[Photo] State companies dive head first into smuggling operations

Seol Song Ah  |  2017-06-23 17:16
As China increases its implementation of UN sanctions targeting North Korea, customs regulations at border checkpoints have tightened, prompting North Korean trading companies to ramp up their smuggling operations. Daily NK reporter Seol Song Ah witnessed some of these operations taking place openly on the banks of the Yalu river. 

The North Korean economy cannot function properly without continuous engagement and trade with China. Materials for manufacturing and products bought wholesale are acquired through Chinese merchants. The countrys supplies of foreign currency are also highly dependent on engagement and exchange with China. Many of the regimes foreign currency-earning operations would cease to exist without their Chinese partners. 
Although North Korea has isolated itself diplomatically by pursuing nuclear and missile development, trade through China remains a lifeline for the Kim regime, making the cross-border relationship essential to the regimes survival. Smuggling has enabled these economic lifelines to remain intact despite sanctions and crackdowns by Chinese customs authorities. While a number of smuggling operations exist in North Hamgyong province near the border region, the practice is far more widespread in North Pyongan province near the Yalu river.

Daily NK [DNK]: Daily NK recently received reports that the authorities are complicit in smuggling operations involving the sale of dried reed leaves to China. Even young students are being recruited for it. Is North Pyongan Province really rife with smuggling? 

Seol Song Ah [Seol]: North Pyongan province is home to downstream elements of the Yalu, which means the water level is deep enough to accommodate large and small ships, and the water eventually flows out to the West Sea. The area is famous for smuggling. Some operations hide their goods inside vehicles. 

A bridge spanning the Yalu connects North Koreas Sinuiju with Chinas Dandong. Together, the two cities serve as one of the most important hubs between the two countries. The connection was initially set up by the Japanese occupiers, who sought an increase in cross-border economic interactions. The area has a rich history of both trade and smuggling. 

In the 1990s, in response to a deep economic depression, the North Korean authorities opened up the border between Sinuiju and Dandong leading to a flurry of trade and smuggling. During times of difficulty, traders in the area revert back to their old smuggling methods to keep the lifelines open. 

DNK: What kinds of residents are involved? How do these ventures compare to legal trading operations? 

Seol: The legal trading operations involve deals created between two entities on either side of the border who engage in documented trade. They go through the standard customs procedures and must pay tariffs. Only those who have explicit permission from the authorities or those who licence such permission are legally permitted to engage in trade. 

Smugglers, on the other hand, pay no tariffs. As an illegal business activity, there are lower barriers to entry, meaning that anyone with the means and the will can get involved. Weve heard from informants that even ordinary housewives sometimes engage in smuggling to earn extra money for their families. The smugglers often use simple means to get across the river; they can either buy a small inner tube from the border guards or rent space on a boat. The mode of transport is determined by the scale of the enterprise. Trading companies move hundreds of tons of merchandise at a time, while ordinary merchants might transport a few hundred kilos.      
Although, smuggling can be a dangerous method to earn money over the long term, it is attractive in the short term because even merchants without much capital can profit quickly. 

DNK: How do the smugglers evade detection? 
Seol: Before I get into that, it might be helpful to explain how ordinary trading works. Customs offices are open along the border from 10am until 5pm. However, you can sometimes see North Korean trucks coming across the bridge until 9pm. These trucks are inspected at a warehouse and cleared through customs procedures before 5pm. There are hundreds of trucks waiting to cross, and sometimes a line-up forms, delaying the journey.  

For smugglers, however, there is no distinction between night and day. Smuggling goes on 24 hours a day, especially during times when it is difficult to trade legally. Smugglers ships have been going across the river between Sinuiju and Dandong night and day recently. Because smuggling is subject to similar economic principles as ordinary trade, the early merchant can sometimes get a better price for their wares. So the North Korean foreign currency-earning companies are quite busy," an inside source recently told Daily NK.
Both North Korean trading companies and merchants are telling their Chinese counterparts, Lets increase the volume of smuggled products. This is the exact opposite of the old dynamic, where Chinese merchants use to make the same request to their North Korean counterparts."

DNK: Can you provide some details about the nature of these smuggling operations? 

Seol: Just a few days ago I saw a North Korean smuggling ship pull into Dandong, China, on the Yalu river. I found out that they were there to offload shrimp and other types of seafood. I assume that they fish in the Yalu and then sell the catch in China. The boat in question was crewed by 7 or 8 females in their twenties. Watching these women delicately pass over heavy bags to their Chinese counterparts was equally impressive and sad. 
If they were in South Korea, these pretty young women would be studying at university or preparing for a career. By turn of fate, they have been thrust into a world where smuggling represents the best opportunity for them. If they attain success, they could become a member of the donju (newly-affluent middle class). 

Its a little surprising to see smuggling occur during the daytime. The increased scale and frequency is no doubt due to Chinese officials implementing tough provisions as part of the international sanctions regime, but smugglers have been coming to Dandong for a long time. 

DNK: It seems as if China is able to crack down on trade conducted through customs, but is unable to control the widespread smuggling operations that persist despite sanctions. Is that correct? 

Seol: The trading companies are really in a bind these days because North Korean products are being restricted by the customs office in Dandong. Starting from a few days ago, theyve begun to tightly restrict the entry of fishing boats on the Yalu River. As per usual, the passage of boats at night is being controlled, but now, in an unprecedented move, these restrictions are also being applied during the daytime. 

When asked about this, an inside North Korean source said, Rumors are swirling that Chinese central cadres came to Dandong and tightened up security, but we dont know the real story. Its rare to see the Chinese government strictly controlling North Korean fishing boats like this.  
Both large and small boats are being inspected and fines imposed. You cant see a Chinese boat on the Yalu over the course of a week. Thats why its easy to spot North Korean boats conducting smuggling operations in the middle of the day, selling seafood and other goods to their counterparts in China, the source added.

*Edited by Lee Farrand

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