North Korea have become increasingly reliant on China for trade since South Korea ended nearly all business relations with the communist state after an attack on a South Korean warship last year.
In 2010, trade between North Korea and China accounted for 56.9 percent of North Korea’s total trade, up from 52.6 percent in 2009.
According to the North Korean Economy Team of the Korean Development Institute, the total trade between North Korea and China was valued at US$3.47 billion – a 29.3 percent increase from the previous year.
The increasing trade reliance on China looks certain to continue this year, as trade between both nations have doubled in the first four months of 2011, compared to the same period last year.
The report states:
“The North expanded its exports of such strategic materials as coal to China at the instruction by Kim Jong-il following the blocking of its trade channel with the South.
As a result, we think that the country is facing disruptions in running its economy such as a possible energy shortage during winter.”
The cessation of trade within the Korean Peninsula has led to multiple problems for the North as the country struggles to deal with a sudden withdrawal of economic activity.
The North Korean currency exchange rate has nearly doubled since December last year as concerns arise over a lack of hard currency due to worsened business ties with South Korea.
The Korean Development institute added that, “The spike in the North's currency exchange rate seems to have resulted in a sharp rise in food prices, further crimping its citizens' livelihood.”
North Korea’s rice prices have quadrupled this year as the country risks further economic isolation.
“While the regime lifted its ban on street markets that was placed at the end of 2009, high prices and goods shortages are preventing them from helping meet North Koreans’ needs,” said the report.
Story from AFP