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Adam J Hantman  05/15/2007 09:33:59 AM  From  DB/Inbox:  Adam J Hantman

Cable 
Text:                                                                      
                                                                           
      
C O N F I D E N T I A L        SHENYANG 00078

SIPDIS
CXSNY:
    ACTION: POL
    INFO:   ECON RSO/RF RF

DISSEMINATION: POL /1
CHARGE: PROG

APPROVED: CG:SBWICKMAN
DRAFTED: POL:AJHANTMAN
CLEARED: BJ POL: EDKAGAN

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RHHJJAA RHEHAAA RHMFISS RUEKJCS
DE RUEHSH #0078/01 1201027
ZNY CCCCC ZZH
P 301027Z APR 07
FM AMCONSUL SHENYANG
TO RUEHC/SECSTATE WASHDC PRIORITY 8043
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 7789
RUEHUL/AMEMBASSY SEOUL 1722
RUEAIIA/CIA WASHDC 0020
RUEFDIA/DIA WASHINGTON DC
RHHJJAA/JICPAC HONOLULU HI
RHEHAAA/NSC WASHDC
RHMFISS/SACINCUNC SEOUL KOR
RUEKJCS/SECDEF WASHDC 0043

C O N F I D E N T I A L SECTION 01 OF 02 SHENYANG 000078 
 
SIPDIS 
 
SIPRNET DISTRIBUTION 
 
E.O. 12958: DECL: TEN YEARS AFTER KOREAN UNIFICATION 
TAGS: PGOV PINR PREL KN KS CH
SUBJECT: NORTH KOREA/CHINA: SMALLER-SCALE SMUGGLING ACROSS 
THE BORDER 
 
REF: (A) SHENYANG 31 
 
Classified By: CONSUL GENERAL STEPHEN B. WICKMAN. REASONS 1.4 (B/D). 
 
¶1. (C) SUMMARY: Despite a recent crackdown by PRC and DPRK 
authorities, Chinese smugglers--often partnering with local 
North Korean military contacts--reportedly continue to 
operate near Dandong.  A fair amount of smuggling in the 
area appears to be smaller-scale in nature, though profits 
can nevertheless be significant in some cases.  Undermining 
PRC efforts to effectively crack down on these activities 
are corrupt local officials.  Our contacts almost 
universally report that some local police are aware of 
smugglers' operations.  END SUMMARY. 
 
¶2. (C) This cable builds on ref A and draws on two trips to 
the PRC-DPRK border (March 12-15 and January 8-11), where 
Poloff visited, inter alia: Dandong and the nearby 
localities of Donggang, Hushan and Hekou; Yanji, capital of 
the Yanbian Ethnic Korean Autonomous Prefecture; and Tumen. 
It is based on firsthand observations, as well as 
conversations with self-described smugglers and legitimate 
border traders, as well as with local Chinese contacts 
friendly with smugglers/traders. 
 
¶3. (C) In a number of areas along the southern end of the 
PRC-DPRK border, illicit cross-border smuggling persists, 
complicating the extent to which official trade figures 
fully capture the complex reality of PRC-DPRK exchanges-- 
official or otherwise (see ref A for detailed background on 
the scope and vectors of cross-border smuggling).  Poloff 
on March 12 and 13 met with a number of possible small- 
scale cross-border smugglers in the vicinity of Dandong-- 
this time in Hushan and Hekou, two villages in Kuandian 
County--who work with local North Korean military contacts 
stationed across from their houses on the banks of the Yalu 
River. 
 
SCOPE, PROFITABILITY, METHODS 
----------------------------- 
 
¶4. (C) Scrap metal and antiques are among the staples of 
smaller-scale smuggling around Dandong.  Nearly 65 
kilometers north of Dandong in Hekou, a local People's 
Armed Police (PAP) border guard led Poloff to the riverside 
house of a man the PAP guard described as a friend and 
smuggler who has contacts with the North Korean military. 
(NOTE: Poloff was put in touch with the PAP guard by a 
contact in Dandong friendly with a number of security 
personnel in the area. END NOTE.)  On the banks of the Yalu 
River, next to an industrial-use scale used to weigh 
smuggled cargo, the PAP guard showed Poloff a cache of 
spent North Korean tank-artillery shell casings and scrap 
copper that his friend had procured from the North Korean 
military, just a boat ride across the river.  Two self- 
described smugglers in Hekou and three elsewhere in 
Kuandian County showed Poloff similar caches of scrap 
copper and iron, in addition to small amounts of North 
Korean antiques (e.g., porcelain vases, bronze bowls) that 
they had smuggled into China, intending to sell the items 
in Dandong's antiques markets. 
 
¶5. (C) Profitability is difficult to discern.  One Hekou 
smuggler reported that copper--the price of which has 
spiked considerably of late--currently fetched RMB 49 (USD 
6.30) per kilo on the black market.  According to one 
Kuandian smuggler, the most successful smuggler in Hushan-- 
a full-time operator, unlike some others who smuggle only 
to supplement their normal incomes--can afford to pay his 
"employees" RMB 60,000 (USD 7700) per year, a large sum in 
an otherwise depressed area.  (NOTE: Hushan lies 
approximately 20 kilometers north of Dandong and falls 
under Kuandian County's administration; many of its 
residents live on/near the banks of the Yalu and engage in 
smuggling on a regular basis to supplement their incomes. 
END NOTE.) 
 
¶6. (C) Several self-described smugglers in Hushan and Hekou 
told Poloff that they communicate with their North Korean 
partners via mobile phones.  But the communication is 
almost always one-way: North Korean military personnel keep 
their phones turned off during the day, the smugglers said, 
and only call across the river at night once they have 
something to sell.  Only one smuggler (elsewhere in 
Kuandian) told Poloff that he communicated with his North 
Korean partners either by fixing a specific date after each 
meeting or, on a more ad hoc (and less reliable) basis, by 
signaling across the Yalu River with light-based codes. 
 
 
 
CORRUPTION UNDERMINING CRACKDOWN 
-------------------------------- 
 
¶7. (C) PRC and DPRK authorities have started to crack down 
on cross-border smuggling recently, according to two Hushan 
smugglers.  Local police, they said, recently announced 
that those caught would face fines of RMB 5000 (USD 640). 
Few smugglers Poloff encountered in the Hushan area or 
beyond seemed terribly worried.  A Hushan resident told us 
one evening after dark, for instance, that a number of 
small open-bed trucks parked outside several neighboring 
houses were waiting to transport cargo that would be 
brought over from North Korea later in the evening. 
 
¶8. (C) Not surprisingly, the complicity of corrupt local 
officials complicates PRC efforts to crack down on 
smuggling.  Consistent with Poloff's previous interviews 
with smugglers (see ref A), interlocutors almost 
universally reported that local police were well aware of 
the smuggling and turned a blind eye.  Many explicitly 
noted that maintaining a good relationship with security 
officials is absolutely essential to their operations.  In 
two locations, Poloff himself was personally directed to 
smugglers by local PAP border officials either "on the 
take" (in Qianyang in January) or friendly with local 
smugglers (in Hekou in March). 
WICKMAN