Trade still robust on N Korea's other border

A Chinese paramilitary policeman stands guard as a truck with a North Korea license plate drives on the Friendship Bridge over the Yalu River which connects North Korea's Sinuiju to China's Dandong on April 12, 2013.

DANDONG - China has stepped up checks on shipments to and from North Korea almost two months after agreeing to new United Nations sanctions that demand greater scrutiny of trade, but the flow of goods in and out of the reclusive state appears largely unaffected.

The sanctions were imposed after North Korea's third nuclear test on Feb 12. China has said it wants the measures enforced, but few analysts believe Beijing will take steps that hurt North Korea as it is committed to a policy of engagement.

The sanctions, on top of those agreed after previous nuclear tests, target the North's attempts to ship and receive cargo related to its banned nuclear and missile programmes, aim to stop the flow of luxury goods to North Korea's elite and tighten financial curbs, including the illicit transfer of bulk cash.

Reuters spoke to more than a dozen Chinese trading firms that do business with North Korea, mostly based in China's border city of Dandong through which as much as 80 per cent of the bilateral trade is conducted, and also in the port city of Dalian. The companies are involved in goods ranging from non-ferrous metals and car parts to clothing and food.

About half said they had noticed customs authorities taking a closer look at shipments since the sanctions were put in place, though others said trade with North Korea was generally always more tightly monitored than with other countries.

"Look at all the trucks out there and you tell me if trade has slowed," said trader Liu Mingjin, pointing to a long line of Chinese and North Korean trucks queuing at Dandong's run-down border post.

"Customs may be taking a closer interest, but there's no impact on trade whatsoever," added Liu, who imports ginseng and exports pretty much anything North Korea wants, including building materials.

That suggests that while China is expressing its growing frustration with Pyongyang and its recent threats to wage war on Seoul and Washington, it still believes in its right to conduct normal trade with North Korea.

Why China Won't Cut Off N.Korea Completely

China is the main way luxury goods get to North Korea. The March 7 resolution gave examples of some items North Korea could not import, from yachts and racing cars to luxury automobiles and several types of gems and jewellery.

China also supplies virtually all of North Korea's external energy needs - crude oil, diesel and jet fuel - much of it in the form of off-the-books aid.

To be sure, there have been calls in China to punish North Korea by limiting or even removing trade and aid, led by influential tabloid the Global Times, published by the Communist Party's official newspaper the People's Daily.

Chinese have also taken to Sina Weibo, the country's answer to Twitter, to denounce North Korea's young leader Kim Jong-un for his warmongering, lampooning him as "Fatty Kim".

But China will not cut North Korea off completely.

The country is a useful buffer from US troops stationed in South Korea, and Japan. And if China turned the screws too much then North Korea could collapse - Beijing's ultimate nightmare scenario.

Not only would that release a flood of refugees into north-eastern China, it would also raise the question of what would happen to North Korea's nuclear material.

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