North Korea’s foreign currency earnings are expected to decrease by 0.2 to 1 billion US dollars per year, depending on the level of Chinese participation (on average, $600 million per year). This amounts to 26% of North Korea’s yearly exports and 19% of accumulated foreign currency earnings for 25 years (1991~2015).
The reduced foreign currency inflow is expected to put pressure on North Koreas civilian economy, in two ways. Firstly, it will lead to a fall in imports, especially those of machinery and industrial equipment, raw materials, and consumer goods. Such supply shortages in turn discourage production and market activities. Secondly, Pyongyang will try to cover the WMD and conventional weapon production/procurement costs by further exploiting the civilian economy.
In order to make the sanctions incur attitude-changing damages to the Kim Jung-Un regime, they should be implemented consistently for a sufficient period of time. However, Beijing is highly unlikely to carry out sanction measures when they begin to threaten the regime.
The Korean government needs to strengthen policy flexibility toward North Korea to cope with future uncertainties.