Asia politics: Quick View - China restricts crude oil exports to North Korea
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- Country Data and Maps
- Economist Intelligence Unit
- No abstract is available.
- International Relations, Politics, News Analysis, Forecast
- Political Geography
- China, South Korea, North Korea
On January 6th China began enforcing new sanctions limiting exports of crude and refined petroleum products to North Korea.
The measures, announced by China's Ministry of Commerce and the General Administration of Customs, are in line with sanctions imposed by the UN in late December 2017. The newest UN sanctions cap exports of refined petroleum products to North Korea at 500,000 barrels, down from the cap of 2m barrels adopted in September. Importantly, the fresh sanctions expanded export restrictions to include crude petroleum products, capped at 4m barrels (or 525,000 tonnes) annually. The previous sanctions allowed countries to export the same amount of crude petroleum products as they had exported to North Korea in the year before the September resolution was adopted.
The tougher measures on crude petroleum products, which are estimated to constitute the bulk of China's petroleum exports to North Korea, indicate the UN's greater willingness to target real pain points in the North Korean economy. However, the latest measures are likely to have only a moderate impact on the China-North Korea trading relationship: although China has not published official statistics on its energy exports to North Korea for several years, industry sources report that it ships around 3.8m barrels (or 520,000 tonnes) of crude petroleum to the hermit state annually, a number just under the new cap. China's unofficial exports to the North Korean regime, allegedly evidenced by the uncovering by the South Korean authorities of illegal ship-to-ship transfers of petroleum products in December 2017, also highlight the difficulties in gauging true volumes of bilateral trade. The UN measures, however, require countries to file reports on their crude petroleum exports to North Korea every 90 days, which should help with data clarity as well as enforcement.
More than sanctions, China will continue actively to support diplomatic engagement as the main tool for crisis resolution in the Korean peninsula. China welcomed the reopening of direct communication lines between North and South Korea earlier this year, and has also moved to "normalise" relations with South Korea following disputes over the US-led Terminal High-Altitude Area Defence anti-missile system. However, in our view these efforts will not deter North Korea from achieving full nuclearisation over the next two years.
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