Sanctions bite both North Korea and China

Dandong, China: With swift precision and a fixed gaze the young women sit silently assembling parts with slender fingers, their hair tied back in pony tails.

These women are from North Korea, and the spotless, light-filled factory room they are working in is within a new industrial estate in the Chinese river town of Dandong - North Korea's economic lifeline.

Ninety per cent of North Korea's foreign trade is with China. Of that, two-thirds goes through Dandong, which sits metres across the Yalu River from the hermit kingdom, connected by a single bridge.

Three hundred women have worked here for three years, sleeping in factory dormitories, offered simple food so that their appetites aren't "spoiled" by the comparative opulence of the Chinese diet when the time comes for them to return to Pyongyang. They can't go outside.

The business owner pays the North Korean government 1800 Chinese yuan ($A350) per worker per month as a fee.

They are part of North Korea's army of forced labour - factory workers, waitresses, software programmers and artists - who are sent abroad, a major source of foreign cash for the regime.

But the toughest round of United Nations Security Council sanctions against North Korea will bar any more workers being granted visas.

Dandong is at the frontline of Chinese sanctions against North Korea, which will come under scrutiny as US president Donald Trump meets with Chinese president Xi Jinping next week.

"Every business in Dandong is connected to North Korea, either through labour, trade or resources," says the factory owner, who faces an uncertain future.

Mr Trump has repeatedly urged China to "do more" to punish North Korea. Then, in the wake of its sixth nuclear test in September, China agreed to ban North Korean seafood, lead and textile trades, cap oil supply and banish North Korean businesses, including joint ventures, from January.

Customs data show that, in September, China's imports from North Korea fell 37.9 percent year-on-year. This week, the Port of Dandong said it had defaulted on a 1 billion Chinese yuan loan as business plummeted in the wake of UN bans on North Korean coal and iron ore shipments.

There have been sanctions before but not like this, say the Dandong traders, shopkeepers, restaurateurs and truck drivers whose
livelihood depends on cross border trade.

For the first time, it is biting.

North Korean buyers are still visible in the street, but not in the same numbers as before. And they no longer have money, complains one car parts dealer. Under the sanctions, North Koreans are no longer able to bring in coal and minerals to barter, so have no means to buy Chinese products.

Traders selling coal heaters, refrigerated cabinets, toothbrushes and beer from small shopfronts say the downturn in North Korean customers may force them to lay off staff.

"We are all worried. It hits this street and all Dandong," says one small businessman who complains Chinese Customs is stopping many of his products, including small pumps, from entering North Korea.

The Bank of China has blocked the transfer of money to North Korea through its branches. This came after the Bank of Dandong, whose logo is splashed across the local airport, was sanctioned by the United States as a conduit for North Korean money laundering.

North Korean factory workers have been returning from China in large numbers as their contracts expire, says a driver who shuttles them across the heavily-guarded Friendship Bridge.

On one side are new high rise apartments and giant advertising screens, on the other, army watch posts and farmers cutting grass for heating.

Outside of town, on the stretch of river that has made smugglers rich, red banners are hung roadside to proclaim that the authorities are "Striking hard against illegal trade and workers". At multiple checkpoints, armed soldiers check cars.

On one side of the river are peach tree orchards and restaurants; on the other, bare mountains and empty fields.

There have been two sets of arrests. A Chinese village official who aided North Korean security officers smuggle stolen zinc into China, and a group of locals who smuggled five trucks full of guns from North Korea.

The arrests show two things: firstly that the crackdown is on, but also that North Koreans are becoming desperate to sell anything they can find to make up for the lack of cash caused by the sanctions.

Beijing's crackdown, however, cannot stop the smuggler's trade in seafood.

On the outskirts of Dandong at an old ship yard at dusk, half a dozen men in rubber boots and gloves are standing around, waiting. A North Korean soldier watches silently from the other side of the river, maybe 20 metres away.

Metal tubing, small engine parts, biscuits and packaged food are unloaded from a white refrigerated truck and taken down to the river, to be stowed under the deck of a small timber boat. It is barter. When another boat chugs in to dock, the men spring into action, heaving bags of seafood that emerge from under its deck onto the wharf. Sea snails, shrimp, crabs and fish.

The bags are allocated to the buyers that have appeared from out of nowhere, including two smartly dressed women in high heels. These are pre-arranged sales. The bags are weighed on mobile scales, entries noted in a book, and then loaded into the refrigerated truck for delivery.

Within 10 minutes, it's over.

North Korean seafood can easily be bought at Dandong's seafood markets, where sea snails the size of a fist remain in demand among locals.

But the big seafood processing factories near the river, which rely on large volume and employ North Korean workers, have been hit by the ban.

The regime's thriving art industry - North Korean artists travel to Dandong and are housed by Chinese businessmen while they produce oil paintings to be sold for thousands of dollars in cash - will also draw to an end, with no new visas being issued.

One art gallery venture was bringing in 100 artists a year and had stockpiled 10,000 paintings before its April opening as China's largest private
art gallery.

The North Korean restaurants that line the Yalu River and draw Chinese tourists curious about their impoverished northern neighbour have also begun to shut. Around 100 waitresses were sent packing just days before China's busiest tourist week in October.

At least one North Korean restaurant owner has been arrested on corruption charges, in an investigation that has also put the local government under scrutiny.

But the traffic across the bridge has not stopped entirely. Hundreds of trucks cross the Yalu River each day, transporting tyres, mattresses to North Korea. The queue of North Korean trucks entering China block traffic. On Tuesday, open-top trucks carried bags of a mineral, a black hard rock.

This trade, China says, is "normal trade", beyond the sanctions list. It continues apace.

This story Sanctions bite both North Korea and China first appeared on The Sydney Morning Herald.