Where does North Korea's money come from
President Trump has said he is prepared to deal with the growing nuclear threat coming from North Korea, with or without China's help. But the experts are categorical that the Chinese will be needed in this, especially if the money flow to Pyongyang is to be effectively inerrupted. Because it is China that is the main economic supporter of North Korea, making up 80% of their trade balance.
America and her allies have been trying for years to curb the money flow to NK and isolate the country from the global banking system. But this cannot happen without China. Here are the main sources of income for Kim Jong Un and his regime...
1. Coal. The largest portion of NK's trade income is from the millions of tons of coal that the country sells to China every year. It makes 1/3 of the exports. These incomes were put in question when China announced they would be stopping coal imports from North Korea by the end of the year. But the experts believe that China's threats are mostly words in the air. Actually China has no interest in collapsing the economy of their rogue neighbour, which is a convenient buffer between China and South Korea, a key US ally. The traders on both sides know very well how to bypass restrictions and sanctions, so no one is particularly concerned about cutting the economic ties between the two countries, especially in coal trade. By the way, North Korea also exports other goods to China - like iron ore, sea food and clothes.
2. Reserves. Even if China decides to tighten the rules of bilateral trade, North Korea is believed to have reserve funds from the many years of consistent income from coal trade. The international observers believe NK holds huge amounts of money inside Chinese banks, which the regime can use for buying arms, developing its nuclear program, etc. By keeping their money in China, NK can more easily bypass sanctions and keep itself from being blocked from the global financial system. Besides, it is believed that NK is using a network of companies to main access to the world financial system.
3. Cyber attacks. Since last year, another source of money for the NK regime has been revealed: hacking banks. The country is linked to attacks against financial institutions in 18 countries. Last year the global media widely covered a cyber attack on the central bank of Bangladesh. The same North Korean software has also been used in Costa Rica, Poland and Nigeria.
4. Selling labour force. While the North Korean elite in the capital lives in opulence, most citizens barely make ends meet, and they are subjected to frequent periods of starvation. North Korea is one of the most introvert economies in the world, but the regime still manages to make money out of their subjects. One way is by sending thousands of North Korean workers abroad, where they are forced to work in unbearable conditions in places like China, Russia and the Middle East. It is believed these people work in mining, logging, construction, the textile industry, etc. The regime also squeezes money out of its own citizens through a system of state-owned shops, where imported goods such as mobile phones and other gadgets are sold.
Short of mere posturing for the sake of appearing decisive and manly, Trump and his administration would be able to achieve nothing against North Korea, unless they work to interrupt these sources of income for the regime first. And China is a key factor in that respect that cannot be bypassed, regardless of the president's bold statements and hints of unilateral action.
America and her allies have been trying for years to curb the money flow to NK and isolate the country from the global banking system. But this cannot happen without China. Here are the main sources of income for Kim Jong Un and his regime...
1. Coal. The largest portion of NK's trade income is from the millions of tons of coal that the country sells to China every year. It makes 1/3 of the exports. These incomes were put in question when China announced they would be stopping coal imports from North Korea by the end of the year. But the experts believe that China's threats are mostly words in the air. Actually China has no interest in collapsing the economy of their rogue neighbour, which is a convenient buffer between China and South Korea, a key US ally. The traders on both sides know very well how to bypass restrictions and sanctions, so no one is particularly concerned about cutting the economic ties between the two countries, especially in coal trade. By the way, North Korea also exports other goods to China - like iron ore, sea food and clothes.
2. Reserves. Even if China decides to tighten the rules of bilateral trade, North Korea is believed to have reserve funds from the many years of consistent income from coal trade. The international observers believe NK holds huge amounts of money inside Chinese banks, which the regime can use for buying arms, developing its nuclear program, etc. By keeping their money in China, NK can more easily bypass sanctions and keep itself from being blocked from the global financial system. Besides, it is believed that NK is using a network of companies to main access to the world financial system.
3. Cyber attacks. Since last year, another source of money for the NK regime has been revealed: hacking banks. The country is linked to attacks against financial institutions in 18 countries. Last year the global media widely covered a cyber attack on the central bank of Bangladesh. The same North Korean software has also been used in Costa Rica, Poland and Nigeria.
4. Selling labour force. While the North Korean elite in the capital lives in opulence, most citizens barely make ends meet, and they are subjected to frequent periods of starvation. North Korea is one of the most introvert economies in the world, but the regime still manages to make money out of their subjects. One way is by sending thousands of North Korean workers abroad, where they are forced to work in unbearable conditions in places like China, Russia and the Middle East. It is believed these people work in mining, logging, construction, the textile industry, etc. The regime also squeezes money out of its own citizens through a system of state-owned shops, where imported goods such as mobile phones and other gadgets are sold.
Short of mere posturing for the sake of appearing decisive and manly, Trump and his administration would be able to achieve nothing against North Korea, unless they work to interrupt these sources of income for the regime first. And China is a key factor in that respect that cannot be bypassed, regardless of the president's bold statements and hints of unilateral action.