consequently, forging closer ties with traditional partners like Russia and the PRC is a long-term strategy aimed at weathering periods of reduced interest from the U.S. and the international community. Therefore, this approach will help the DPRK avoid having to engage with the ROK, irrespective of the administration in power in Seoul, while maintaining North Korea’s focus on military development and amassing more leverage given Washington’s and Seoul’s passive policy approaches.
Deeper economic cooperation with China and Russia will thus prove to be highly advantageous for the DPRK. Despite the unprecedented economic challenges, increased economic interactions will further enhance the DPRK’s self-sufficiency, reducing its reliance on the rest of the international community and allowing Pyongyang to choose the actors it will engage. In such a scenario, the DPRK’s pursuit of self-sufficiency will be partially dependent on the PRC and Russia, as it has always been. While joint economic endeavors would deepen economic interdependency, the DPRK maintains a degree of freedom of choice vis-à-vis the partners it will engage. Additionally, in the current global geopolitical environment, worsening ties between the major world powers put the DPRK in a somewhat privileged position, wherein it is a necessary pawn in this hegemonic competition while maintaining a degree of independence and unassailability due to its nuclear arsenal.
Contemporary State of DPRK-Russia-PRC Economic Relations
During a confidential briefing to lawmakers, South Korea’s National Intelligence Service revealed a concerning trend of annual economic contraction in the DPRK throughout the years 2020–2022. In response to these difficulties, it appears that the DPRK is taking measures to gradually repair and reinvigorate its beleaguered economy. A significant part of this restorative strategy seems to involve capitalizing on the lessons learned from the pandemic, building upon the earlier revision of trade laws, and implementing measures to assert control while simultaneously expanding trade activities with the PRC and Russia.
As briefly noted in the first few lines of this analysis, this alignment is symptomatic of a return to great power politics and bipolarity. Recognized as a “pacing threat” and identified as a second pole in the international system, China has adapted to this emerging global structure. While Chinese revisionism in the military sphere would be conducted through conflict over Taiwan, the majority of the competition with the United States would unfold in the economic arena. On the other hand, Russia, while not a peer of the U.S., can still be understood as a power with both revisionist aspirations and capabilities, as shown by the protracted conflict in Ukraine and Moscow’s resilience vis-à-vis international sanctions. By strengthening their respective relations with the DPRK and deepening trilateral cooperation, Beijing, Moscow, and Pyongyang are constructing a long-lasting sphere of influence, injecting a fragmenting impulse into the existing international system.
In recent years, relations between Beijing and Pyongyang have witnessed a remarkable upturn. Both have made commitments to enhance their coordination while sharing their collective dissatisfaction with the U.S., its allies, and the policy of maximum pressure. Overall, trade still lags behind the levels observed before the border closure by roughly 30%, based on figures from Beijing’s General Administration of Customs. However, the PRC’s trade volume with the DPRK has recently seen an uptick, reaching $216.53 million in September and totaling $1.63 billion for the first three quarters of 2023.
The DPRK’s relations with Russia are currently experiencing their most significant upswing since the Cold War era. Notably, on September 13, Kim Jong Un held a summit with Russian President Vladimir Putin, during which discussions likely revolved around the expansion of North Korean weapons exports to Russia. It has been reported that the DPRK has already delivered a significant number of containers, believed to contain weapons and ammunition, to support Russia during the Ukraine war. The RUSI reports that the DPRK has supplied Russia with ammunition at least five times since August 2023. South Korean authorities have also confirmed the dispatch of at least three hundred thousand rounds of artillery ammunition to Russia since August 2023.
Economically, an expanded arms trade relationship with Russia would be a significant boon for the DPRK, beyond merely offloading existing inventory to Russia. Increased arms sales to Russia are a potential and initial catalyst for economic growth through heightened consumption and access to foreign currency to exchange for goods. However, the isolated position of the military industry within the broader economic structure may limit the scope of these gains, rendering this a short-term remedy. In the long term, the economic benefits for the DPRK are likely to remain constrained. Once Russia’s involvement in Ukraine subsides or ceases, the demand for North Korean weapons is expected to decline rapidly, mirroring the swift rise. On the other hand, the collaborative trade initiatives undertaken at this juncture aim to instigate broader economic cooperation and provide an initial infusion of funds into the DPRK’s border infrastructure and overland trade networks, particularly those directed towards mining and trade facilitation.
Reimagining COVID-19 Infrastructure and Exploring New Economic Avenues
As acknowledged by Kim Jong Un himself, the pandemic pushed the DPRK into very difficult straits. To weather these damages and the International Community’s disinterest, the DPRK has inched closer to the PRC and Russia. Against this backdrop, the DPRK’s current policies seem to be directed at the creation of ventures similar to past inter-Korean attempts at cross-border cooperation.
The DPRK might build upon the lessons learned from the Kaesong Industrial Complex and the Keumgangsan Diamond Mountain Project to establish joint cross-border economic “parks” for tourism and other trade-focused ventures. The fences, guard posts, patrol roads, and other infrastructure built or upgraded along the border with Russia and the PRC can be repurposed toward these objectives to serve increased cross-border trade activity.
The infrastructure built during COVID-19 for stocking and quarantine purposes is thus a primary indicator for gauging and understanding the scope of trilateral or bilateral cooperation. For instance, the Uiju Quarantine Facility, formerly Uiju Airfield, is a complex subdivided into five distinct zones, each of which likely serves as a designated area for loading and unloading cargo. The Uiju compound is already integrated into the road and rail system of northwestern DPRK and China, from Dandong to Sinuiju to Pyongyang and other areas.
The DPRK’s mining sector is another major avenue for future cooperation. The DPRK has sizable deposits of minerals—reportedly circa 200 types—that are distributed all over its territory. Under UN-imposed sanctions as of 2016, the DPRK is forbidden from selling gold, titanium, vanadium, and rare earth. However, with sanctions enforcement steadily failing, this obstacle might be fading, and the DPRK might be willing to explore all available avenues of economic cooperation.
Worth noting is the discussion that took place on October 19, 2023, between Russia’s Minister of Foreign Affairs, Sergei Lavrov, and his DPRK counterpart, Choe Son Hui, in Pyongyang. The two discussed prospects of bilateral collaboration and, most notably, agreed to re-convene in November as part of an intergovernmental commission to discuss “geological exploration and plans to supply energy and other goods.” As far as China is concerned, North Korean exports of minerals, such as tungsten, molybdenum, and compounds of metal and carbon, have seen a remarkable increase since 2022. Already in 2019, there were reports of Chinese interest in investing in North Korea’s mining sector. Specifically, the DPRK would have granted the PRC access to one of its rare earth mines in exchange for investment in solar energy.
Special attention should be paid to the northeastern provinces of the DPRK bordering both Russia and the PRC, primarily Hamnam (South Hamgyong Province). This region is mineral-rich but extremely vulnerable to extreme weather events, with limited and underdeveloped infrastructure for both transport and energy provision. However, the pandemic-induced reorientation of state resources towards domestic projects reversed this trend partially. Thus, given the region’s untapped potential, the mining sector holds a prime position in realizing the DPRK’s objective of post-COVID reconstruction and long-term economic growth. While it remains dangerous to invest in the DPRK, both Chinese and Russian companies have been doing so for decades before the pandemic. The mine complexes in this region—Sangnong, Geomdeok, Musan, Deaheung, and Jeongchon—hold reserves of zinc, lead, magnesite, iron ore, graphite, and rare earth elements (REEs) and offer a substantial source of state revenue for the DPRK.
These minerals play diverse and crucial roles across various sectors in both China and Russia. Zinc, widely used for galvanizing and creating alloys, serves as a cornerstone in the industrial sector, while its oxide finds applications in batteries, pharmaceuticals, plastics, and electrical equipment. Lead, with its applications in construction, cable sheathing, and lead-acid batteries, is a versatile resource essential in industrial and commercial contexts. Military applications of zinc and lead include their use in ammunition and radiation protection. Magnesite, primarily a refractory material, serves the industrial sector well, finding applications in high-temperature settings such as furnace linings and kilns. Additionally, it is utilized in the production of fertilizers and magnesium compounds. Iron ore, an industrial workhorse, is the key ingredient for steel production and is used in construction, infrastructure development, and the manufacturing of machinery. Iron and steel, derived from this resource, are integral to a wide array of consumer goods. Graphite, essential for refractory materials and lubricants, plays a pivotal role in industrial applications. Its military significance extends to aircraft and missile components, highlighting its role in military technologies. Rare earth elements (REEs) are indispensable for the electronics industry, finding application in smartphones, computers, and high-tech devices. Their significance is also prominent in military applications, including missile guidance systems, advanced radar technologies, and the aerospace industry, making REEs a valuable resource across the spectrum.
Therefore, focusing on the existing mining complexes spread throughout this region and building onto the investment and infrastructure established during COVID-19, the DPRK could expand rail and road connections to additional ports and distribution hubs, among others, Nampo Port or the Rason Special Economic Zone. This network, aimed at facilitating cross-border trade, both land and sea-based, would connect known cross-border hubs such as the cities of Hoeryung, Khasan, and Tumen to the aforementioned ports in the DPRK and to both Russia and the PRC, integrating with the Trans-Siberian Railway (Rason) and the port of Vladivostok, to name a few.
Future Prospects for Trilateral Relations and Engagement with the DPRK
DPRK cross-border collaboration with both the PRC and Russia is set to increase over time for both trade and assistance in addressing pressing issues, including food shortages. COVID-19 has given the DPRK the time to establish stronger border controls and better facilities for goods stocking and processing. While tourism, traditional trade avenues, and even arms sales between the three countries are poised to return and continue in order to bring respite to the beleaguered DPRK economy, the mining sector should be a focus of analysis going forward.
South Hamgyong Province holds enormous resources and earning potential for the DPRK. However, it is important to note that nearly all the mines in the region, due to geological configurations, underdevelopment, and mismanagement of resources and infrastructure, face multiple issues. Going forward, the DPRK will need to increase investment in engineering, infrastructure, equipment, and, additionally, energy provision, given the poor state of the country’s grids.
The achievement of these infrastructural changes will require time and copious amounts of investment. Mining is undertaken on long-time horizons; while it might be viable for potential investors to sink capital in these projects now, they might be forced at a later time to let them go due to international pressure or sanctions. However, the current direction of global affairs seems to point to a gradual and unstoppable division along the Washington and Beijing consensi. This entails a further degradation in relations between the two forming blocs of alliances and like-minded partners undermining the sanctions regime and making actions that go against the American-led order a more frequent occurrence.
Currently, time seems to be on the DPRK’s side. On the one hand, the asymmetrical commercial relationship between the DPRK and Russia, wherein the former retains the majority of leverage, given Russia’s damaged reputation and the isolation resulting from the invasion of Ukraine. Additionally, Pyongyang is currently the only supplier that could offer a steady supply of compatible ammunition. On the other hand, the PRC’s support, which will be sustained in the long term given Beijing’s need for an anti-American system of alliances, puts the DPRK in a fairly advantageous position. Investment in infrastructure, therefore, could be achieved through cooperative policies with Russia and the PRC, offering a viable path for addressing the DPRK’s energy needs and further developing its mining sector.
Such a scenario would further entrench the DPRK in its isolationist and autarkic policies. Pyongyang will continue to increase its leverage vis-à-vis Washington and Seoul, not needing to engage in de-escalatory negotiations. The DPRK economy will likely witness short- and medium-term monetary injections thanks to its arms deals with Russia. Additionally, both Moscow and Beijing will continue to support the DPRK within the UN system, vetoing further sanctions and providing aid under the aegis of humanitarian assistance and post-pandemic reconstruction. Therefore, the DPRK will become progressively less inclined to engage with the international community and will gain more leverage when in discussion with International Organizations and NGOs, possibly deeming their involvement in the country as unnecessary.