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C O N F I D E N T I A L SECTION 01 OF 03 SHENYANG 000101 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR INR, EAP/CM, EAP/K 
 
E.O. 12958: DECL: TEN YEARS AFTER KOREAN UNIFICATION 
TAGS: PREL PGOV PINR ECON KN KS CH
SUBJECT: PRC/DPRK: BORDER TRADE AND SOME NEW FRICTIONS (MAY 
 2007) 
 
REF: A. (A) SHENYANG 69 
 
     ¶B. (B) 06 BEIJING 23166 
 
Classified By: ACTING CONSUL GENERAL DAVID BRIZEE.  REASONS: 1.4(B) 
AND (D). 
 
¶1. (C) SUMMARY: There continue to be differences between 
Jilin and Liaoning Provinces in the volume and scrutiny of 
their trade with North Korea.  PRC-DPRK frictions have 
recently emerged in Ji'an, where Chinese officials have 
taken the unusual step of publicly criticizing neighboring 
North Korean authorities.  Chinese officials farther north 
in Baishan privately expressed some trade-related 
frustration with the DPRK, but remain hopeful that the 
North will soon agree to participate in several new barter- 
trade zones recently constructed by the PRC in Linjiang and 
Changbai.  END SUMMARY. 
 
¶2. (C) Poloff traveled May 7-11 along nearly half of the 
PRC-DPRK border, which was quickly transitioning into 
spring as North Koreans and Chinese busily ploughed their 
fields in preparation for the imminent planting of spring 
crops.  Sites visited included Dandong, across from 
Sinuiju, North Korea; Ji'an, which abuts Manpo; Baishan; 
Linjiang, which faces Chunggang; and Changbai County, 
across from Hyesan. 
 
THE PORTS, FROM DANDONG TO CHANGBAI 
----------------------------------- 
 
¶3. (C) DANDONG. The level of activity at the Dandong Land 
Port appeared consistent with previous visits during 
Poloff's very brief observation on the morning of May 7. 
Between 1000 and 1045, Poloff observed approximately 40-50 
mostly large, closed-container PRC trucks pre-cleared 
elsewhere cross into Sinuiju, North Korea; nearly 80 
crossed during the same time interval in March (ref A). 
Several light outbound vans and passenger cars--including 
two late-model Mercedes with red North Korean plates-- 
exited China without appearing to undergo inspection. 
Border officials appeared to pay more attention to traffic 
entering China from North Korea.  Between 1040 and 1120, 
Poloff observed approximately 80-100 mostly empty container 
trucks cross into China from North Korea.  Upon entering, 
quarantine officials sprayed tires with a disinfectant, 
after which customs officers inspected the cargo holds of 
incoming trucks and, unlike what appeared to be the case 
during past visits, climbed into the cabs of a number of 
cargo trucks to look around.  The 10-15 late-model Japanese 
passenger cars and SUVs with North Korean plates that 
passed through the port during the same period appeared to 
attract less scrutiny from customs officials.  Chinese, 
presumably business partners, greeted a number of North 
Korean drivers at the port, often handing the latter cell 
phones as soon as they cleared customs. 
 
¶4. (C) Poloff finally gained access to Dandong's customs- 
monitored warehouse on the outskirts of town, where customs 
officials appear to inspect and "seal" many of the trucks 
bound for Sinuiju. (NOTE: Police had previously refused 
Poloff access to the facility--shouting at Poloff to leave- 
-presumably because of PRC sensitivity in the wake of 
Pyongyang's nuclear test and UNSCR 1718.  The facility is 
located at 40 Huayuan Road; see ref B for details. END 
NOTE.)  At approximately 0915 on May 8, Poloff observed a 
number of Chinese container trucks being loaded from a 
warehouse situated at the edge of the facility.  80-100 
heavy PRC trucks sat parked in the middle of the open-air 
enclosure as customs officials inspected paperwork and, 
alongside drivers, peered into open cargo holds, which 
contained goods ranging from fruit and furniture to 
refrigerators.  The facility contained no North Korean 
vehicles. 
 
¶5. (C) JI'AN. Several hundred kilometers north of Dandong 
in Jilin Province, three official ports link Ji'an with 
North Korea.  At Ji'an's rail port to Manpo, a 3-car 
Chinese train with one passenger car crossed into North 
Korea at approximately 1740 on May 8, though People's Armed 
 
SHENYANG 00000101  002 OF 003 
 
 
Police (PAP) guards refused Poloff access to the facility. 
PAP guards proved far more lax 60 kilometers south of Ji'an 
proper at Laohushao Port, where cargo traffic crosses the 
Yalu on a small barge.  Poloff on the morning of May 9 
observed only two Chinese trucks--packed with consumer 
electronics--slowly cross by barge into North Korea's Wiwon 
Port. 
 
¶6. (U) In an unusual online report last month quite 
critical of neighboring North Korean authorities, Ji'an 
Customs noted that heavy rain again destroyed Wiwon Port's 
dock on April 18.  PRC port authorities have complained 
about the DPRK's inability to properly reinforce the port 
on several occasions during negotiations, and the article 
alleged that the DPRK's actions had "seriously affected" 
PRC-DPRK border trade in Laohushao.  According to another 
online report by the Ji'an government in late April, 
commerce has effectively (temporarily) stopped at Qingshi 
Port--the city's third port--and Ji'an's overall trade with 
North Korea is falling this year.  The main reasons include 
resource depletion in the DPRK (over-timbering has 
decreased the amount available for export), as well as a 
trade spat: North Korea this year raised the price of its 
timber exports considerably, which has hampered Chinese 
profit potential and produced "difficulties" in PRC-DPRK 
trade negotiations on the issue, the report said. 
 
 
¶7. (C) LINJIANG. Further north at Linjiang Port--across 
from Chunggang, North Korea--Poloff on May 9 at 1400 
observed one North Korean container truck parked on the 
land bridge waiting to enter China.  On the Chinese side, 3 
light, open-bed Chinese trucks stuffed with fruit, 
vegetables and clothing queued to enter the port, inside of 
which 7 North Koreans waited, presumably to cross back into 
North Korea.  Several minutes after entering, PAP guards 
insisted that Poloff leave the facility, which is open to 
Chinese tourists, but not foreigners, they said. 
 
NK TRADE DOWN IN CHANGBAI, NEW BARTER ZONES ON THEIR WAY? 
--------------------------------------------- ------------ 
 
¶8. (C) CHANGBAI. Several hundred kilometers north of 
Linjiang in Changbai County (China's sole autonomous ethnic 
Korean county), Changbai Port sits across from Hyesan--a 
large, relatively lively North Korean border city with 
abundant signs of life (unlike many other cities along the 
border visited by Poloff).  PAP authorities at the port 
strenuously opposed Poloff's request for a visit--despite 
the intervention of the local Foreign Affairs Office-- 
citing the sensitivity of the North Korean side.  Local 
government officials, however, proved willing to talk 
unofficially. 
 
¶9. (C) Trade between North Korean and Baishan City--which 
formally administers Linjiang and Changbai, including their 
ports--has been suffering, according to ZHAO Lina 
(protect), Chief of the Baishan Trade and Economic Bureau's 
Foreign Trade Section.  2006 was "not so good," and saw 
total Baishan-DPRK trade of USD 180 million, of which USD 
120 million was exports, Zhao told Poloff on May 10.  Zhao 
suggested that North Korea's missile/nuclear adventurism, 
among other longer-term factors (e.g., the North's planned 
economy, low efficiency, poor "credibility"), had led to 
the decline in trade as Chinese customs tightened 
inspections, she argued.  But the Deputy Director of 
Changbai Customs contradicted Zhao, asserting in a 
separate, unofficial conversation with Poloff later that 
day that there had effectively been no change in the 
volume/value of local trade with North Korea as a result of 
the nuclear test or alleged enhanced inspections pursuant 
to UNSCR 1718, precisely because of the composition of 
Chinese exports to North Korea in the area (which is 
dominated by daily consumables, grain, clothing and the 
like--all of which is not restricted by UNSCR 1718). 
 
¶10. (C) Zhao noted, too, that both Changbai and Linjiang 
have recently constructed barter trade zones to facilitate 
more informal cross-border trade, but said somewhat 
 
SHENYANG 00000101  003 OF 003 
 
 
disappointedly that Baishan is still awaiting a response 
from North Korean authorities.  She offered no specifics. 
BRIZZEE