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In North Korea, Coronavirus Hurts Like No Sanctions Could

  • July 04, 2020

But the trade imbalance with China created its own concerns.

Even as the sanctions hit the North’s exports hard, the country continued to buy cooking oil, flour, sugar and other consumer goods, as well as construction materials, from China. The imports were needed to keep its industries going, as well as the unofficial markets that have helped many people to survive, as the North’s food rationing system fails to meet the population’s needs.

Since 2017, North Korea has reported a trade deficit of more than $2 billion every year. In comparison, the North’s total exports last year were $260 million.​

“The clock is ticking and the bomb could explode any time,” Kim Byung-yeon, a​ Seoul National University​ economist​, wrote in December, predicting that the North’s foreign currency reserves would shrink by $1 billion a year, leading inexorably to a crisis.

North Korea has tried to replenish its coffers with revenues from illegal smuggling and cybertheft, as well as “loyalty donations” from ​what are known as donju — tradespeople with political connections, who have hoarded foreign currency obtained through smuggling​ and other enterprises.

Mr. Kim’s government also runs shops in Pyongyang, the capital, where the moneyed class spends foreign currency on imported goods. And it has profited by selling Chinese smartphones to an estimated six million cellphone subscribers in the country.

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