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Strengthening Complementary Textile Production System between North Korea and China
- Author CHOI Jangho
- Date2015-07-31
Recently, the diving price of minerals and metals in the international market and slower economic growth of China have brought structural changes in trade between North Korea and China. The interesting feature of this change is in the source of change; the driving force comes from China and the world, not from North Korea, even though North Korea is regarded as the most closed economy in the world. North Korea has been exposed to the world market through its trade with China, and has heavily relied on China in its export of mineral fuels, marine products and textiles. The price nosedive of minerals has given North Korea a hard time and North Korea has tried to diversify the composition of export commodities to overcome it. In 2014, the export revenue of textile to China increased by 23.7% which is the sharpest increase among export commodities. Increased textile export to China brought about an integration of the textile production system between North Korea and the two Northeast Provinces of China Jilin and Liaoning since the two provinces of China have begun to outsource the labor-intensive process of textile production to North Korea to avoid China’s relatively high tariffs on finished garments. The increasing trade of intermediates has two implications. Firstly, strengthening cross-border complementary textile production through intermediates trade will further increase the trade of North Korea. Second, the increase in intermediate trade also means the increase of North Korean economy’s dependency on the Chinese economy, making the North Korean economy less vulnerable to domestic shocks.
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