News Special Coverage Industry Overview Supply & Demand Price Reference Forum
 

Chinese exports to North Korea of wine surge

www.scmp.com by Ji Siqi28/10/2022  

1.jpg
the Yalu River Bridge,next to the Friendship Bridge connecting China and North Korea

Liquor exports from China to North Korea roared back in the third quarter for the first time since the isolated and heavily-sanctioned nation sealed its border due to the coronavirus pandemic in 2020.

The alcoholic drinks – from wines to spirits – were mostly re-exported from China, with their origins ranging from Latin America to Europe, according to Chinese customs records and a trade source, who said they were likely destined for the tables of North Korea’s elite as most ordinary people struggle to access daily necessities.

The United Nations Security Council approved a ban on luxury goods from entering North Korea in 2006. While alcoholic beverages are considered luxuries in countries such as the United States and United Kingdom, the resolution does not clearly define alcohol as one of those goods, experts said.

China exported nearly US$3 million of wine and liquor to North Korea from July to September, according to Chinese customs data. No exports were made in the five months previous, while US$38,395 worth of whisky and vodka was sent across the border in January.

North Korean leader Kim Jong-un declared victory in the battle against the coronavirus in August, ordering a lifting of restrictions.

China’s shipments included more than 83,000 litres of liquor produced by distilling wine, such as brandy, 71,000 litres of wine in bottles no bigger than two litres, almost 68,000 litres of whisky and over 47,000 litres of vodka. Smaller volumes of gin, liqueurs and cordials, as well as tequila were also exported.

Customs records showed most shipments were sent from bonded areas – where imported goods can be stored without paying duties – in Liaoning province, which borders North Korea, with the rest from Fujian and Hunan provinces.

Such shipments were common before the pandemic, with many being re-exported from China via the bonded areas in Dalian, a city in Liaoning, a Chinese trader familiar with North Korea told the South China Morning Post.

“Not just alcohol, but also tobacco and white sugar are re-exports,” the trader said on condition of anonymity.

The trader, who had travelled frequently to North Korea before the pandemic, said the country’s ruling elites were avid consumers of Western liquor.

Chinese liquor exports to North Korea had been largely paused since early 2020, when Pyongyang sealed the borders, with shipments last year totalling zero, customs records show.

The customs records do not show country of origin for re-exported products, but it is possible to map out possible starting points by aligning import-export data, such as a batch of goods arriving in a bonded zone and later being sent to North Korea in the exact same volume.

For example, China exported 36 litres of tequila worth US$444 to North Korea last month from bonded areas in Liaoning, the first such shipment since 2017, the earliest available records show on the customs website.

In the same period, Liaoning bonded areas recorded only one entry for tequila imports: 36 litres of tequila worth US$444 was imported from Mexico in January 2020.

The UK sent 2,520 litres of gin to Liaoning in February 2020, while in September this year, 2,520 litres of gin was sent from Liaoning to North Korea.

“Each of [the UN members] announces its own items of luxury goods sanctions against North Korea and demands its citizens to abide by them,” said Hyung-Gon Jeong, a senior research fellow at Korea Institute for International Economic Policy.

China, the only major economy trading with North Korea, does not make public its list of banned luxury goods, according to a 2019 research paper written by Jeong.

The Chinese trader said the liquor shipments shown on the customs records did not violate UN sanctions.

“Luxury goods are sanctioned, but since you can see the records online, these exports should be legit trade,” the trader said.

In February 2019, Dutch authorities intercepted a shipment of 90,000 bottles of vodka suspected to be en route to North Korea. Vodka is defined as a luxury good by the European Union Council.

Last month, Chinese exports to North Korea jumped 26 per cent compared to August, totalling US$90 million.

The cross-border goods train between the two countries resumed operations late in September, after a five-month hiatus.

The service was suspended on April 29 when Dandong, the port city on the Chinese side of the border, reported a new wave of Covid-19 cases. Soon after, North Korea also reported its own outbreaks, which it says have now been contained.