North Korean trade has hit the headlines this week, as Russian president Vladimir Putin visited Pyongyang and the Guardian uncovered the lucrative hair trade that makes up a high proportion of the country’s exports.
As subsidy races and increasing tariffs raise concerns about free trade and geopolitical fragmentation, North Korea demonstrates what real isolation means for a country’s coffers.
Putin visit
North Korea has been the subject of greater attention from Putin, following Russia’s 2022 invasion of Ukraine. Putin made his first state visit in 24 years this week, meeting North Korean leader Kim Jong Un in Pyongyang.
Following two days of ceremonies, photo opportunities and national tributes, a strategic partnership committing to greater trade and military ties was agreed.
Putin suggested trade in military goods was a prominent part of the pact, comparing the new arrangement to NATO supplying long-range missiles and fighter jets to Ukraine, according to an FT report.
He added that Russia was planning to supply missiles to friendly nations located near Ukraine’s allies, in “regions of the world where strikes can be made against sensitive targets”.
Since Kim visited Russia in September, experts believe there have been increased arms transfers between the two nations.
The US secretary of state, Antony Blinken, said that Russia was “desperate” to secure arms in the face of dwindling support following its invasion of Ukraine during a press briefing on Tuesday (17 June), given alongside NATO secretary general Jens Stoltenberg.
Stoltenberg said that the meeting raised concerns about Russia offering assistance with the development of North Korea’s nuclear programme.
He added that that China’s role in supporting Russia should also be considered:
“They cannot continue to have normal trade relationships with countries in Europe and at the same time fuel the biggest war we have seen in Europe since the Second World War.”
Wig economy
Another surprising source of revenue for North Korea’s nuclear ambitions is fake hair – wigs, false eyelashes and beards – according to the Guardian.
The product makes up a notable portion of North Korea’s minimal exports, as hair imported from China is manufactured into artificial hairpieces through North Korean forced labour, then re-exported to China and sold internationally.
Many consumers in the developed world will be unaware that their purchases originated from North Korea, as a ‘Made in China’ appears on the label.
Of the country’s US$248m in exports, $11.6m comprised hairpieces – almost 5% – according to data from the Observatory of Economic Complexity.
This was sold exclusively to China, which made a substantial £3.28bn from fake hair exports. To highlight the scale of this markup, well over a quarter of all its imported fake hair came from North Korea, according to the same data source.
Sanction-busting
The nuclear programme has attracted a breadth of UN-endorsed sanctions since the mid-2000s, hitting arms, military equipment and dual-use technology exports to North Korea, as well as capping a wider range of North Korean exports, such as oil, refined petroleum products, natural gas and products made with the country’s forced labour.
Considering the effect of sanctions on the nation, professor Leif-Eric Easley of Seoul’s Ewha University, told the Guardian that “they haven’t stopped North Korea.”
“The Kim regime has built a governance system that can survive, and even thrive, on the suffering of its people.
“Pyongyang is also adept at evading sanctions through smuggling and cyber hacking, especially since countries such as Russia and China became increasingly lax about enforcement.”
As recently as last year, the G7 members appealed to China to stop facilitating North Korea’s oil sanctions evasion, by allowing it to use Chinese territorial waters.
The group cited satellite images appearing to show North Korean tankers anchored in Chinese waters.
Trade profile
Given its geopolitical isolation, the nation’s exports to a small circle of trading partners, with China being its biggest financial supporter. Exports to China totalled $131m – over 50% of total exports – recorded in 2022.
African nations also feature prominently with just over $69m in goods exported, led by Senegal ($26.9m) and Nigeria ($14m).
Despite sanctions, refined petroleum is one of its biggest exports, worth $27.3m, behind only tungsten ore at $30.9m. These were sold mostly to African nations – Rwanda, DRC and Burkina Faso – and China, respectively.
Imports were far less diversified with China an almost exclusive import partner, making up over 98% of internationally-sourced products. Although wide-ranging, the majority of these were foods, medical goods, other chemical goods and plastics.